The Dawn Patrol – 25.01.13 – MSFT=, SAMSUNG-, LTRO, LotsOfStuff…


European shares were set to fall on Friday, with a cautious tone on spending from Samsung and a sharp drop in Apple shares seen hurting tech stocks, and some investors taking profits on a major index’s 23-month highs.

Today, we’ll watch the size of the LTRO repayment at 12:00 (Paris time). It will be the first repayment of the first 3y LTRO. Could be catalyst for further outperformance of banks if the number is high (apparently consensus is around €100bn). We won’t get a breakdown by country or by bank.
We’ll also watch the German IFO, the French Jobseekers, the Spanish PPI, the UK Q4 GDP and the US net home sales.

This was a really tough week. Take time for yourself and the ones you love. There are more important things in life than the markets… Eat properly, exercise at your rythm and read.

Here is the trailer of jOBS, the first movie about Steve Jobs will land in theaters on April 19th. Why this date? It’s Apple’s birthday!

New Album by an artist I like:



MSFT Q2 Sales/EPS of $21.46bn/76c vs estimates of $21.56/75c. Shares down 1.7% After Hours. All numbers were in line. The co sold more than 60m Win8 licenses.

SEMI reports December North American semi equipment book-to-bill ratio of 0.92. Book-to-bill 0.92 in December vs 0.79 in November. Orders totaled $924.1M in December (three-month average basis), from $718.6M in November. Billings $1.01B vs $910.1M m/m

Nokia trading higher possibly on CEO comments regarding Verizon relationship. When asked if a flagship phone deal with VZ is being worked on, Elop responeded, “We are planning a lot of exciting things with Verizon as well.”

Samsung Electronics warns despite record profits: The group said its smartphone business would be hit this year by growing price competition and slowing demand in developed markets, even as it confirmed record earnings for 2012. The company’s shares fell as much as 2.9% to its their lowest level in nearly two months after it said the strong Korean currency could cut this year’s operating profit by up to 3tn Won. (Financial Times)(Bloomberg)

Lenovo considering RIM bid: The Chinese PC maker is assessing potential acquisition targets and strategic alliances, including a deal with BlackBerry maker Research In Motion, the company’s CEO said at Davos yesterday. (Bloomberg) – My expert on RIMM thinks a purchase will never happen…

Credit Agricole Gets EU32M Gain From Sale of 5.2% of Bankinter

Bank Of Italy May Approve Paschi Aid as Soon as Tomorrow

Bankinter sold 29.3m shares in private placement.

JC Decaux Q412/FY12 organic growth of +0.2%/+1.5% small beat. Beat driven by strong Transport division in Q412 (+10.3%) with double digit growth in France, the UK Asia Pac and ROW.

GDF Suez will reduce prices for households by 0.5% on Feb. 1 because of the introduction of new regulatory pricing system, Environment Minister Delphine Batho said in a statement yesterday.


On Italy

Monti under fire over bank crisis: Italy’s prime minister was forced to offer to recall parliament on Thursday amid questions about his government’s handling of the financial crisis at Monte dei Paschi di Siena and the role of the central bank. Shares in Italy’s third-largest bank by assets, which has requested a second state bailout in four years, have fallen more than 22% in the past few days since revelations five days ago of derivatives transactions that may force it to restate hundreds of millions of euros of losses. (Financial Times)

On Cyprus
Rehn warns of disorderly Cypriot default risk: EU economics commissioner Olli Rehn told the WSJ a Cyprus rescue would require substantially reducing government and bank debt, and might also necessitate winding down or merging some of the country’s banks. The acknowledgement that a more conventional bailout would leave the country with too much debt came amid intensifying disagreement between other EU members over the terms of a rescue. “It’s essential that everybody realizes that a disorderly default of Cyprus could lead to an exit of Cyprus from the euro zone,” said Rehn. WSJ

George Soros says the euro is not going anywhere. (Bloomberg)


MS on Chemicals
Adding Solvay to MS Best Ideas list with PT €145: Solvay remains our highest conviction Overweight in the sector with >25% upside and a number of catalysts in 2013 to underpin the stock’s momentum. Our bull case of €180 assumes that the group achieves its €3bn 2016 EBITDA target, which we believe is increasingly likely.
Akzo Nobel and Clariant upgraded to OW: We also upgrade the other two sector restructuring plays. With possible upside from its strategy review in February, we see top quartile EPS growth from Akzo Nobel in 2013. At Clariant, while we have some doubt as to achievability of mid-term targets, the completion of its disposals and potential structural margin improvements could provide continued momentum as portfolio mix improves.
K+S, Victrex, Wacker join existing UWs: Potential market EPS downgrades drive our K+S and Wacker downgrades, while we think strength following recent newsflow at Wacker is misguided. On Victrex, valuations are full and there is some risk to volumes through 2013.

Capgemini (GS, Borra) Buy: Mean reversion opportunity with cyclical merits; reiterate CL Buy
We reiterate Conviction Buy on Capgemini. We believe it has an attractive valuation in the context of improving data points from peers. At 10x 2014E PF EPS, the stock is trading at a c.30% discount to its 2010-11 P/E mean of 14x.

Bayer Added To Europe 1 List at BofAML
Biomerieux Cut To Neutral From Outperform at Exane
Christian Dior Cut To Neutral From Overweight at HSBC
Evraz Cut To Underweight VS Buy at BofAML
Givaudan PT Raised 7% to CHF1,080 at Exane
Hugo Boss Raised To Overweight From Neutral at HSBC
IAG Raised to Overweight from Neutral at JPMorgan
Lafarge Cut To Hold From Buy at SocGen
Lanxess Cut To Equalweight VS Overweight at Morgan Stanley
Pirelli Cut To Hold VS Buy at Deutsche Bank
Shell Raised to Buy from Hold at SocGen
STMicro Raised to Outperform from Neutral at Exane
Swatch Cut To Neutral From Overweight at HSBC
Tod’s Raised To Overweight From Neutral at HSBC
Vesuvius Rated New Overweight At JPMorgan; PT 420p
Victrex Cut To Underweight VS Equalweight at Morgan Stanley


Asian markets
Nikkei 225 up +224.41 (+2.11%) at 10,845
Topix up +14.95 (+1.67%) at 912.57
Hang Seng down -82.00 (-0.35%) at 23,517

US markets
S&P 500 up +0.01 (0.00%) at 1,495
DJIA up +46.00 (+0.33%) at 13,825
Nasdaq down -23.29 (-0.74%) at 3,130

European markets
Eurofirst 300 up +3.41 (+0.29%) at 1,171
FTSE100 up +67.27 (+1.09%) at 6,265
CAC 40 up +26.00 (+0.70%) at 3,752
Dax up +40.59 (+0.53%) at 7,748

€/$ 1.34 (1.34)
$/¥ 90.47 (90.33)
£/$ 1.58 (1.58)

Commodities ($)
Brent Crude (ICE) down -0.16 at 113.12
Light Crude (Nymex) down -0.12 at 95.83
100 Oz Gold (Comex) down -6.50 at 1,663
Copper (Comex) unchanged 0.00 at 366.45

10-year government bond yields (%)
US 1.85%
UK 2.00%
Germany 1.57%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.83bps at 100.22bp
Markit iTraxx Europe -0.09bps at 105.28bp
Markit iTraxx Xover -3.42bps at 421.8bp
Markit CDX IG +0.36bps at 86.6bp

Sources: FT, Bloomberg, Markit



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