ECB today. Sarko-Hollande fight: no clear winner. RCUBE is a bit more bullish. JPM is still super bullish. SG: much better numbers…

Bonjour,

 

Europe set for slightly higher start after US recovered to end session mixed. ECB exp unchanged. Macro eyes on UK PMI + US ISM.

 

CURRENT THEMES

On the ECB
Nothing much expected today except in the Q&A part where we should get a better sense of the ECB’s next moves. Draghi sounded more cautious last week and yesterday’s PMIs won’t help.

On the French Elections
(my 2 cents) Sarkozy was expected to fight Hollande until K.O. (at least technical K.O.) but the much anticipated debate looked more like a scene from Step Brothers (http://imdb.to/JEsZ4R  sorry…). Hollande dodged most attacks and the debate shouldn’t change voters’ choices. So Hollande is still the expected winner.

On China
We will get lots of data starting the 8th of May. GS believes the economy is trending up. The MoM data for April should moderate somewhat but is still expected to grow strongly looking on a YoY basis. The piece by Yu Song is called: Modestly higher activity growth, sticky CPI, slower exports, money and credit supply growth—a preview of data to be released in May.

 

RCUBE

RCUBE is getting a bit more bullish and added to its credit exposure yesterday.
Banks lending seems to improve in the US. We had better than expected ECB lending standards recently confirmed by a better situation in France as well. We not out of the woods yet, as the corporate demand for loans is still very weak, but it seems that lending standards are somewhat easing.

 

RCUBE keeps selling protection on the iTraxx Xover.

 

 

 

STRATEGY

JPM (Lee) US Equity Strategy FLASH
The Summer will be a “Cliffhanger” but We Still See Higher Markets by End of 2Q12.
Tom is bullish and sees a rally from now to year end. I don’t get the meaning of “a view we would deem as having “medium conviction”…?? Anyway, he suggests to buy dips and add to cyclical exposure. The reasons why his view is bullish…: basically the fiscal cliff is huge, but the market knows it and no political party will impose severe tax increases before next year, so should the US economy continue to strengthen it will mitigate the coming fiscal impact. And JPM economists agree. (Also US markets tend to outperform during election years).

 

OTHER STUFF

Name The Country: 101.5% Debt/GDP And… 1.7% Effective Interest Expense | ZeroHedge http://bit.ly/K3oIYo

 

EUROPEAN EQUITIES

FINANCIALS
– HANNOVER RE
oper. profit EU393.2m vs est. EU309m; net EU261.3m vs est. EU183m; anticipates a good 2012 financial year if major losses do not significantly exceed EU560m and if there are no major downturns in capital markets
– SOCIETE GENERALE 1Q net income declines 20% y/y to EU732m vs est. EU597.5m; aims to reach 9%-9.5% core Tier 1 ratio in 2013
– Storebrand 1Q net income NK523m vs est. NK448m; sees growth in core markets
– Spain is sounding out investment banks including Credit Suisse, Goldman and UBS, says Reuters
– RBS may set aside as much as GBP300m in additional compensation for customers improperly sold payment protection insurance
– ING to sell its KB Financial stake in 2 years, according to Bloomberg
– Italian bank’s 2012 EPS estimate cut by 8% at Deutsche Bank
– UNIONE DI BANCHE ITALIAN Raised to Hold vs Sell at Deutsche Bank
Banco Popolare, Monte Paschi, Credem, Pop. Milano Kept at Hold at Deutsche Bank
– UBS Raised to Hold vs Sell at Deutsche Bank

INDUSTRIAL/MINERS/SERVICES
– BMW
1Q sales EU18.3b vs est. EU17.5b; Ebit EU2.13b vs est. EU1.74b; reiterates outlook for 2012
– FINMECCANICA 1Q sales EU3.69b vs est. EU3.76b; 1Q adj. Ebita EU173m vs est. EU178m; 1Q net EU18m vs est. EU14m
– HeidelbergCement rev. EU2.8b vs est. EU2.73b; loss from cont. ops EU148m vs EU116m; loss EU204m vs est. EU133m; says 1Q confirmed outlook for 2012
– LUFTHANSA 1Q rev. EU6.6b vs est. EU6.59b; 1Q operating loss EU381m ; 1Q net loss EU397m vs est. EU318.8m loss; restructuring costs may affect 2012 forecast; sees no major losses in passenger unit
– NORSKE SKOG 1Q sales NK4.4b vs est. NK4.6b; 1Q net loss NK343m vs est. loss NK57.4m; sees fall in demand partly offset by lower output in 2012
– ArcelorMittal and Lafarge used the most UN offsets to cover carbon-dioxide emissions last year, according to the European Commission
– Rio Tinto
and BHP Billiton may cut Australia project spending, BofA-Merrill says
– RIO TINTO’s CEO sees global demand for copper, iron ore and coal to grow until at least 2025, in line with growing global incomes
– BAE Systems will furlough 210 of 1,250 workers for ~30 days due to delay in 2012 contract
– Fiat auto brands April sales in Italy fell 12%
– Fraport Cut to Equalweight vs Overweight at Morgan Stanley
– AdP PT Raised to EU65 vs EU64 at Morgan Stanley; Kept at Equalweight
– Safran Cut to Hold vs Buy at Jefferies
– Tenaris PT Cut to EU44.5 vs EU45 at UBS; Kept at Neutral

