The Dawn Patrol – 16.01.13 – EU Car sales, JPM and GS on Metals & Mining. Lots of reco changes.

Bonjour,

Expect mixed markets today at the opening on global growth and 4Q12 earnings concerns. Banks to be in focus today with publications from BNY, JPM and GS.

Today, we’ll monitor the poor EU27 car registrations, EU CPI, US CPI, US IP, the NAHB housing market index and the Beige book.

OVERNIGHT MARKETS: DOWN

WHICH ONE DO YOU PREFER??

OPTION 1

MARKET SNAPSHOT AT 0611 GMT:

LAST PCT CHG NET CHG

S&P 500 1,472.34 0.11 % 1.66

NIKKEI 10,600.44 -2.56 % -278.64

MSCI ASIA EX-JP 555.68 -0.59 % -3.31

EUR/USD 1.3274 -0.22 % -0.0029

USD/JPY 88.12 -0.77 % -0.6800

10-YR US TSY YLD 1.818 — -0.02

10-YR BUND YLD 1.521 — 0.02

SPOT GOLD $1,681.20 0.16 % $2.70

US CRUDE $93.43 0.16 % 0.15

OPTION 2

Asian markets
Nikkei 225 down -217.66 (-2.00%) at 10,661
Topix down -18.22 (-2.01%) at 888.00
Hang Seng down -136.52 (-0.58%) at 23,245

US markets
S&P 500 up +1.66 (+0.11%) at 1,472
DJIA up +27.57 (+0.20%) at 13,535
Nasdaq down -6.72 (-0.22%) at 3,111

European markets
Eurofirst 300 up +0.46 (+0.04%) at 1,160
FTSE100 up +9.45 (+0.15%) at 6,117
CAC 40 down -10.90 (-0.29%) at 3,697
Dax down -53.61 (-0.69%) at 7,676

Currencies
€/$ 1.33 (1.33)
$/¥ 88.13 (88.78)
£/$ 1.61 (1.61)

Commodities ($)
Brent Crude (ICE) up +0.36 at 110.66
Light Crude (Nymex) up +0.29 at 93.57
100 Oz Gold (Comex) unchanged 0.00 at 1,683
Copper (Comex) unchanged 0.00 at 362.30

10-year government bond yields (%)
US 1.83%
UK 2.04%
Germany 1.52%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.73bps at 99.28bp
Markit iTraxx Europe +1.26bps at 104.89bp
Markit iTraxx Xover +6.92bps at 432.96bp
Markit CDX IG -0.63bps at 88.75bp

Sources: FT, Bloomberg, Markit

HOT STUFF

Global growth concerns are likely to weigh on the market after the World Bank slashed its economic forecasts for developed nations this year, predicting that the euro zone economy would shrink 0.1 percent.

CASINO 2012 rev. in-line with est., cut prices in France.

METRO 4Q Rev. EU19.4b, Confirms 2012 Profit Forecast

EUROPEAN CAR SALES Fell 16% in Dec. to 838,428, ACEA Says: European FY vehicle sales fell 7.8% to 13.59m units. VW Dec. sales -14.5%. Peugeot Citroen -19%. Ford -27%. Renault -19%. GM -27%. Fiat -18%. Toyota -21%.

UK BANKS. Britain’s banking industry and financial regulator are in talks to establish a cut-off date to end the costly stream of claims from the public relating to banks’ mis-selling of payment protection insurance (PPI), the Times reported.

FIAT. Chrysler, majority-owned by Fiat, said on Tuesday it has agreed to make Jeeps in China with partner Guangzhou Automobile Group Co Ltd, a key step toward its goal of building Jeep into a global brand. Separately, Fiat has asked the government to approve a special lay-off scheme at its Melfi plant in southern Italy so the company can restructure the factory before production of new models starts.

ENI, SNAM The Italian oil and gas group said on Tuesday it had completed the placement of 1.25 billion euros of bonds exchangeable into ordinary shares in gas transport group Snam. Underlying the bonds are some 288.7 million Snam shares, accounting for about 8.54 percent of Snam capital.

FINMECCANICA. Italy’s state-controlled defense group said on Tuesday that its AgustaWestland unit won a contract to sell eight AW159 helicopters to South Korea for 270 million euros ($360.39 million).

