The Dawn Patrol – 15.02.13 – JPM on Vol, PPR+, ENI+, JPM ups RENAULT, GS on MICHELIN, WEEK END!


(I put the results in the end. Too long).

Hope you had a great evening with your significant other…

European stocks were seen mixed on Friday following the previous session’s losses as investors combed through earnings from companies such as Commerzbank and PPR and kept an eye on the G20’s Moscow meeting. Investors will keep an eye for any potential reaction at the G20 meeting on Friday and Saturday in Moscow about recent currency swings.

Today,we’ll monitor: Eurozone Trade Balance, Spanish CPI, Italian Trade Balance, U.K Retail Sales.U.S: Empire Manufacturing, Industrial Production, U. of Michigan Confidence, Net Long-term TIC flows


Eni 4Q Adj Operating Profit EU4.96b; Analyst Est EU4.42b (I’m long ENI as it still has the best CF profile among majors, but suffers from the Saipem issues).

Abertis Seeks Partners for Airport Business, Expansion Says

Peugeot Citroen downgraded by S&P; banking unit cut to junk
Vodafone reaches agreement to cut 620 jobs in Spain.
Renault CEO optimistic this morning on French radio : 2013 to be better 2013


And another amazing result for French ski. Going skiing soon??? Don’t forget: work hard on those quads and stretch a lot (


And like Tessa Worley: eat Milka…

FILMO: Searching for Sugar Man. This is an amazing stroy and the music is great…

RESTO: L’Office. Small and friendly. EXCELLENT food.

EXPO: Yun Minjun, L’Ombre du fou rire. Worth going.


G20 finance officials/currencies: meetings are on-going today and the weekend as currencies remain in the spotlight as the main focus for investors at the moment. Today’s news is that Russian apparently seeks a “stronger currency manipulation stance” according to Bloomberg and DJ reports that “a source” said there is no mention of an individual currency in the draft communique. Today the yen climbed, ahead of the meeting on concerns the G20 will be overly critical of Japan’s attempts at weakening their currency. The euro rallies on Jens Weidmann comments that the ECB won’t cut rates to combat recent “appreciation”.

Einhorn nearly doubled Apple holdings in Q4. Regulatory filings released on Thursday show David Einhorn’s Greenlight Capital – which last week sued Apple as part of a campaign to increase returns to investors – raised its holdings in the company by 46% to 1.6m shares, including shares covered by call options. The filings do not cover any trades since the beginning of this year. (Financial Times)

Portugal sees full return to bond markets soon: “I expect we will have full market access in the next few months,” João Moreira Rato, chief executive and chairman of IGCP, the Portuguese treasury and government debt agency, told the Financial Times. (Financial Times)

Lehman and creditors want to question London Whale: “Lehman Brothers Holdings Inc. and its creditors want to question the trader known as the “London Whale” in connection with a lawsuit alleging J.P. Morgan illegally siphoned billions of dollars from the collapsing investment bank in the days before it filed for the largest bankruptcy in U.S. history.” (Wall Street Journal)


European Food Retailers (MS, Aubin) The Last Days of Empires?
We continue to favour European food retailers that are optimizing their international assets, given the value that could be unlocked and the diminishing opportunity for international expansion to create shareholder value. Carrefour and Dia are our top picks that fit this theme.

Publicis Groupe (MS, Rossi) Attractive outlook, PT raised
Strong FY12 numbers and an attractive outlook lead us to raise our EPS by 4% despite a 2% currency downgrade. Trading at 12.6x ‘14e PE, valuation is all the more attractive that PUB is net cash and excess FCF will keep building, we think. We remain buyers of PUB ahead of the April 23rd investor day.

Renault (JPM, Asumendi). Cost savings accelerate margin improvement. Upgrading to Overweight.
Upgrading to Overweight with a €55 price target. We find the large earnings upgrade irrelevant as the autos business is expected to turn the corner in FY13 from losses into profits of €490m. This is still a drop in the sea assuming Renault could make €1.5bn in earnings in FY15 thanks to its cost cutting actions leveraging on the Renault Nissan alliance without any major help from volume growth in Europe. As a result of seeing sustainable profits from Renault autos over the next two years, we upgrade our rating to Overweight (from Neutral) and Dec-13 SOTP-based price target to €55 from €50.

Michelin (GS, Puetter) Sell: Seven reasons to sell Michelin; cutting price target to €48; Sell
We cut 2013-15E EBIT by 8-10% on lower volumes, pricing and FX. Adding higher pensions, our 12-month price target falls to €48 from €60. Reiterate Sell on falling pricing and slower specialty growth. 2013E EBIT is 9% below consensus, 4% below guidance.

