On the markets, the Euro, Asia Pac, and JPMorgan.

Hello,

Markets to open up on renewed optimism of further European policy makers moves or announcements and better than expected Chinese services PMI. Macro eyes on European PMI services, Eurozone retail sales, German factory orders (12:00 paris time) and the ISM non manf.

CURRENT THEMES

On the Markets
As grim as the macro outlook seems, investors are a bit more ambivalent on the near-term given 1) how oversold stocks are and 2) the potential for positive headline risk out of all the policy meetings/events (G7 conf call Tues, ECB meeting Wed, Bernanke Thurs, FOMC June 20, etc). While sentiment may be super negative there has yet to be an aggressive and ugly capitulation (despite the Fri action) while a pretty large group of people seem to be anticipating a near-term market bounce. There wasn’t a real reason for the late rally. S&P came out (~2pmET) and while they foresee a 1/3 chance of Greece leaving the euro, they don’t anticipate other countries following suit.

On the Euro
The Euro bounced back on hopes of renewed efforts by the European policy makers as Rajoy called for a new fiscal authority and Portugal injected €6.6bn into its largest banks. There is no Eurobonds in sight but banks capitalisation seems to be the way (WSJ article where Merkel suggests direct EU oversight for the banks) . This is not good for my UBS/SX7E trade idea… The Euro will remain volatile any way as feelings are mixed regarding another round of LTRO, ECB easing and the Fed’s next move. And as the FT highlights this morning, that a record number of Hedge Funds are positioned for further downside in the Euro. The number of short positions “ increased by 13,627 contracts in the week ending May 29, outweighing long positions by a record 203,415 contracts.”

also on Bloomberg: — S&P sees at least a one-in-three chance of Greece exiting euro zone in coming months, following national elections on June 17. Finance ministers and central bank governors from the G-7 countries will hold a call today to discuss the European debt crisis.

On Asia Pacific (it’s a shortcut)
The RBA cut its rates by 25bp to 3.5% bringing the cash rate to its lowest level since 2009. This is in line with expectations and it’s linked to the international woes which will impact Australia’s growth.
In china, the HSBC Services PMI for May came out at 54.7 vs 54.1 for April.

On JPMorgan
(Bloomberg) JPM could report a $4.2bn trading loss in the CIO division which would cut 2Q12 earnings to 65c vs 93c expected. This is the work of an ISI analyst (never heard of).

STRATEGY

JPM (Cembalest) Eye on the Market
(Mike Cembalest is the strategist of JPMorgan Private Bank. An incredible character full of knowledge, interested in everything and a great speaker).
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/05-2/Cembalest-%2006-04-2012%20-%20EOTM.pdf

EUROPEAN EQUITIES

FINANCIALS
– Barclays
was sued by Landesbank Baden-Wuerttemberg and Sealink Funding in separate cases over losses in the sale of mortgage-backed securities valued at a total of $808.7 million
– Santander
cannot be sued for allegedly putting investors’ money into Madoff’s brokerage under US law; its Chairman says that Spain should seek European money to rescue its failed lenders
– Commerzbank sees ‘good chances’ for increasing the amount of mortgages by 20% annually in coming years, as well as its market share, according to Bloomberg
– Deutsche Bank and BNP PARIBAS’ BNL may bid for Monte Paschi branches, says Bloomberg
– ZURICH INSURANCE’s Chairman says that the recapitalisation of Spanish banks is of the ‘highest urgency’
– Schroders
is said to be in talks to enter real estate lending, reports the FT

INDUSTRIAL/MINERS/SERVICES
– BHP BILLITON’s Olympic Dam expansion may not happen and is likely be slowed until commodity prices rise, says JPMorgan
– Maersk
delays its Asia-Europe peak-season surcharge to June 15th
– Rolls-Royce must face a whistle-blower lawsuit brought by two former quality-control officers claiming the company cheated the US by failing to report defence-contract product defects
– ArcelorMittal will publish a report by July 31st that includes industrial strategies for maintaining some kind of profitable activity at its Florange factory in north-eastern France, reports Bloomberg

UTILITIES/OIL/HEALTHCARE/CHEMICALS
– Elekta 4Q rev. SK3.12b vs est. SK3.22b; 4Q pretax profit SK775m vs est. SK774m; 4Q net SK574m vs est. SK518m; sees 2012/13 FY sales growth of more than 15% and FY op profit of more than 17%
– EON
received $150 million in Bank of America equity financing for a 150MW wind farm in eastern Illinois
– VERBUND and EVB are interested in Albanian hydro-power plants, reports Bloomberg
– Shell’s CEO says that it has ‘no answer’ on potential cove bid
– Repsol will have a seat on YPF’s new 17-member board after the Argentine government nationalized the oil company, according to Bloomberg
– Rosneft has hired former TNK-BP Ukraine head Didier Casimiro as VP, reports Bloomberg
– Merck’s experimental insomnia treatment suvorexant maintained its effectiveness for 12 months in study to be presented next week, says Reuters
– Fresenius is confident about its Rhoen-Klinikum acquisition, Jefferies says; Kept at Buy, PT EU95
– GlaxoSmithKline Kept at Buy at Jefferies; PT unchanged at 1,650p

TMT
– The European Commission said it put on hold plans by Germany’s telecoms regulator to set price levels for leased ultra-fast broadband lines
– British Telecom is accused by Comcast of infringing six patents related to interactive networks, data transfer and synchronizing upgrades in distributed networks
– Nokia expects sales of location-based services to grow this year
– Lagardere is to carry out an audit of Virgin Radio, reports Les Echos

RETAIL/CONSUMER/LUXURY
– Carrefour has told unions that it wants to reduce some non-food sections, according to Le Figaro; it owns 96.61% of Guyenne & Gascogne, says the AMF
– NESTLE is now selling new coffee machines as a recipe for growth

SMALL/MIDCAPS
– Aryzta 3Q sales rise 15% to EU1.17b; confirms FY underlying EPS guidance of EU3.38
– Burckhardt FY rev. SF328.9m vs est. SF348.4m; FY Ebit SF64.8m vs est SF56.9m; raises div. to SF7
– Impregilo PT Increased to EU3.7 vs EU2.8 at Mediobanca; PT Raised 14% to EU3.2 at Exane, Kept at Neutral

 

 

 

Louis Capital Markets UK,LLP
Authorised and regulated by the FSA and Banque de France
39-41 rue Cambon
75001 Paris

T +33 (0)1 53 45 10 74
E mkamir
I http://www.louiscapital.com

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