The Dawn Patrol – 02.08.12 – RCUBE/LCM Macro. On the Fed, the ECB. Earnings…

Mohin,

Nervous markets today… The Fed will do something later, but nothing announced last night. All are awaiting the Dark Knight… Keep your eyes on earnings, Initial claims, the ISM for NY and the Spanish bonds auction… (only for the fans: nobody expects the Spanish bonds auction… Sorry, I tried).

BNP offers a strong beat on 2Q Net (Best EU bank so far) but cautious by reaching 10% ROE, Veolia headline results look light & confirm targets, DPW report higher 2Q Ebitda and raise FY forecasts, TIT and GSZ slightly better than cons, ADS revs/net inline but margins look poor.

AFTER HOURS

MET: flat% – MetLife 2Q Operating EPS $1.33, Est. $1.24. MetLife 2Q oper. rev. $16.79b vs est. $16.81b
AEO: +5% – American Eagle Outfitters 2Q Prelim. EPS, Rev. Top Ests. American Eagle Outfitters 2Q prelim. adj. EPS 19c-21c, saw 13c-15c in May, est. 15c.
YELP: +11% – Yelp 2Q Loss Per Share 3c, Boosts Yr Rev. Forecast. YELP sees year rev. $135m-$136m, had seen sales $128m-$132m.
PRU: +1.1% – Prudential Financial 2Q adj. EPS $1.34 vs $1.54 est., rev. $11.4b vs est. $10.66b.
ANF: % – Cuts Forecast. Sees Yr EPS $2.50-$2.75, Saw $3.50-$3.75. Abercrombie 2Q prelim EPS 15c-18c vs est. 32c. Sees Gross Margin erosion of about 100bp. ANF to report full results Aug. 15

RCUBE

The LCM Global Macro Monthly publication is out. This a very informative document with many charts and well constructed rationales. The current stance is to constructive on equities where risks remain but we believe there is upside potential. This is played via a simple options strategy on the Footsie.
On credit, we remain long as this asset class is really cheap and current spreads imply way too much risk. We’re long both the EU and the US credit.

LCM – Rcube – Global Macro Monthly Report – August 2012

CURRENT THEMES

On the Fed
Modest change in wording hints at action in September if economic conditions, especially the labor market, do not improve. Also perma-hawk Lacker sounded more dovish today.
Where todays FOMC communique notably differs from June:
Now: Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed.
June:The Committee is prepared to take further action as appropriate.

On the ECB
Well… Get ready for an interesting day. The press release will be out at 13:45 Paris time, but the Press conference will be more important.
It’s still hard to guess what will come out of Draghi’s hat, but expectations are high and have been building consistently. We should see some kind of announcement whereby the ECB is more involved in lowering the yields in the periphery. So we should get some Spanish and Italian purchases today, followed by another round of LTRO with a larger scope for assets that can be used as collateral. This is the most common scenario expected by the street’s strategists…
This may disappoint markets in the first place…

OTHER STUFF

July PMI Global Roundup – Business Insider http://read.bi/Nc6PFX

Software maker Oracle has lost a breach of contract lawsuit brought by bitter rival Hewlett-Packard and may have to pay into the billions of dollars to settle the damages claim. (Financial Times)

Louis Bacon, founder of Moore Capital, plans to return $2bn from his struggling flagship fund to investors. “Mr Bacon told investors in a letter on Wednesday that uncertain and illiquid markets meant his flagship hedge fund had become too large to be able to match past returns,” reports the FT. (Financial Times)

EUROPEAN EQUITIES

FINANCIALS

RESULTS

BNP Paribas Rev. from equity, advisory ops. down 46%; FI sales down 25%; 2Q net falls 13% from EU2.13b Y/y; 2Q CIB pretax EU821m vs Est. EU748; Total retail banking profit EU1.64b in 2Q, up 0.7% Y/y ; BNP reaches 9% core cap ratio goal 6 mos. Early.

News

Generali’s Board Formally Appoints Mario Greco as CEO

AXA Unit Buys Stake in Frostkrone Holding: Capital.gr

Deutsche Bank has been picked by Russia to Manage Sovcomflot IPO

RBS UK Govt Officials Discussing Full Nationalization of RBS; Operating Profit May Drop 23% as Markets Revenue Declines

Standard Chartered Posts 11% Profit Gain, Steps Up Investing

Erste and Raiffeisen Shares Drop on Growth Concerns: Vienna Mover

BBVA’s Quarterly Profit Slumps on Spain Real Estate Purge

RBS Operating Profit May Drop 23% as Markets Revenue Declines

Hartford Reports $101 Million Loss on Cost Tied to Allianz

Reco

Scor SE Raised to ‘Outperform’ at Keefe Bruyette

INDUSTRIAL/MINERS/SERVICES

Results

News

BMW US Sales Rise 4% in July

Fiat Suspends New Investments in Italy Because of Europe Crisis

Mercedes-benz USA July Total U.S. Vehicle Sales up 13.8%

Antofagasta Quarterly Output Rises 9.1% on Esperanza Ramp-Up

BHP May Reduce Planned Iron Ore Port Expansion, Investec Says

ENRC Quarterly Chrome, Iron-Ore Output Falls on Repair Work

Anglo Gets 85% of De Beers as Botswana Declines to Add Stock

Hydro Plans to Shut Down Loss-Making Remelting Aluminum Capacity

EADS to Form Partnership for Plant in Portugal

Ferrovial Wins 2 Billion-Pound Highway Contract in the U.K.

Glencore Will Probably Raise Xstrata Bid in Aug., Jefferies Says

Reco

Pirelli Rated New Buy at UBS; PT EU10

UTILITIES/OIL/HEALTHCARE/CHEMICALS

Results

Veolia Says Cost Cuts Are in Line With 2012-13 Targets; 1H rev. up 3.3% to EU14.8b vs est. EU14.6b; 1H net income EU153m vs loss of EU67m Y/y; 1H adj. operating cash flow down 9.7% Y/y to EU1.38b.

FUCHS 2Q rev. EU461.6m, est. EU447.7m; 2Q Ebit EU72.9m, est. EU71m; Confirms Outlook

News

OMV Petrom Says Bulgaria Terminates Antitrust Probe

Repsol Finds 2.5t Cubic Feet of Gas in Peru: Minister

Shire Firazyr Seen Taking Share From ViroPharma’s Cinryze: BofA

Bayer-Dow Fight Over Herbicide-Tolerant Corn Heads to Arbitrator

AstraZeneca Combination Improves Breast Cancer Survival in Study

Anglo Gets 85% of De Beers as Botswana Declines to Add Stock

TMT

Results

TELECOM ITALIA 1H sales EU14.8b vs est. EU14.8b ; 1H Ebitda EU5.86b vs est. EU5.90b ; 1H Net EU1.25 bln; analyst est. EU1.19 ; reiterates FY target of stable sales,

Ebitda Y/y ; Says dividend policy is sustainable.

RETAIL/CONSUMER/LUXURY

Results

Adidas 2Q Rev. In-Line, Net Beats; Adidas 2Q rev EU3.52b, EU3.51b.; 2Q net EU165m, est. EU157m; 2Q gross margin down 0.9% ppt to 48.2%, est. 48.6%

Dia 1H net EU49.3m vs EU6.77m Y/y.

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