Many data out today and tomorrow. RCUBE on European Yields, MS on Commos and Spain.

Bonjour,

No clear direction on the Futures today and we should have another volatile session. There some iportant economics data (some are already out) such as German unemployment, EU CPI, US GDP (revised for Q1) ADP employment, etc…

ENI to sell a 30% stake in SNAM for 3.5bn (€3.47/share). I like ENI…

CURRENT THEMES

On the Markets
No real new news overnight, but the sentiment remains really negative. The EURUSD broke below 1.24, a two year low, all US and Asian indices are down. US and German bonds are at record low levels with the German 2Y yielding 0, the US 10y falling to a level last seen in 1946!

On Economics
We are in a very busy schedule of economics data. South Korea published better than expected IP at 0.9% MoM vs -0.4% expected but at 0% YoY vs 0.7% expected. Then German retail sales which look slightly better on a MoM basis (+0.6% vs +0.2%e) but much more disappointing on a YoY basis (-3.8% vs +0.3%e). Then we have the ADP employement report, the jobless claims, the revised Q1 GDP for the US, the Chicago PMI and most important: the PMI…

(UK time)

 

 

RCUBE

Why a Euro Breakup Could Eventually Lead to Deeply Negative Short-term Rates.
The title says it all. RCUBE looks at the probability that German short term yields (Schatz) go to -5%. This would happen as all investors would flock to countries that have the best prospects for a strong future currency. Given yesterday move on the German 2Y, we can only agree…

STRATEGY

MS (Allidina) The Commodity Manual
Wheat Out Ahead of Corn

Also mentioned here: (http://read.bi/LhHYAa) , this 125 page report gives MS views of the comodities world. MS likes Gold, Soybeans and Corn. They also expect a copper rise in H2 with China growth picking up. They’re bearish on Zinc, Lead, Aluminium, Sugar, NatGas and Oil…

MS (Antonucci) Spain
Searching for a circuit breaker.

(copied/pasted) Moderate Sequential Growth in 2013 Spain should start growing next year. But the contractions in 2H 2012 should make the 2013 number negative. Export Potential – You’d Be Surprised Spain has a comparative advantage it can build on. Its exports are structurally strong and are becoming stronger. Political Stability Bodes Well for Reforms The structural reforms that the absolute-majority government is implementing will likely pay off. We Forecast €45-55bn of Bank Capital Needs However, further DTA and equity stakes write-downs could increase the amount to the higher end of the range. European Bank Recap – A Policy Option If Spain muddles through year-end, it has a higher chance of avoiding a ‘European solution’ to recapitalise its banks. Risks: Housing Market and Contingent Liabilities The house price correction has further to go, in our view. And off-balance sheet liabilities might be an investor focus.

 

 

OTHER STUFF

Spain: Bankia Down, Who Is Next? | ZeroHedge http://bit.ly/KKsp5b
The Good, Bad, And Ugly Of Emerging Markets | ZeroHedge http://bit.ly/KzbvYK

EUROPEAN EQUITIES

FINANCIALS
– Axa’s CEO says that it has taken actions that would allow it to withstand effect of a disorderly Greek euro exit without a capital increase
– PRUDENTIAL is to acquire SRLC America from Swiss Re for £398 million
– Swiss Re sells US Admin Re unit to Jackson National Life Insurance for $0.6 billion in cash
– RBS’s Chairman says that shareholders who bought stock before it was bailed out will never recover the losses on their shares; shareholders vote 99.31% in favour of remuneration report
– BBVA’s Chairman says that Spain and Italy will not lose their ability to pay their debt and there will not be a catastrophe in Spain because of the European crisis
– DEXIA’s breakup plan has caused to EU to have ‘serious doubts’, says Bloomberg
Buy Zurich, one of Top Picks in European insurance, Citi says
Buy BNP PARIBAS, ‘Grexit risk is manageable,’ Citi says

