The Dawn Patrol – 29.01.13 – JPM on oil (CGG, Technip…), ENI (buy), Philips numbers.


European stocks were seen edging higher on Tuesday, consolidating near two-year highs as optimism over a solid start to the U.S. earnings season was mitigated by concerns a string of upbeat U.S. economic data may bring forward the end of monetary stimulus.
Traders speculated more solid U.S. growth indicators might see the U.S. Federal Reserve pull back on its aggressive easing stimulus. They were now awaiting the outcome of a two-day Fed policy meeting due to start on Tuesday, as well as Friday’s string of data, including a key U.S. jobs report for further cues. The U.S. earnings season had also sent reassuring signals on the health of the world’s largest economy. With one third of the reporting season now complete, 73 percent of companies that have reported results that have met or beaten expectations.

The New Blackberry looks better than the iPhone 5.



Eni May Cut Stake in Galp Energia as Lock-Up Expires: Sole

Interparfums Targets 2013 Sales Growth of 16% Ex Burberry. Sales in 4Q fell to EU117.6M v EU125.8M, co. says in statement in Les Echos.

Philips 4Q Adj. Ebita Beats Estimates; Sells Lifestyle Unit. Philips transfers Lifestyle Entertainment business to Funai for EU150m, brand license fee. Repeats 2013 targets. Sees slow start of sales in 2013, pick up in 2H. 4Q rev. EU7.16b, est. EU7.20b. Net loss EU358m, est. EU280m. Adj. Ebita EU875m, est. EU866m (4 ests)

Software AG Misses 4Q, 2012 Rev., Net. 4Q rev. EU276m; est. EU289.4m (15 analysts).

Yahoo +3.5% 4Q beat and buy back announcement
VMWare (Tech) -14% misses 1Q estimates, guidance disappointing
EMC (Tech) -3.6% (majority owner of VMWare)

RENAULT. Nissan +4% joins Daimler in developing fuel cells for electric cars, with the project aimed at cutting technology costs

M&S is missing China targets set by executives, the Telegraph reports, without citing anyone


Euro periphery draws back €100bn –
Almost €100bn of private funds flowed back into the eurozone’s periphery late last year after action by the European Central Bank encouraged reinvestment in the crisis-hit countries.

US bank stress test scenarios revealed: The six largest US banks had their trading positions compared to a “global market shock” as part of the latest round of government-mandated stress tests. The Fed made public for the first time the assumptions the six banks had to use when stress-testing their portfolios, which include a doubling of German sovereign yields and a 56% drop in the price of benchmark oil contracts. The results will be publicly released in March. (Financial Times)


Pan European oilfield services (JPM, Dobbing) Top picks for 2013 – focus on backlog expansion and long term structural growth themes for outperformance
Notwithstanding the supportive oil price backdrop, an aggregate global upstream capex increase budgeted for 2013 of only 6% is the lowest seen during the eleven years that we have been conducting this analysis. This follows a disappointing aggregate order intake for European oilfield services during 2012, which has failed to trigger a return to the strong earnings upgrade cycle that was so evident during 2004-2008 and that propelled sector performance. However, upstream and downstream project bid pipelines look stronger than they have for some time – driven somewhat by the rollover of delayed contract tenders into 2013.

DIA S.A.(JPM, Aubin) Six reasons to remain Overweight DIA
We view DIA as a core long-term retail holding for investors. The company will continue to benefit from powerful structural trends in food retail – shift to proximity and discount – and is making the right changes in terms of capital allocation. We raise our PT to €6.70, implying 20% upside.

United Kingdom: Banks (GS, Thomasen) Risk rising, catalysts coming; Royal Bank of Scotland down to Sell
Regulatory rhetoric has sharpened while UK banks have rallied over recent months. Consequently, we are turning more cautious. Of the UK banks under our coverage, RBS appears most exposed to near-term regulatory risk. We downgrade the stock to Sell.

Europe: Banks (GS, Omahen) A case of positive contagion – UCI and BNP onto the Conviction Buy List
With more normal funding markets, banks are now operating in a more stable environment. We believe this warrants a lower risk premium and allows investors to refocus on banks’ core earnings power. We add BNP and Unicredit to the Conviction Buy List.

Bayer Cut To Underweight From Equalweight at Barclays
CGG Veritas Raised to Overweight From Neutral at JPMorgan
Ericsson Raised To Buy VS Hold at Deutsche Bank
Hunting Cut To Underweight From Neutral at JPMorgan
Intesa Cut To Hold From Buy at Berenberg
Investec Raised To Overweight at Morgan Stanley
Sanofi Cut To Equalweight From Overweight at Barclays
Santander Cut To Sell From Buy at Berenberg
SKF Cut to Underperform From Market Perform at Bernstein
Technip Raised To Overweight From Neutral at JPMorgan
UniCredit Cut to Hold From Buy at Berenberg
Unilever Cut To Hold From Buy at Jefferies
Wood Group Cut To Neutral From Overweight at JPMorgan


Asian markets
Nikkei 225 up +32.94 (+0.30%) at 10,857
Topix up +5.63 (+0.62%) at 919.41
Hang Seng up +4.32 (+0.02%) at 23,676

US markets
S&P 500 down -2.78 (-0.18%) at 1,500
DJIA down -14.05 (-0.10%) at 13,882
Nasdaq up +4.59 (+0.15%) at 3,154

European markets
Eurofirst 300 down -1.82 (-0.15%) at 1,173
FTSE100 up +9.96 (+0.16%) at 6,294
CAC 40 up +2.73 (+0.07%) at 3,781
Dax down -24.97 (-0.32%) at 7,833

€/$ 1.35 (1.35)
$/¥ 90.79 (90.81)
£/$ 1.57 (1.57)

Commodities ($)
Brent Crude (ICE) up +0.12 at 113.60
Light Crude (Nymex) up +0.26 at 96.70
100 Oz Gold (Comex) unchanged 0.00 at 1,652
Copper (Comex) unchanged 0.00 at 364.90

10-year government bond yields (%)
US 1.98%
UK 2.10%
Germany 1.69%

CDS (closing levels)
Markit iTraxx SovX Western Europe +1.08bps at 100.3bp
Markit iTraxx Europe +1.09bps at 106.07bp
Markit iTraxx Xover +3bps at 423.19bp
Markit CDX IG +0.89bps at 85.77bp

Sources: FT, Bloomberg, Markit


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