The Dawn Patrol – 17.01.13 – Results: ASML bad. REMY, CARREFOUR: Good. APPLE is a BUY. More…

Bonjour,

European Markets expected to open slightly lower today as we await for US earnings (Citi, Intel, BoA…) and economic data from China tomorrow (GDP, IP, FAI, Retail Sales). Asia was lower

US equities finished narrowly mixed in another round of uneventful trading on Wednesday. Global growth concerns, competitive currency devaluations and the debt ceiling standoff all received some attention early on, though macro continued to wane as the big directional for the market. The economic calendar also seemed to be largely relegated to the backburner. While the earnings calendar was busier today, most of the focus remained on the banks. Tech was the best performing sector with help from a bounce in Apple. Telecom extended its recent underperformance, while materials and industrials also underperformed.

TODAY, we’ll monitor the US housing starts, jobless claims and Philly Fed. Spain and France to sell bonds.

The invitation-only professional surfing contest known as Mavericks is returning to California after a three-year wait for the right weather conditions, on a forecast for storm-churned waves as high as a two-story building… (Still waiting for the invitation).

APPLE:

I’m a buyer at these levels. Q1 numbers out on the 23rd of January and they’ll be good. Give me another company with such growth, aura and valuation. Yes, there are concerns on competition and yes Androids products are great. But it still has a lot of followers and people with Macs and iPhone will stay with Macs and iPhones. Also the iPad mini should make a killing. BMO and JPMorgan lowered their targets. And the WSJ reports that investors think Apple may have reached the time when it stops being a growth stock and starts being a value stock. The article notes that despite its P:E ratio, which is lower than the market average, many value investors think Apple is too expensive at its current level. The article also notes that Apple could spark an instantaneous change of opinion with its results next week.

EADS:

Virtually all Boeing 787 Dreamliners have been grounded by aviation regulators worldwide, after an incident with an ANA flight on Wednesday. US regulator, the Federal Aviation Administration, ordered operators of the super-advanced jet to stop flying until they could prove their batteries were safe. Shortly afterwards, regulators in all regions with airlines that operate Dreamliners — Japan, India, Chile and Europe — also ordered a halt to flights of the model. (Financial Times)(Wall Street Journal)

ASML: disappointing guidance. Flat sales is weak! This is not good. Expect some downgrades today. Otherwise, numbers are in line.

REMY GOOD NUMBERS: 3Q Organic Sales, Total Rev. Beat Est. Remy Cointreau 3Q organic sales up 0.5%, median est. -0.6%. 3Q rev. EU368.6m, median est. EU359m. Confirms target of signficantly increasing FY earnings

UPM 4Q Op. Profit Ex-Items EU138 Mln Vs EU147 Mln in 4Q 2011. UPM books EU1.77b impairment charge in paper business, of which EU783m relates to goodwill, EU987m to fixed assets; total impact on net EU1.57b. 4Q result “broadly” in line w/ outlook; paper unit op. loss ex-items EU10m in 4Q.

ILIAD’S Free Has 5m Customers, Founder Niel Says: Le Figaro

CARREFOUR GOOD NUMBERS: 2012 Rev. Beat Est., Says France Sales Improved. Carrefour 2012 rev. incl. VAT up 1% to EU86.6b, est. EU79b. 4Q sales helped by Latam, food sales; confirms improvement in trends reported in France in 3Q; S. Europe consumption pressured

SOCIETE GENERALE says “significant tightening of bank spreads” in 4Q will result in negative charges likely to exceed EU605m

ANHEUSER-BUSCH INBEV is unwilling to sell Grupo Modelo plant in Mexico as a concession to win U.S. approval of its takeover of the co., Bloomberg reports

OVERNIGHT MARKETS: DOWN

Asian markets
Nikkei 225 down -105.72 (-1.00%) at 10,495
Topix down -3.77 (-0.42%) at 884.34
Hang Seng down -107.62 (-0.46%) at 23,249

