The Dawn Patrol – 01.10.13 – GS on Autos, JPM bull (after GS, MS) on SAP. Japanese stimulus. Infosys:+++

Bonjour,

European markets to open up today following the US and the $166bn Japanese economic stimulus.

Today, we’ll monitor the French Current Account balance, the UK’s IP and manufacturing data and in the US the trade balance. Wells Fargo to publish today.
Italy to sell between €2.75 and €3.5bn of 2015 bonds.

What to do this Week End if you’re stuck in Paris?
Go and see Django Unchained, get out and exercise, don’t find excuses… and if you have timego see this exhibit at le Musée d’Orsay: (click)

 

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +157.16 (+1.48%) at 10,810
Topix up +9.10 (+1.02%) at 898.12
Hang Seng down -61.05 (-0.26%) at 23,293

US markets
S&P 500 up +11.10 (+0.76%) at 1,472
DJIA up +80.71 (+0.60%) at 13,471
Nasdaq up +15.95 (+0.51%) at 3,122

European markets
Eurofirst 300 down -3.33 (-0.29%) at 1,165
FTSE100 up +2.86 (+0.05%) at 6,102
CAC 40 down -14.33 (-0.39%) at 3,703
Dax down -12.00 (-0.16%) at 7,708

Currencies
€/$ 1.33 (1.33)
$/¥ 89.06 (88.78)
£/$ 1.61 (1.62)

Commodities ($)
Brent Crude (ICE) down -0.30 at 111.59
Light Crude (Nymex) up +0.02 at 93.84
100 Oz Gold (Comex) unchanged 0.00 at 1,677
Copper (Comex) unchanged 0.00 at 369.45

10-year government bond yields (%)
US 1.91%
UK 2.11%
Germany 1.57%

CDS (closing levels)
Markit iTraxx SovX Western Europe -3.12bps at 98.61bp
Markit iTraxx Europe -0.32bps at 102.58bp
Markit iTraxx Xover -2.51bps at 422.83bp
Markit CDX IG -0.47bps at 86.28bp

HOT STUFF

· ECB Damps Talk of New Stimulus. A united European Central Bank sent a strong signal that it is unlikely to cut interest rates despite economic contraction and record unemployment, suggesting the euro-zone economy must find its own footing without additional ECB help.

· Italy: Berlusconi claims Italy is not a country that can be governed (he would know) BBG

· ATLANTIA press says a bid for GEMINA to include stock, cash outlay could be less than 700mm. Total deal is worth €1.1bn at current market prices. Shareholders could vote on merger by end-April (Reuters). Market sees €300mm synergy from the deal Sole24Ore)

· SAP unveils most significant overhaul to its mainstay enterprise software in two decades

· ROCHE says liquid Tamiflu for children in short supply in U.S.

· RIM Cut to ‘Underperform’ at BMO Capital Markets

· INFOSYS raises full-year revenue outlook. The company raised its revenue forecast for the full year ending in March to at least Rs407.46bn, from a previous forecast of Rs395.82bn. Positive for CAPGEM and all IT services companies;

· JOHN LEWIS Weekly Sales Rise 21% to GBP199.3m

· VEOLIA Seeks Cost Cuts in Water, New Growth Markets, Figaro Says

· BOUYGUES Has Injected EU678M Into Bouygues Telecom: L’Agefi

· China 2012 Passenger Car Sales Rise 7.1% on Year: Caam

· CHEVRON shares moved up 0.8% to $111.30 following the company’s projection that its fourth-quarter earnings will be “notably higher” than in the third quarter.

· AMERICAN EXPRESS shares turned lower, trading down 0.5% at $60.50. The shares had been up by 1% as the company outlined plans to eliminate about 5,400 jobs this year. The move would bring its overall staff levels down by 4% to 6%, and Amex will take a related fourth-quarter, $400 million restructuring charge. Fourth-quarter profit at Amex came in at 56 cents a share. Excluding charges, the company said adjusted earnings were $1.09 a share. A Thomson Reuters survey of analysts produced an estimate of $1.06 a share.

