The Dawn Patrol – 21.02.13 – CAP+, ALV+, SU+, TEC-, SGO=, DIA-, AXA-. Fed more hawkish, MS on TEF, JPM on Weir, GS on TF1…


Markets to open down following the fall in US equities as the FOMC becomes more hawkish as the Fed might slow or stop the purchase of bonds. Also note that the VIX rose some 16%. Asia was down significantly too and commodities heading down as well.

Today, we’ll monitor the Flash PMIs for February in France, Germany and for Europe as well as the Markit PMI Manufacturing in the US. We’ll also have the Philly Fed, the Leading Indicators and another round of corporate earnings.

On the debt side, Spain and France will sell bonds.

Sony Unveils The PlayStation 4 … Sort Of
Read more:


VIVENDI: Maro Telecom results out, they’re in line, but the dividend is down 20% (in line with some estimates though), so may see some pressure.

EADS CEO Enders hasn’t given up on merger with BAE. FT

APPLE down another 2.42% yesterday on the news that Foxconn will freeze its hiring. I’m still not selling Apple. Am I in love with this stock? Yes, I’ve been iin love with the company’s products since the launch of the Apple ][e and I’m starting to dislike a lot of things there. But it remains a great company with strong growth, amazing margins and cheap valuation. But you know the story as well as I do…





Saint-Gobain FY-2012 results in-line at operating level; Cost savings target raised but guidance remains cautious, so consensus should come down slightly.
Axa 2012 net income missed consensus and dividend announced at 72c (BDVD forecast 73c.). Solvency ratio 233% at year end 2012 vs 188% Y/y
Allianz reports as always good numbers, beating forecasts. See 2013 op. profits at 9.2bn, dividend at 4.50eur.
Schneider 2012 Net Eu1.84b; Analyst Estimate Eu1.83b
Atos 2012 revenue in line with estimates
Technip 4Q net EUR 147m ahead of estimates, backlog rises to EUR 14.3bn. The 2013 margin guidance for Subsea is disappointing around 15% versus consensus around 17%. May be expected…

Vallourec delivers a strong Q4 thanks to strong pricing, EPS estimates slightly down on higher tax and Depreciation.

Safran Had M&A Talks on Avio; 2012 Earnings, Dividend Beat
Safran CEO Herteman says in conference call co is interested in Avio’s space engines business. 2012 adj. net income, revenue beat estimates.
• Safran retains interest in M&A if opportunities arise
• Says its space engines business is complementary to Avio’s
• 2012 adj. net income EU999m, est EU774m
• 2012 rev EU13.6b, est EU13.3b


On the FOMC
The January FOMC minutes did not paint a clear picture of the policy bias of the Committee. Although there was significant discussion of the risks around QE, which might prompt earlier exit, the level of detail on where voting members stand on QE was reduced relative to the December minutes. (GS)

On Spain
Rajoy announced the 2012 General Government deficit would be below 7% of GDP which is a positive news.

On Apple
Apple shares fell after its key supplier, Foxconn, said it had introduced a recruitment freeze over most of its Chinese factories. Apple declined to comment. Its shares were 2.4% lower on Wednesday. (Bloomberg)(Financial Times)


Telefonica (MS, Prota) Underperformance Overdone With A Positive 4Q12 Ahead
We think recent underperformance is overdone and 4Q12 should be a positive catalyst. We expect a ST bounce back for the stock. We remain EW due to in-line valuation when adjusted for Venezuela and gearing, plus ongoing ST revenue pressure.

Weir Group (JPM, Liddy) Upgraded to Overweight from Neutral
we believe frac activity is poised to rise from cyclical trough

We believe the outlook for the Oil & Gas division is poised to improve. The newsflow from some players in the fracking market is starting to perk up, particularly for flow control products. While OE frack pumps are always in the spotlight for Weir, they are likely to account for only 11% of Weir’s upstream sales in 2012. We believe the risk to forecasts is shifting to the upside. As a result of this, together with 14% upside potential to our price target and valuation multiples in-line with the sector (despite Weir’s premium returns), we are raising our recommendation to Overweight from Neutral.

TF1 (GS, Yang) Buy: Improved competitive outlook underestimated; reiterate CL Buy
We reiterate our CL Buy on TF1 as its competitive outlook is improving, which should ease pressure on its audience share and content costs. Meanwhile, the structural outlook is still sound and valuation is low, although near term ad trends are softer.

Admiral Group Rated New Neutral At JPMorgan; PT 1,246p
Barclays Raised To Outperform VS Marketperform at Bernstein
BHP Billiton Cut to Neutral Vs Buy at Citi
Bilfinger Cut To Neutral VS Buy at UBS
Drax Cut To Sell VS Hold at SocGen
PostNL Added to Benelux Favorites List at ING, Reiterates Buy
Solvay Cut To Underweight VS Equalweight at Barclays
Swedish Match Raised To Buy VS Hold at SEB
Sydbank Raised To Buy VS Hold at Nordea
Thomas Cook Rated New Buy At Jefferies; PT 155


Asian markets
Nikkei 225 down -135.57 (-1.18%) at 11,333
Topix down -11.55 (-1.19%) at 962.15
Hang Seng down -450.46 (-1.93%) at 22,857

US markets
S&P 500 down -18.99 (-1.24%) at 1,512
DJIA down -108.13 (-0.77%) at 13,928
Nasdaq unchanged 0.00 (0.00%) at 3,164

European markets
Eurofirst 300 down -3.01 (-0.26%) at 1,169
FTSE100 up +16.30 (+0.26%) at 6,395
CAC 40 down -25.94 (-0.69%) at 3,710
Dax down -23.55 (-0.30%) at 7,729

€/$ 1.33 (1.33)
$/¥ 93.43 (93.54)
£/$ 1.52 (1.52)

Commodities ($)
Brent Crude (ICE) down -0.58 at 115.02
Light Crude (Nymex) down -0.84 at 94.38
100 Oz Gold (Comex) down -18.60 at 1,559
Copper (Comex) unchanged 0.00 at 360.55

10-year government bond yields (%)
US 2.01%
UK 2.22%
Germany 1.64%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.55bps at 99.38bp
Markit iTraxx Europe -0.44bps at 110.59bp
Markit iTraxx Xover -3.57bps at 432.31bp
Markit CDX IG +2.07bps at 87.53bp

Sources: FT, Bloomberg, Markit


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