On Spain, the ECB and the Fed.

Kalimera,

Markets should open today on hopes of a solution for the Spanish banks following the demand for help by Montoro. Macro eyes will be on a numer of economic data: Euro Zone GDP, German IP, US Mortgage apps and of course, the ECB meeting…

CURRENT THEMES

On Spain
Hopes of a solution for Spanish banks helped the markets yesterday and the demand for aid from Montoro may have added pressure on the slow moving politicians to take action. The question, of course, is how to get help and who from? Some press articles suggest that the ESM money may be considered to help the Spanish banks (both Cinco Dias and the Süddeutsche Zeitung). There is no detail as this seems to be work in progress and behind closed doors negotiations. We’ll monitor the NOISE, the headlines, the press. It should carry the market today. And more importtantly, we’ll watch the Spanish bonds auctions tomorrow.

On the ECB
Most expect no cut today. However, MS, BNP, CredAg expect a 25bp cut and Barclays expect some announcement about additional LTROs (June, Spet, Dec).

to read: Only So Much ECB Can Do About Crisis – WSJ.com http://on.wsj.com/L8MiTK

On the Fed
According to the voice of the Fed, Jon Hilsenrath at the WSJ, the Fed may be putting back more “action to spur the recovery“. ” Such action seemed highly unlikely at the central bank’s April meeting, when forecasts for growth and employment were brightening. At their policy meeting this month, Fed officials will weigh whether the U.S. economic outlook is deteriorating enough to justify new measures to boost growth, according to interviews and Fed speeches.”. The next Fed meeting is on June 19 and 20, which may be too soon. . http://on.wsj.com/Mh9cWr

STRATEGY

JPM (Kasman) Thoughts on a global growth downgrade
(Copied/pasted) Over the past two weeks we have lowered growth forecasts across the globe. Although the reduction in global growth for the year as a whole is modest – from 2.3% to 2.1% — the profile of growth has changed significantly as a projected lifting in the second half has been removed. Where we had previously seen global growth at 2.6% in 2H12, we now expect growth at a steady 2.1% pace over the course of the year. (Our estimate of trend is 2.7%). The absence of lift implies that the global economy will remain mired in sub-performance and has failed to lift as last year’s drags fade. With the exit from previous episodes of subpar global growth supported by a significant global monetary policy stimulus, the key question now is whether the global economy can eventually lift in a world of monetary policy constraints, fiscal deleveraging and European political turmoil?

EUROPEAN EQUITIES

FINANCIALS
U.K.’s top 5 banks may have GBP40b undeclared losses, says the Telegraph
– Commerzbank had its credit rating cut one level as Europe’s deepening debt crisis prompted Moody’s to downgrade seven lenders in Germany and three in Austria
– Bankinter’sCEO said the rigor that comes with being rescued with European bailout money would teach a lesson to the Spanish banks that need the funds.
– Generali said its director resigned after disagreeing with ouster of the insurer’s CEO
– Banco Popular
Initiated Sell At ING, PT Eu1.50
– Bankinter
Initiated Sell At ING, PT Eu2.20
Sabadell Initiated Sell At ING, PT Eu1.10
Standard Life Added to Least Preferred Insurers at BofA
AXA and Prudential Added to Most Preferred Insurers at BofA

INDUSTRIAL/MINERS/SERVICES
– BHP BILLITON considers the sale of its stake in the Guinea Alumina project; its CEO Says global uncertainty will affect commodity demand
– Vinci says the French government has decided to withdraw its status as preferred bidder for the A355 western Strasbourg bypass concession contract
– Glencore
plans to expand Philippine Associated Smelting and Refining Corp.’s smelting capacity
Deutsche Post may have to repay more aid for pension costs, reports Bloomberg
Rheinmetall Upgraded to Buy from Hold at Berenberg; PT trimmed to EU45 vs EU48
– VW and BMW Outstanding L/T Investment Opportunity, Morgan Stanley says
– Ryanair Cut to Underweight From Neutral at JPMorgan
– TGS Cut to Underweight From Neutral at JPMorgan

UTILITIES/OIL/HEALTHCARE/CHEMICALS
– Greece to make EU250m loan to power-market operator, reports WSJ
– Roche’s rheumatoid arthritis drug Actemra beat Humira from Abbott Laboratories in a study
Teva’s CEO sees share buybacks and small acquisitions
– Synthes says shares may be delisted on June 18
Novartis Phase 3, Phase 2 Studies Met Primary Endpoints
– Merck enters Global Biosimilars Partnership with Dr Reddy’s
– Statoil Fuel & RETAIL
says Alimentation Couche-Tard extended acceptance offer to June 20
Integrateds Preferred to refiners on margins outlook at Goldman

TMT
– WPP
’sCEO says pay reflects performance
– Telenor says it did not form group with Weather II when it bought shares in VimpelCom from Weather II in February
– Telecom Italia is
having its share price losses looked into by market regulator Consob

RETAIL/CONSUMER/LUXURY
– Ahold 1Q rev. EU9.7b vs est. EU9.82b; 1Q net EU282m vs est. EU304.2m
Luxury-home prices, in central London, rose the least in nine months in May
– NESTLE and Aquino to discuss expansion in Philippines, says Bloomberg
– Adidas asked to file income tax in India, reports the Economic Times

SMALL/MIDCAPS
– Impregilo
will name its UniCredit Director as Chairman, says Reuters
– Petropavlovsk Upgraded to Buy from Neutral at UBS
– Kenmare Resources
Initiated At Neutral at Goldman Sachs
Sierra Rutile Initiated At Buy at Goldman Sachs
MAN Group Raised to Buy From Neutral at Citi

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