The Dawn Patrol – 11.09.12 – On China, France and Spain. JPM on the Banking Union, Citi is bull, MS likes EM bonds, UBS plays catch up.


Markets to open down. US markets down (in low volumes) as press reports suggested that Rajoy may wait until the 0ct 21 elections before asking for help and Schaueble is opposed to the Spanish bailout ( Apple was down 2.6% ahead of the iPhone 5 launch (1/3 of the S&P 500) and INTC continued its sell off. Today, we’ll watch German unemployment numbers and prices, the French NFPs and the Dutch auction (elections tomorrow).

COTY, the US cosmetics group, has delayed plans to raise up to $700m in an initial public offering that had been set to be this year’s biggest consumer retailer debut.
GLENCORE CEO Ivan Glasenberg is still waiting for a decision from Qatar on whether it will support this yr’s largest takeover, 5 days after a late-night meeting with Emirate’s prime minister bought more time for the deal.
China’s car sales missed estimates for a second month in August – Brilliance down 2.33% … watch BMW, VOW
Airbus may not reach its sales target for A380
DEUTSCHE BANK unveils details on its new strategy and cost cutting plans today. It is being billed by the media as the biggest change in DB’s history since 2004
BHP Billiton may have $15Bn in saleable assets acc to WSJ

MS upgrades VOLVO to OW, FIAT IND to EW from OW. CS upgrade ATCOA to O/P, UBI Banca raised to OW whereas BMPS + ISP cut to UW at Barcap, UCG cut to Hold at Socgen, Gas Natural cut to Neutral vs Buy at GS whereas Drax upgraded to Buy, ITX removed from GS Conv. Buy list, RIO added to UBS’s EU Key call list (well positionned for QE), Citi like Daimler’s valuations


On China
China’s net new loans last month exceeded expectations, with the highest level of lending of any August on record. Net new local currency lending was Rmb703.9bn compared to estimates of Rmb600bn among economists surveyed by Bloomberg.

On France
French Tax Debate Spurs New Tension… Nothing you wouldn’t know if you’re French. If you’re not, it’s worth reading to understand what is going on –

On Spain
He did it again… Yesterday night Rajoy on TV: “I won’t accept them telling us which are the specific policies where we have to cut or not.”. Also, Schaeuble said that Spain doesn’t need a full bailout as Rajoy already made a lot of progress on reforming the economy.


JPM (Henriques) Europe Credit Research
The State of the Union

Previewing EU Banking Union Proposals.
In this note, JPM tries to see what will be the details to be published on the 12th of September. Should highlight policies on resolution, deposit guarantees, prudential issues and burden sharing. The Banking Union will act as a ‘wrapper’ for both new and existing proposals, including provisions that the EU has previously developed on resolution and prudential capital.

JPM warns that the political disagreement will be the main issue…

Citi (Levkovich) US Equity Strategy (from business insider).
S&P 500 Target 1,615.
As Citi’s strategist reckons, this may seem optimistic, but here are his points:
Valuations are attractive:
Fed projections are bullish:
Credit is cheap
Washington will work on the deficit:
General American awesomeness
And finally, people are way too worried about worst-case scenarios
MORE HERE: Here’s a breakdown of how Levkovich gets to 1,615

Firm Strategist 2013 Close 2013 EPS
Bank of America Savita Subramanian $109.00
Bank of Montreal Brian Belski 1,575 $106.75
Barclays Barry Knapp $105.00
Citigroup* Tobias Levkovich 1,615 $108.00
Credit Suisse Andrew Garthwaite $106.10
Deutsche Bank David Bianco $108.00
Goldman Sachs David Kostin $106.00
HSBC Garry Evans
JPMorgan Thomas Lee $110.00
Morgan Stanley Adam Parker $98.71
Oppenheimer*** John Stoltzfus
RBC Myles Zyblock $106.60
UBS Jonathan Golub $107.00
Weeden Christopher Harvey
Wells Fargo Gina Martin Adams $104.00

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