US markets
S&P 500 up +0.29 (+0.02%) at 1,473
DJIA down -23.66 (-0.17%) at 13,511
Nasdaq up +6.76 (+0.22%) at 3,118

European markets
Eurofirst 300 down -0.27 (-0.02%) at 1,160
FTSE100 down -13.33 (-0.22%) at 6,104
CAC 40 up +11.14 (+0.30%) at 3,708
Dax up +15.22 (+0.20%) at 7,691

SX5E up +0.95 (+0.04%) at 2702.54

VGA down -6 (-0.22%) at 2693 @8:06

Currencies
€/$ 1.33 (1.33)
$/¥ 88.31 (88.38)
£/$ 1.60 (1.60)

Commodities ($)
Brent Crude (ICE) down -0.13 at 109.55
Light Crude (Nymex) down -0.42 at 93.82
100 Oz Gold (Comex) down -6.20 at 1,677
Copper (Comex) unchanged 0.00 at 359.10

10-year government bond yields (%)
US 1.82%
UK 2.02%
Germany 1.49%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.55bps at 99.83bp
Markit iTraxx Europe -0.85bps at 104.04bp
Markit iTraxx Xover -3.9bps at 429.06bp
Markit CDX IG -0.09bps at 88.66bp

Sources: FT, Bloomberg, Markit

UPS & DOWNS

DRAX GROUP Raised To Outperform VS Sector Perform at RBC

ERSTE BANK Cut To Neutral VS Buy at Citi

GENERALI Cut To Hold VS Buy at Deutsche Bank

MEDIASET Raised to Outperform from Underperform at Credit Suisse

MICHELIN Removed From Most Preferred Auto Shares At UBS

OLVI Cut To Hold VS Buy at Nordea

PIRELLI Added To Most Preferred Auto Shares at UBS

SABMILLER Raised to Outperform VS Neutral at Macquarie

SAP Cut to Neutral VS Buy at Citi

TUI TRAVEL Cut to Underperform From Neutral at Exane

TUI TRAVEL Raised to Equalweight VS Underweight:morgan Stanley

European Media (SocGen)

SocGen Selects Preferred Names Among European Media Shares. Says defensives look attractive vs cyclicals (attractive divs, multiples expansion potential).

REED ELSEVIER remains top pick among publishers. WOLTERS KLUWER also looks better positioned than PEARSON. VIVENDI, LAGARDERE remain attractive special situations (opportunities to reduce discounts in 2013). Most attractive situations WPP, IPSOS, HAVAS, M6, PAGESJAUNES. Risk/reward trade-off appears either neutral (PUBLICIS, GFK, PROSIEBENSAT1, TF1), unconvincing (AXEL SPRINGER, JCDECAUX), or unfavorable (Spanish TV, MEDIASET). JCDECAUX upgraded to hold from sell

European Trucks (JPM, Whight)
Q4’12 Previews: Difficult results expected as cyclical headwinds approach their peak

We expect weak Q4 results at Volvo and MAN relative to Scania. European Freight has slowed (with the moderation in IP) diminishing the near-term incentive for road freight carriers to order new trucks. Pricing and under-absorption remain a drag on profitability, but both should ease in 2013. This, together with improvement in Europe and a rebound in Brazil, should support Truck OEM 2013 earnings growth above the sector average, in our view. We reiterate our Scania Overweight and Volvo top pick (AFL stock) given its reorganization potential, which we believe remains intact

Goldman Sachs (JPM, Abouhossein).
Q4 results solid on strong revenues, better cost mgm’t but valuation remains unattractive

GS results are very solid, both on revenues and costs. Even adjusting for one-offs and low PE Investing and Lending business, results are better than our and consensus forecasts. However, at current share price we see limited upside with GS trading at 0.9x P/NAV for RoNAV 9.8% in 2014E. The result is putting pressure on MS, CS and BARC to deliver on cost management in our view as this is the new theme that seems to develop out of the 4Q results in the IB space.

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