UTILITIES/OIL/HEALTHCARE/CHEMICALS
– Cermaq
1Q sales NK2.2b; 1Q net loss Nk95.4m vs est. net income NK88.5m; sees market growth in Chile at more than 20% and in Norway at more than 10%
– CLARIANT 1Q rev. SF1.95b; 1Q Ebit SF123m vs est. SF163.5m; 1Q net income SF20m; Expects further sales growth in local currencies and sustained profitability in 2012
– FRESENIUS
confirms raised forecast; to invest 5% of sales in property, plant and equipment; sees net debt/ Ebitda ratio of about 3.0 at year end
– FRESENIUS MEDICAL CARE
1Q rev. per treatment $353 in the US; 1Q net $370m
– BP
and lawyers suing the company over 2010 GoM oil spill win preliminary approval of their proposed settlement
– Areva starts the process to sell its nuclear radiation measurement unit Canberra, according to Bloomberg
EDF would see the completion of one nuclear plant, but the closing of another, under François Hollande
– GDF SUEZ
signs a development pact with a Sempra Energy unit
– VEOLIA and Transfield are to maintain and operate Sydney Ferries, with an estimated contract value over a 7-yr period of A$800 million, reports the WSJ
– DSM offers $38.50/share for Kensey Nash in all-cash deal
– Novartis’ generics division Sandoz agrees to buy Fougera Pharma in an all-cash transaction for $1.525 billion
– Roche says that its arthritis medicine study met its primary endpoint
– Actelion PT Raised to CHF40 vs CHF34 at Morgan Stanley; Kept at Equalweight
– Lanxess PT Raised to EU77 vs EU73 at Morgan Stanley; Kept at Overweight


TMT

– FRANCE TELECOM 1Q sales EU10.92b vs est. EU10.82b; 1Q Ebitda EU3.432b vs est. EU3.44b ; reiterates FY target of close to EU8b in operating cash flow; targets net debt/Ebitda of 2.0 in medium term
– INFINEON 2Q sales EU986mm vs est. EU941.6m; 2Q net income EU111m vs est. EU101m
– REXEL 1Q sales rise 7.4% to EU3.23b; net up 4% to EU89.9m; confirms FY target of adj. Ebita margin of at least 5.7%
– Telenet 1Q rev. EU364m vs est. EU356.4m; 1Q adj. Ebidta EU192.6m vs est. EU187.8m
– VODAFONE’
s tax penalty may be waived by the Indian government, reports the Economic Times
– Nokia seeks a smart phone boost with new devices, according to the FT; could sell real estate, including its headquarters in Espoo, Finland in order to cut costs, says Bloomberg
– SAGE is said to be in talks with Microsoft on putting its accounting software for small businesses on Microsoft’s Azure cloud platform, says the FT
– DKSH Holding Initiated at Neutral at Credit Suisse; PT CHF52
– Tele2 Upgraded to Buy from Hold at Berenberg
– Swisscom PT Raised 4% to CHF418 at Exane; Kept at Outperform
– Schibsted Cut to Neutral vs Buy at Citi
– Ziggo Initiated Hold at Deutsche Bank, PT EU23.1

RETAIL/CONSUMER/LUXURY
– ADIDAS
boosts FY guidance; had seen 2012 EPS EU3.52- EU3.68 but now sees basic EPS EU3.58-EU3.75; sees FY gross margin ~47.5%, unchanged from 2011
– Dufry
1Q sales SF740.8m vs est. SF709.5m; 1Q Ebitda SF98.1m vs est. SF91.3m; 1Q net SF25.1m vs est. adj. net SF20.1m
– Hermes 1Q rev. EU776.9m vs est. EU743.2m
– ORKLA 1Q op. revenue NK14.8b; 1Q net income NK1.29b; brands to increase selling prices and reduce costs
– Next’s 6% sector premium is unjustified, Barclays says; PT raised 2% to 2,550p; Kept at Underweight
– Kerry Group PT Raised 11% to EU39 at Exane; Kept at Outperform

SMALL/MIDCAPS
– Draegerwerk
1Q sales EU529.3m; 1Q Ebit EU46.8m ; confirms FY outlook; expects order intake and net sales will grow at least as fast as the global economy again in 2012
– Ipsen
1Q sales EU292.8m
– ORPEA 1Q rev. rose 14.9% to EU336.5m; ‘particularly confident’ of hitting 2012 sales target of 15.5% increase to EU1.425b
– Pohjola Bank net income EU80m vs est. EU74m; EPS EU0.26/shr vs est. EU0.230/shr; sees 2012 consolidated earnings before tax “markedly” higher than in 2011
– Vicat 1Q rev. EU485m vs est. EU515.5m
– Henderson Group
PT Cut to 145p vs 150p at Morgan Stanley; Kept at Overweight
– Wolfson Micro PT Raised to 220p vs 210p at Morgan Stanley; Kept at Overweight
– Mondadori PT Cut to EU0.97 vs EU1.37 at Citi; Kept at Sell
– Tekfen Holding Raised to Buy vs Neutral at Citi
– NRJ Group PT Cut 4% to EU8 at Exane; Kept at Outperform
– Fenner Cut to Neutral from Outperform at Credit Suisse; Removed from Small & Mid Cap Focus List
– M6 Raised to Overweight vs Equalweight at Barclays
 

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