CURRENT STUFF

On Europe
Spain calls for Germany to stimulate:
Mariano Rajoy has called on Germany and other creditor countries in the eurozone to do more to stimulate growth, arguing that a switch to a more expansionary policy would boost economic recovery across the single currency area. “What is clear is that you cannot ask Spain to adopt expansionary policies at this time. But those countries that can, should,” he told the FT. (Financial Times)

On World growth
The World Bank has cut its global growth outlook for 2013 from 3% to 2.4%, compared to 2.3% growth in 2012. “A frustratingly slow economic recovery in developed nations is holding back the global economy, the World Bank said” (Reuters).

On China

News of a fall in foreign direct investment into China in 2012 added to the gloomy economic backdrop, ahead of Friday’s key fourth-quarter gross domestic

product (GDP) data from the world’s top metals consumer.

UPS & DOWNS

AB Inbev Cut to Reduce From Neutral at Nomura
Amlin Cut To ’Sector Perform’ at RBC Capital
Anglo American Cut To Sell at Societe Generale
ARM Cut to Underperform from Market Perform at Bernstein
ARM Holdings Cut to Neutral From Buy at UBS
Berkeley Group Raised To Buy From Neutral at BofAML
Boliden Added To Conviction Buy List at Goldman Sachs
Brunello Cucinelli PT Raised to EU14.5 vs EU12.8 at Nomura
Burberry PT Raised 14% to 1,600p at Berenberg; Confirms Buy
Campari Cut To Neutral From Buy at Nomura
Capital Shopping Raised To Neutral VS Underweight at JPMorgan
Casino Cut To Neutral From Buy at Citi; PT Kept at Eu78
Catlin Group Raised To ’Outperform’ at RBC Capital
Credit Suisse Raised To Outperform at Macquarie; PT Chf30
Deutsche Bank Raised To Neutral at Macquarie; PT Eu35.50
Enagas Raised To Buy From Neutral at UBS
Ericsson Added To Most Preferred Tech Shrs at UBS
Ferragamo PT Raised to EU19 vs EU17.5 at Nomura
Ferragamo PT Raised to Eu21.3 VS Eu19.5 at BofA; Kept at Buy
Fresenius SE Added to European Key Calls List at UBS
Inditex Raised To Buy From Neutral at Nomura
ING Group Cut to Underperform at Macquarie; PT Eu7
ITV PLC Cut to Neutral at JPMorgan
KPN Raised to Buy From Hold at Deutsche Bank
lloyds Cut To Underperform at Macquarie
Luxottica PT Raised to EU31 vs EU27.6 at Nomura
Mediaset Cut To Neutral VS Overweight at JPMorgan
Mediaset Espana Cut To Neutral at JPMorgan
Modern Times Group Cut To Underweight From Neutral at JPMorgan
MTU Aero Engines Exits Credit Suisse Smid Focus List
Novartis PT Raised 3% to Chf70 at Exane; Kept at Outperform
PPR Raised to Buy From Underperform at BofAML
Randstad Holding PT Raised to Eu28 From Eu24 at Berenberg
Safran Added To Credit Suisse Focus List
SOCIETE GENERALE Cut to Underperform at Cheuvreux
Taylor Wimpey Cut To Neutral From Buy at Citigroup
Tod’s PT Raised to Eu94 VS Eu82 at Nomura; Kept at Reduce
Vodafone Cut To Hold From Buy at Deutsche Bank
Wolters Kluwer Cut To Neutral From Outperform at Exane

Société Générale (JPM, Lee) Feedback on analyst dinner with CFO Bertrand Badré
Société Générale held a sell-side dinner yesterday, hosted by CFO Bertrand Badré. Overall message was relatively optimistic: the economic environment is clearly challenging with ongoing European sovereign deleveraging, however, the regulatory framework is becoming clearer with some positive news, and SG is in good shape and will comply with Basel 3 capital and liquidity requirements in 2013, well ahead of implementation schedule. Legacy assets have been significantly reduced to less than €10bn and the asset disposal plan is now completed with 50bp of Basel 3 Core Tier I improvement achieved.

European Metals & Mining (JPM, Jamieson) Adjusting estimates post iron ore price update – RIO remains top pick
J.P. Morgan’s Global Commodity team has increased near-term iron ore price forecasts, resulting in a material increase to our earnings forecasts for RIO, BHPB and ENRC, along with a small boost to NPVs. RIO (OW) remains our top pick, and we maintain our Neutral ratings on BHPB and ENRC.

Europe: Metals & Mining (GS, King) Recovery sparks the rally, but valuations look stretched; Hydro onto Conviction Sell List
We update estimates for our large-cap mining coverage. Boliden (Buy) is added to our Conviction List, while we downgrade Hydro to Sell and add it to the Conviction Sell List.

STRATEGY

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