AB-InBev Added as a Best Idea at Citi
Ahold Raised to Buy vs Hold at Cantor Fitzgerald
Brembo Raised to Outperform vs Neutral at Mediobanca
EADS Cut to Market Perform vs Outperform at Bernstein
Finmeccanica Cut From UBS’s Most Preferred List
Finmeccanica Cut To Neutral VS Buy at UBS
Fresnillo Cut To Sell VS Neutral at Citi
Gjensidige Cut To Neutral VS Outperform at Credit Suisse
IMI Cut to Equalweight VS Overweight at Morgan Stanley
Invensys Raised To Overweight VS Equalweight: Morgan Stanley
Randgold Cut To Sell VS Neutral at Citi
Renault Raised To Overweight VS Neutral at JPMorgan
Terna PT Raised to EU3.5 vs EU3.3 at Barclays


JPM (Kolanovic) Volatility Review
Despite a significant pullback in cross-asset correlations, we believe cross-asset correlations will not decline further and are more likely to increase from these levels.
Firstly, seasonal pressure on cross-asset correlations will soon abate (this is already seen with equity correlations: with the passing of the Q4 US earnings season, stock and sector correlations bounced back from January’s low levels). Secondly, several key-cross asset correlations that defined the risk-on/risk off trading environment of the past few years did not participate in the decline. In particular, Rate-Equity Correlation is high at above 60% (~75th percentile). Credit-Equity correlation is also high at ~70% (85th percentile) and EUR vs. S&P 500 correlation increased above 50%, after briefly declining during the US election and Fiscal Cliff negotiations. The risk for our view would be actions of the Fed and ECB, as an early Fed exit could break rate-equity correlation, or a divergence of Fed/ECB policies could upset EUR vs. Equity correlation.


(I know this is too long and not very relevant, but maybe you’re on a train or something and find it convenient…)

Aker Solutions Sales Beat Est., Raised Dividend to NK4/Shr 7:14
4Q sales NK12b vs est. NK11.7b; net NK504m vs est. NK678.6m.
• 4Q order intake NK9.1b, order backlog NK56.7b end 4Q
• 4Q Ebitda NK1.2b vs est. NK1.26b

Aegon 4Q Net EU422m vs Est. EU381m; Div. EU0.11 7:33
Aegon 4Q underlying pretax EU447m.
• IGD solvency ratio 230% end Dec.
• RoE in 4Q 7.2%; tax rate 23%
• Co. to cancel all preferred shares

Eni 4Q adj. operating profit EU4.96b vs est. EU4.42b.
• 4Q adj. net EU1.52b vs est. EU1.6b
• Proposes dividend of EU1.08 total, includes interim div. of EU0.54, in line with BDVD forecast
• 4Q gas sales 25.08 bcm, down 1.5% Y/y
• 4Q refining adj. operating loss EU9m vs loss of EU268m Y/y
• 4Q, full year benefitted from dollar appreciation
• Says recovery of profitability in Gas & Power, Refining & Marketing and Chemicals divisions will “depend greatly” on management actions to “optimize” ops, improve cost position
• Expects continuing weak conditions in European gas, refining and marketing of fuels and chemicals sectors
• Demand for energy commodities expected to “remain sluggish”
• Prior outlook: On Oct. 30, Eni forecast 2012 liquids, gas output to grow Y/y, gas sales to be roughly in line Y/y
• Saw retail sales falling from 2011’s 11.37mt in Italy, Europe, reduce refinery throughput
• Call 2pm CET +39 06 33168 pw 0*

PPR 2012 recurring oper. inc. EU1.79b, est. EU1.75b (avg of 10).
• 2012 rev. up 21% to EU9.74b
• 2012 recurring net group shr up 28% to EU1.27b
• 4Q luxury comparable sales up 14%, est. up 10% (median of 8), in 3Q up 12%
• 4Q Gucci comparable sales up 8.2%, est. up 8.2% (median of 7), in 3Q up 7%
• 4Q Bottega Veneta comparable sales up 33%, in 3Q up 21%
• 4Q Yves St Laurent comparable sales up 13%, in 3Q up 27%
• 4Q other luxury brands comparable sales up 20%, in 3Q up 16%
• 2012 rev. from outside eurozone rose 12%, accounted for 78.6% of sales for the yr vs 77.9% in 2011
• Expects to pay cash div. EU3.75/shr, stock div. in Fnac shrs
• Net debt down 27% to EU2.49b
• Confident 2013 will have “robust” rev. growth, “enhanced operating and financial performances;” expects to finalize strategic repositioning in luxury, sport & lifestyle sectors


Asian markets
Nikkei 225 down -188.98 (-1.67%) at 11,118
Topix down -16.55 (-1.73%) at 938.33
Hang Seng down -30.05 (-0.13%) at 23,383

US markets
S&P 500 up +1.05 (+0.07%) at 1,521
DJIA down -9.52 (-0.07%) at 13,973
Nasdaq up +1.78 (+0.06%) at 3,199

European markets
Eurofirst 300 down -2.02 (-0.17%) at 1,164
FTSE100 down -31.75 (-0.50%) at 6,327
CAC 40 down -28.93 (-0.78%) at 3,670
Dax down -80.70 (-1.05%) at 7,631

€/$ 1.34 (1.34)
$/¥ 92.29 (92.85)
£/$ 1.55 (1.55)

Commodities ($)
Brent Crude (ICE) down -0.12 at 117.88
Light Crude (Nymex) up +0.03 at 97.34
100 Oz Gold (Comex) down -1.70 at 1,633
Copper (Comex) unchanged 0.00 at 373.00

10-year government bond yields (%)
US 2.00%
UK 2.18%
Germany 1.63%

CDS (closing levels)
Markit iTraxx SovX Western Europe -1.47bps at 100.75bp
Markit iTraxx Europe -0.97bps at 110.45bp
Markit iTraxx Xover -4.26bps at 430.74bp
Markit CDX IG -0.1bps at 85.93bp

Sources: FT, Bloomberg, Markit


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