· JERONIMO MARTINS 2012 sales up 10.5% to Eur 10.88bn YoY

CURRENT STUFF

Japan unveils Y10.3tn stimulus: Japanese prime minister, Shinzo Abe, unveiled a Y10.3tn ($116bn) economic stimulus package that the government expects will lift the country’s gross domestic product by 2% and create 600,000 jobs. Y3.8tn will go towards disaster prevention and reconstruction after the March 2011 tsunami and earthquake, while Y3.1tn will be allocated for wealth creation, through measures to improve the competitiveness of Japanese industry and stimulate innovation. Another Y3.1tn will go towards social security such as healthcare and education as well as regional revitalisation.(Financial Times)(Bloomberg)

China’s inflation accelerates after cold spell: The CPI index rose 2.5% in December from a year earlier, compared to a 2.3% median estimate from economists surveyed by Bloomberg. November rise was 2%. The nation’s coldest winter in 28 years pushed up vegetable prices in particular. (Bloomberg)(Financial Times)

Other Stuff
Bill Gross increases Treasury holdings to highest level since July.(Bloomberg)
Fed hawks worry about… inflation. (Reuters)
The Two Things That Could Kill The Current Market Rally http://read.bi/WwJnXB
Credit Suisse 2013 Global Growth Forecast | The Financialist http://bit.ly/11lvq64
This has nothing to do with anything, but a python embarked on a Qantas plane yesterday: http://media.smh.com.au/selections/snake-clings-to-wing-of-qantas-flight-3943179.html

10 best selling videogames in 2012 http://on.mktw.net/VP1pbj

CES 2013 Thursday: Highlights of the Day’s http://on.wsj.com/Ua1ZOV

UPS & DOWNS

Autos (GS, Burgstaller) More re-rating to come; Conviction Buy ideas for 2013: Daimler, Volvo and Valeo.
With Autos trading at 10-year relative lows, we maintain our Attractive coverage view. New Conviction Buys are Daimler, Volvo and Valeo. We downgrade Conti and Nokian to Neutral, and Michelin and Pirelli to Sell. We upgrade Scania and MAN to Neutral.

Metso (MS, Almerud) Overweight: Expectations too low, compelling risk-reward
Assume at OW, PT €40 | Added to MS Best Ideas

At this level we think the market is still mispricing the effect of changing mix on Metso’s margins, as Service revenues outweigh Equipment. Our base case 2014 numbers are 15% above consensus and there are plausible catalysts to bring our bull case EPS of ~€3.50 into sight. We assume at OW, €40 PT.

SAP (JPM, Pollard) Business Suite on HANA much earlier than expected
In a special press conference today, SAP announced that the full Business Suite on HANA will be made generally available by the end of 2013, through a staged release over the course of the year. Previous guidance with respect to the possible timing of the release of full Business Suite on HANA was that ERP (Enterprise Resource Planning) on HANA (one significant component of the full Business Suite) was due for release at some time in 2013, and that the full Business Suite would be the next significant HANA product release (we had previously anticipated by 2014 or 2015). So SAP is saying that they are releasing the full Business Suite on HANA about a year earlier than we (and we think much of the market) had been expecting, and this is likely to lead to upward revisions to HANA revenue estimates.

ARKEMA Cut to Neutral From Buy by Citigroup
ASSOCIATED BRITISH FOODS Cut To Neutral VS Buy at BofAML
AVIVA Raised to Buy From Neutral by Citigroup
BHP BILLITON (London Listed) Cut to Underperform at BofAML
BMW Cut to Neutral From Buy at Goldman
BUNZL Raised To Neutral From Sell at Goldman
CARREFOUR Reinstated Underperform at BofAML
CASINO GUICHARD Reinstated Buy at BofAML
CONTINENTAL Cut To Neutral From Buy at Goldman Daimler Added To Goldman Conviction Buy List, Was Buy
DELHAIZE Cut To Neutral From Outperform at Exane
EDF Cut to Underperform From Neutral at Credit Suisse
JERONIMO MARTINS Reinstated Underperform at BofAML
MAN SE Raised to Neutral From Sell at Goldman
METRO Reinstated Buy at BofAML
MICHELIN Cut To Sell From Neutral at Goldman
MORRISON Reinstated Buy at BofAML
NESTLE Raised To Buy VS Neutral at BofAML
PIRELLI Cut To Sell From Neutral at Goldman
SAINSBURY Reinstated Underperform at BofAML
SALZGITTER Cut To Neutral at Credit Suisse, PT Eu42
SCANIA Raised To Neutral From Sell at Goldman
SKY DEUTSCHLAND Cut To Neutral VS Buy at BofAML
TESCO Reinstated Neutral at BofAML
VALEO Added To Conviction Buy List at Goldman, Was Buy
VOLVO Raised To Conviction Buy From Neutral at Goldman
VW Removed From Conviction Buy List at Goldman, Stays Buy
ZIGGO Rated New Underperform At BofAML, PT Eu21.50

Max Kamir

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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