The Dawn Patrol – 20.02.13 – JPM ups MTU, MS ups DAIMLER, Earnings: LG+, ACA-, BLT=, TF1-, FTE-, DSM-, DB1-, KD8+


Markets expected to open flat following yesterday’s strong gains as we need to go through another patch of earnings and ahead of the Italian elections. Will this rally last?

To date, with around a third of STOXX Europe 600 companies having reported full-year results, 40 percent have missed on earnings, prompting analysts to downgrade 2013 forecasts by 2.3 percent, according to Thomson Reuters StarMine (Reuters).

Today,; we’ll monitor the German PPI & CPI, the French production outlook indicator, INSEE business confidence and CPI, the BoE minutes, the US MBA mortgage applications and housing starts. We’ll also monitor the Fed minutes.
Germany to sell €5bn 10y notes and Portugal to sell some 84 day bills.

The guns to Caviar index and other interesting economic data… (not very relevant…)


The letter from Titan to Arnaud de Montebourg, the French Minister of Industrial Renewal (???):

CVC Capital Partners and BC Partners have teamed up to launch a buyout of Elior. (Financial Times)

Dell profits fall but LBO objections remain: A Q4 profit decline of 31% and revenues that were 11% lower were still strong enough to bolster investors who believe the plan to take the computer maker private undervalues Dell. (Wall Street Journal)

China’s FDI fell for the eight consecutive month. January foreign direct investment was 7.3% lower than a year earlier. (Bloomberg)

BP wins approval to cut potential spill fine by $3.4b


LG+, ACA-, BLT=, TF1-, FTE-, DSM-, DB1-, KD8+

HAVAS organic growth is a bit light at 1.1% with France and Europe deteriorating, but US better. Not great…
CREDIT AGRICOLE reports worse than expected loss on write downs 4Q loss EUR 3.98bn vs. consensus EUR 3.69bn, company made EUR 2.67bn of goodwill write downs. THIS IS on GREECE’s emporiki, underlying numbers not too bad. Stock expected to open -1%.
Lafarge 4Q EBITDA ahead of consensus, sees 2013 cement demand moving higher
Deutsche Boerse 4Q revenue EUR 447.7m, consensus EUR 483.8m, 4Q Ebit EUR 185.2m, EU193.6m
Akzo Nobel Q4 2012 results. Q4 EBITDA reported at EUR363m, -2% versus consensus, +2% year on year.
Kabel Deutschland 3Q sales beat estimates, raises dividend
Accor gives plans to cut debt, improve margins by 2016, 2012 EBIT EUR 526m vs. consensus EUR 527m
DSM reported lower 4Q net and revs
TF1 Good FY12 results. Short term outlook remains “very poor”, as French TV mkt remains among the most competitive in Europe

France Telecom FY sales inline and takes 1.84bn goodwill impairment – CFO`less optimistic’ end of price war (Iliad, Vivendi been slashing prices)

DELL: reported fiscal 4th quarter sales and profit that topped analysts’ estimates (EPS 40c vs 39c est, revs $14.31Bln vs $14.14Bln). Shares are up 0.3% in after-market.


On Spain
Last night Moody’s said that Spanish banks will still face funding and liquidity pressures in coming months “We still consider that liquidity and funding will continue to constrain banks’ credit profiles over the coming months,… while recognizing the decline in the system’s overall financing requirements, Spanish banks continue to display wholesale funding reliance at a time when accessibility to long-term wholesale markets, while improving, has not normalised.” S&P made similar comments recently, reads like house-keeping it is unlikely to have impact on SPGB spreads or the IBEX today.

On the currency War
Note by GS’ Kamakshya Trivedi. Depreciations in the JPY, GBP and, to a lesser extent, the CHF have prompted talk of “currency wars”. The FX moves have been sharp, but they are only one dimension of a broader story that includes a fall in real rates, steeper nominal curves and the outperformance of the more domestic-facing equity sectors. Together, these moves are more consistent with a bout of monetary easing than with a “currency war”.


Daimler (MS, Pearson) Still in the Race; Move to EW
With expectations the lowest since the 08-09 crisis, and a leaner investment period ahead, Daimler looks ripe for a re-rating as FCF improves. We upgrade to EW, but stop short of a more positive stance due to ongoing concerns over Daimler’s China and smaller-car franchise.

Europe: Energy: Oil (GS, della Vigna) Integrated: 4Q12 takeaways: Poor results and outlook; ENI and BG better placed
The 4Q12 reporting season has been generally poor for the European integrated oils on all fronts (earnings, guidance and reserve replacement), supporting our Cautious view on the sector.

MTU Aero Engines (JPM, Perry, CFA) Upgrading to Overweight on better than expected outlook for 2013
MTU has guided to 2013 EBITA of EUR412-419mn, 4-5% below consensus (compiled by MTU) of EUR435m, and just below our estimate of EUR423mn. However, in each of the last three years MTU has beaten its initial EBITA guidance by 5-6% on average (Table 2). We are raising our 2013/14/15E EPS by 6%/5%/5%, on EBITA estimates up c2% pa and lower than expected guidance for the finance line (Table 3). We increase our Dec-13 PT to EUR83.5 from EUR80, giving potential upside of 18%. We upgrade to Overweight.

MS upgrade DAI to EW, up InterContinental’s EPS post strong results and reiterate UW on Danone. JPM upgrading MTU to Overweight on better than expected outlook for 2013, TF1 cut to Neutral at Citi, GS reiterate CL buy on TNT


Asian markets
Nikkei 225 up +92.50 (+0.81%) at 11,465
Topix up +8.71 (+0.90%) at 972.32
Hang Seng up +29.28 (+0.13%) at 23,173

US markets
S&P 500 up +11.15 (+0.73%) at 1,531
DJIA up +53.91 (+0.39%) at 14,036
Nasdaq up +21.56 (+0.68%) at 3,214

European markets
Eurofirst 300 up +12.44 (+1.07%) at 1,172
FTSE100 up +60.88 (+0.96%) at 6,379
CAC 40 up +68.78 (+1.88%) at 3,736
Dax up +123.72 (+1.62%) at 7,752

€/$ 1.34 (1.34)
$/¥ 93.42 (93.54)
£/$ 1.54 (1.54)

Commodities ($)
Brent Crude (ICE) down -0.24 at 117.28
Light Crude (Nymex) down -0.05 at 96.61
100 Oz Gold (Comex) up +3.30 at 1,607
Copper (Comex) unchanged 0.00 at 364.45

10-year government bond yields (%)
US 2.03%
UK 2.20%
Germany 1.63%

CDS (closing levels)
Markit iTraxx SovX Western Europe -1.42bps at 99.93bp
Markit iTraxx Europe -1.95bps at 111.03bp
Markit iTraxx Xover -4.02bps at 435.88bp
Markit CDX IG -1.5bps at 85.46bp

Sources: FT, Bloomberg, Markit


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