INDUSTRIAL/MINERS/SERVICES
– BHP Billiton’s proposed Port Hedland Outer Harbour project gets approval under national environment law
– ArcelorMittal’s Florange furnaces are to stay idle all year, according to Le Figaro
– Vinci is named as the preferred bidder for a €900 million Isle of Wight road contract
– Volkswagen and IG Metall are to announce new contract details
– Volkswagen says 89% of US dealers profitable this year; it plans to add a midsize sport-utility vehicle to its US line-up
– Daimler’s Freightliner unit has the first company in the US to reach fuel-economy goals set by the Obama administration
– Lufthansa may shift a swathe of flights to a new low-cost division operating as many as 90 jets
– Lafarge Raised to Overweight vs Equalweight at Morgan Stanley
– HeidelbergCement Cut to Equalweight at Morgan Stanley
– Fiat Industrial PT Raised to EU9 vs EU 8.5 at JPMorgan; Kept at Neutral

UTILITIES/OIL/HEALTHCARE/CHEMICALS
Norway’s largest oil refinery suspended most shipments, causing supplies to back up, as more public workers joined a strike over pay
– Eni will sell 30% stake of gas-network operator Snam to Cassa Depositi e Prestiti for €3.5 billion
– BP billionaire partners are ready to dissolve the equal ownership structure of TNK-BP as tensions mount between the shareholders
– Repsol says that it has not made final decision about the possibility, raised yesterday, of swapping preference shares
– Eni and Enel may pull out of the SeverEnergia venture with OAO Novatek if Russia raises extraction tax for gas producers, reports Bloomberg
– RWE has reduced the number of turbines by a third at a wind project it is planning offshore the UK to curb its visual and environmental impact
– UCB buys 51% of Meizler Biopharma, but the terms are not disclosed
– PFIZER and Takeda are said to have dropped their Amylin interest, reports Bloomberg
– Novartis releases positive data on Afinitor and Tasigna
– Eni Kept at Conviction Buy at Goldman on sale of 30% in Snam
– SNAM Kept at Overweight at JPMorgan, the overhang is to linger longer than hoped; Kept at Buy at Deutsche Bank
– LINDE is preferred over Air Liquide at Credit Suisse
– Petroleum Geo Services Assumed Outperform at Credit Suisse; PT NK99
– CGG Veritas Assumed Neutral at Credit Suisse; PT EU23
– Lukoil Raised to Buy vs Neutral at BofA
– Severn Trent PT Raised 1% to 1,870p at Exane

TMT
– TELEFONICA plans to sell shares in its German wireless unit, valued at as much as $11 billion, and is considering a similar move for its Latin American businesses
– Belgacom names Dominique Leroy as executive vice president of consumer business unit
– Telecom Italia is cheapest stock in sector and has no clear catalyst for sustainable outperformance, Berenberg says
– Telefonica Raised to Equalweight vs Underweight at Morgan Stanley; PT EU14
– ABB Cut to Neutral vs Outperform at Exane

RETAIL/CONSUMER/LUXURY
Cigarette consumption is estimated to be more than 6.5 trillion pieces a year when accounting for cigarettes produced and marketed illicitly, according the Tobacco Merchants Association
– LVMH wins US International Trade Commission ruling that will help it keep counterfeit Louis Vuitton handbags from entering US
– William Morrison Supermarkets says that 60% of store openings will be in southern England next year as it shifts attention from its northern heritage
– Wolseley ‘best way to play’ signs of a US housing recovery, Citi says
– Ebro Foods Raised To Outperform From Neutral at Exane

SMALL/MIDCAPS
– Strabag 1Q sales EU2.19b vs est. EU2.16b; 1Q Ebit loss EU164.7m vs est. EU165.4m; 1Q net loss EU150.5m vs est. EU129.8m
– Euler Hermes said it will no longer cover new shipments of goods to Greece due to the risk of the nation leaving the euro currency and customers defaulting on payments
– Nexity sees 2012 French property prices down 3%-4%, reports Les Echos
– aalberts Industries Rated New Buy at Berenberg; PT EU16
– Anite Rated New Buy at Jefferies; PT 155p
– Aveva Group PT Raised to 2,070p vs 1,720p at Morgan Stanley
– London & Stamford Property PT Raised to 95p vs 90p at Morgan Stanley; Kept at Underweight
– O’key Group Cut to Neutral vs Overweight at JPMorgan
– UBM Raised to Buy vs Neutral at Citi

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