The Dawn Patrol – 22.11.12 – Happy Thanksgiving. China PMI > 50, GS ’13 strat on IG, JPM ’13 strat on Fixed Income and more


A very quiet day ahead of us… European markets to open slightly down. The US markets rallied after the European close on low volume and lack of news.
Gold is at $1,729.9, the EURSUD at 1.2852 and RIMM took another 5%…
We’ll watch the flash PMIs in the whole of Europe between 9:00 and 10:00. Spain to auction €9bn of bonds of different maturities (’15, ’17 and ’21).

Happy Thanksgiving! Songs For Stuffing: A Thanksgiving Mix : NPR

Ferrovial Could Sell 13.6% of Heathrow Airport
SocGen May Start Closing Branches, Cut More CIB Jobs ; SocGen CIB to Outsource 400 Back-Office Jobs
SABMiller 1h Ebita $3.2bln; Analyst Est. $3.1 Bln
Schiff, Reckitt Benckiser Merger Pact Has $22m Termination Fee
Unilever Indonesia Plans 450b Rupiah Expansion
ACCC to Not Oppose Purchase by Nestle of Pfizer Nutrition
Porsche Targets China Sales to Gain at Least 10% in 2013
SANTANDER is considering an IPO of its US car financing unit, according to people involved with the effort. (Wall Street Journal)
French auto maker RENAULT plans to hire additional workers and make new car models in Spain after wrangling concessions from local unions, raising pressure on its French unions as the car maker pushes to cope with a sharp slide in its European car sales.” (Wall Street Journal)
Some questions over the numbers in HP’s AUTONOMY write-down. (NYT Dealbook)


Aegon PT Raised 4% to Eu5.6 at Barclays, Stays Overweight
Buy Compass, Valuation Still Attractive, Citi Says
Coloplast PT Raised 13% to Dk1,464 at Barclays
DIA PT Raised to Eu4.3 From Eu3.4 at UBS, Stays Sell
Dixons Retail PT Raised to 38p VS 20p at Morgan Stanley
EasyJet Raised to Equalweight from Underweight at Barclays
Impala Cut To Equalweight VS Overweight at Barclays
Johnson Matthey Raised From Neutral At Credit Suisse
Johnson Matthey Raised To Outperform at Credit Suisse
Prudential PT Raised to 1,080p from 1,040p at Berenberg


On China
The Markit Flash manufacturing PMI is back in growth mose for the 1st time in a year. It came in at 50.4 vs 49.5 last month. It’s been expected that things were getting better over there, but still an encouraging sign for the world economy and for our call on EM. The improvement is broad based: output rose, demand rose too.

On Europe
A busy day. We’ll watch the flash PMIs in the whole of Europe between 9:00 and 10:00. Spain to auction €9bn of bonds of different maturities (’15, ’17 and ’21).


GS (King) Europe: Metals & Mining

Silver to mirror gold, stocks look expensive; start Fresnillo as Neutral; Hochschild to Sell
Silver still more industrial than gold, but investment demand increasing
Silver is primarily an industrial metal, with c.50% of demand coming from pro-cyclical and GDPlinked markets. Investment demand grew rapidly in late 2010 and we expect further growth, albeit not at 2010 levels.
Stocks already reflect high expectations for silver price, trading at premium multiples Silver stocks have historically traded at a higher multiple than gold; the average 12-month-forward P/E for UK-listed silver stocks is c.21x vs. c.10x for UK-listed gold stocks. We expect this premium to decrease over time given the recent trend of rising unit costs and falling ore grades for silver.

GS (Chwatko) Investment Grade
2013 Credit Outlook
Moderate Thrills, Avoid the spills.

The search for yield has less to find
Extract: “
We are broadly constructive on IG spreads in 2013. Given tight valuations, we forecast that credit returns will only modestly exceed spread levels. This view reflects our growing comfort with the main macro systemic risks, namely the US fiscal cliff and Europe, and is dampened by our growing concern about idiosyncratic risks. In particular, we think the sustained lowyield environment will likely cause a gradual rise in releveraging events. But for 2013H1, we expect the hunger for yield to dominate such concerns. We also think trading liquidity is set to improve, driven by lower systemic risk in the Euro area and cheaper cost of funding by banks. “

JPM (Wadhwa and team) Global Fixed Income Markets
2013 Outlook

This is a chunky 272 pages report… To summarise: Go short 10Y Germany and UK on better growth prospects and lower tail risk….policy response is likely to significantly improve the outlook for European peripherals in 2013 – the fiscal consolidation burden will be smaller, ECB OMT will implicitly cap yield levels, German elections will produce risk-averse policymaking, and the negative feedback loop between sovereigns, banks and the real economy will be partially addressed. Political pressure will likely drive Spain to request OMT aid in1Q13, followed by heavy ECB buying targeting 2Y Spanish yields around 1.75-2.25%; go long front-end Spain. We highlight the degree of fragmentation between core and peripheral sovereigns/banks/economies.



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