The Dawn Patrol – 15.01.13 – MS d/g ARM! DELL to go private. Burberry strong. GS on Flows.

Bonjour,

European markets to open flat as Bernanke painted a cautiously optimistic outlook for the U.S. economic growth but gave no clear hints on when the central bank would start to curb its aggressive bond purchases, despite speculation that it will halt this year.
Today, we’ll monitor the German CPI (in line) the UK CPI, the US Empire Manufacturing index, PPI and Retail sales. On the bonds side, Spain, Greece and others are to sell bills.

FITNESS EXERCISE
TRY THIS!!!

 

OVERNIGHT MARKETS: MIXED

OVERNIGHT MARKETS: MIXED

Asian markets
Nikkei 225 up +85.61 (+0.79%) at 10,887
Topix up +6.39 (+0.71%) at 905.08
Hang Seng down -81.06 (-0.35%) at 23,332

US markets
S&P 500 down -1.37 (-0.09%) at 1,471
DJIA up +18.89 (+0.14%) at 13,507
Nasdaq down -8.14 (-0.26%) at 3,118

European markets
Eurofirst 300 down -3.64 (-0.31%) at 1,160
FTSE100 down -13.72 (-0.22%) at 6,108
CAC 40 up +2.23 (+0.06%) at 3,708
Dax up +13.99 (+0.18%) at 7,730

Currencies
€/$ 1.34 (1.34)
$/¥ 89.02 (89.46)
£/$ 1.61 (1.61)

Commodities ($)
Brent Crude (ICE) down -0.33 at 111.55
Light Crude (Nymex) down -0.32 at 93.82
100 Oz Gold (Comex) unchanged 0.00 at 1,669
Copper (Comex) unchanged 0.00 at 361.95

10-year government bond yields (%)
US 1.85%
UK 2.05%
Germany 1.56%

CDS (closing levels)
Markit iTraxx SovX Western Europe +1.6bps at 98.55bp
Markit iTraxx Europe +1.65bps at 103.63bp
Markit iTraxx Xover +3.54bps at 426.04bp
Markit CDX IG +2.3bps at 89.38bp

Sources: FT, Bloomberg, Markit

HOT STUFF

Dell Inc. rose 0.8% after markets to $12.39, adding to 13% dayside rally on a report the PC maker is in talks to go private.

Lululemonstock was down 6.2% at $67.85 in heavy volume. The company, which makes yoga clothing and other athletic apparel, said it now expects fourth-quarter net revenue to be at the high end of its previous forecast of $475 million to $480 million. Analysts polled by FactSet currently expect revenue of $489 million.

HMV calls in administrators: Deloitte, which had been advising HMV’s lending banks, has been appointed the retailer’s administrator and will seek a buyer for the business. HMV’s request last week for additional financing from suppliers to pay for its bank debt was rejected. (Financial Times)

Portugal Telecom to Sell 28% of CTM to Citic Telecom.

UBS placing 8.8M Lufthansa shares on behalf of Bayerische Landesbank, terms obtained by Bloomberg News show

Burberry reports sales slightly ahead the consensus at 613m pnds for 3Q. Jan. 15 (Bloomberg) — Burberry Group Plc, the U.K.’s largest luxury-goods maker, lowered its forecast for second-half wholesale revenue on a decline in sales to small specialty accounts in Europe, as third-quarter sales beat analysts’estimates.

RIO announced strong iron ore, copper miss vs. guidance

CURRENT STUFF

On Bernanke
Federal Reserve Chairman Ben Bernanke said Monday the recent deal between Congress and the White House to avert the so-called fiscal cliff addresses “a good bit” of the threat to the economy posed by massive automatic tax increases and spending cuts. The fiscal cliff “probably would have caused a recession this year,” Bernanke said in a question-and-answer session with public policy students at the University of Michigan. “A good bit of that has been addressed.” Bernanke cautioned, however: “We are not out of the woods. We are approaching a number of other critical watersheds.”
Ben Bernanke U Of Michigan Speech – Business Insider http://read.bi/VXzTsc

On Greece
The Grek parliament has approved a new set measures as per international creditors request. This was a condition for the payment of the next tranche of about €9.2bn (part of the global package of €173bn).

On Europe and China
EU berates China over steel subsidies: The European Commission has concluded China is illegally subsidising makers of organic coated steel, and recommended tariffs of up to 50% be applied to imports of the materials from China, according to a report seen by the FT. This comes amid tensions between the EU and China on industries including solar panel manufacturing and telecoms equipment. It could prove relief for European steelmakers such as ArcelorMittal and ThyssenKrup. (Financial Times)

On Gold
Gold Forecasters Splitting on Peak for Bull Market: Commodities – Bloomberg http://bloom.bg/VHaH9S

UPS & DOWNS

RWE (JPM, de Blic) Earnings outlook deteriorating, debt still too high and some political risk; downgrade to Underweight
We are downgrading RWE from Neutral to Underweight and cutting our PT from €32 to €28. We think the continued fall in power prices, limited progress on debt reduction and risk of negative noise into the elections in Germany could further weigh on the shares. Our new 2014E EPS is 14% below median consensus – the 8.7x implied P/E is not compelling given the execution risk on deleveraging and LT growth outlook, in our view.

ARM Holdings Plc (MS, Meunier) Best in class but priced in
OW to EW, PT 725p to 911p | Removed from MS Best Ideas
While 12m ago investors were worried about ARM’s position vs Intel, we believe the current share price implies a near perfect trajectory in ARM’s market share and royalty rate for the next two years. As a result, we downgrade to EW and wait for a better entry point into what remains a great story.

Air Liquide, Linde Cut to Underperform From Neutral at BofAML
ARM Holdings Cut to Equalweight at Morgan Stanley ; ARM Removed From Europe Best Ideas at Morgan Stanley
Atlantia PT Cut to Eu14.2 VS Eu14.8 at Nomura; Kept at Neutral
Credit Suisse Raised to Outperform from Neutral at Exane
Hochtief Raised To Conviction Buy From Neutral at Goldman
HSBC Cuts TNT Express PT 47% to Eu5/shr
Infineon Raised To Outperform From Neutral at Exane
K+S Cut to Neutral From Buy at BofAML
Lagardere Cut to Neutral from Buy at UBS; PT EU27 Unchanged
Lufthansa Raised To Neutral From Underperform at BofAML
PEARSON added to Most preferred Media stock at UBS
RWE Cut to Underweight from Neutral at JPMorgan
SKF PT Raised 27% to Sek210 at Exane; Kept at Outperform
SKF Underperformance Can Continue, Citigroup Says; Kept at Sell
TeliaSonera Cut to Sell From Hold at Berenberg, PT Sk43 VS Sk47
TNT Express Raised to Overweight from Neutral at JPMorgan
TNT Express Raised to Sector Perform at RBC Capital
Vinci Removed From Conviction Buy At Goldman; Still Rated Buy

STRATEGY

GS (Turner) Europe Asset Managers
European Flow Monitor: Strong start to 2013 across all asset classes, not just equities
Investors are quick out of the blocks in 2013 European investors started the first ‘clean’ week of 2013 with strong allocations to equities and fixed income. Money market funds have also seen strong inflows (+€5.8bn), although we are more inclined to attribute this to seasonal factors. Cross referencing EPFR and EFAMA data, we estimate that European investors made a positive weekly net flow into equity funds of +€5.0 bn.
This is equal to the strongest week of inflows in 2012, and is the fifth strongest weekly flow seen in the past two years. 16 of the past 17 weeks have now seen positive flows into equities by European domiciled investors.

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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