The Dawn Patrol – 21.03.13 – China, Cyprus, Fed. Oracle-, Hermes+, MS on Siemens, GS on Oil, JPM on Technip…

Bonjour,

European stocks are set to dip on Thursday as Cyprus’ debt crisis keeps investors on edge, overshadowing a pick-up in Chinese factory activity and a pledge by the U.S. Federal Reserve to maintain its stimulus programme. However, according to the Cypriot TV there could be a plan ‘B’ presented today (another version of Plan ‘A’) around 11:00 Paris time.

Today, we’ll eagerly wait for the Cyprus plan ‘B’, we’ll wonder if Hermès can do better? If Vivendi will really sell SFR, if M&S will be acquired, if it’s time to reload on AAPL… We’ll focus on some macro data with the March Flash PMIs out in Europe between 9:00 and 10:00 this morning and the US at 13:58…

Business is business….
“Ils sont forts ces Suisses”, un Fribourgeois.

CURRENT STUFF

On China

China manufacturing sentiment improves: The preliminary China PMI was 51.7 in March, HSBC and Markit Economics said, compared to 50.4 in February and an expectation of 50.8 for this month. (Bloomberg)

On Cyprus
Medvedev calls for EU rethink on Cyprus: The Russian prime minister signalled on Wednesday that Moscow was “prepared to consider various options” for providing aid to Cyprus but said the EU and Cyprus itself must come up with new, workable proposals first. A meeting between the Russian government and the European Commission is scheduled for today and Friday, now likely to be dominated by discussion on Cyprus. Asked about Russian aid in exchange for access to gas reserves, he said that was “not a simple question”. Banks will remain closed until Tuesday. (Financial Times) Four possible scenarios. (Financial Times) Russian depositors totally fed up with Cyprus now. (Wall Street Journal)

Good article in the FT: The four scenarios: 1/ Russia rides to the rescue. 2/ Cyprus backtracks. 3/The eurozone relents. 4/ The disaster scenario.

In der Spiegel: Banks on the Brink: ECB May Cut Emergency Funding to Cyprus

On the Fed
Bernanke suggests tenure could end: ““I don’t think that I’m the only person in the world who can manage the exit,” the Fed governor said when asked at a news conference in Washington if he’s discussed his plans with President Barack Obama. His term expires at the end of January.” (Bloomberg) He also gave the most explicit indication yet that the Fed was likely to slow the pace of QE3 purchases before bringing them to a halt. (Financial Times)

On France…
in the FT: Make France work

HOT STUFF

EADS. Delta Air Lines is considering buying as many as 20 wide-body jets from Airbus or Boeing with a list value of at least USD 4.3bn.

Sanofi. Investors suing the company won court approval to proceed as a group with claims the drugmaker misled them about the likelihood of US regulatory approval of its weight loss pill Zimulti

Brenntag FY Profit Beats, Sees Further Growth in 2013

Henkel May See Mid-Teens EPS Growth Via M&A, Morgan Stanley Says

Lanxess Sees 1Q Ebitda Ex Items Significantly Lower Y/y

Enel CEO Battles European Slump With Growth in Latin America

Brenntag 2012 Net Income Eu336.2m; Analyst Est. Eu322.3m

Roche Changes Accounting Policy, Sticks to 2013 Forecasts

Buy Philips, Capital Markets Day Promising More, UBS Says

Hermes 2012 Op. Profit Beats Estimates: Dividend 2.5 Euros/Share. Op. profit of EU1.119B compares with average analyst estimate of EU1.09B. Operating margin of 32% is a record since stock market listing in 1993, according to the company.

Xilinx, Infineon, Samsung, TSMC, MediaTek Top Picks: JPMorgan

Eurazeo May Plan IPO of Moncler Late 2013 or Early 2014, FT Says

Oracle shares fell 8% to $32.90 in heavy volume, with the company’s fiscal third-quarter sales coming in at $8.96 billion, less than the FactSet consensus estimate of $9.37 billion in sales. Following ORCL: SAP -2.6% (16k); RHT -2.2% (29k); CTXS -1.5% (22k); WDAY -1.3% (1k); TIBX -1.2% (3k); EMC -1.1% (150k).

UPS&DOWNS

GS on Energy: OilIntegrated: No light at the end of the tunnel; BG, ENI our top picks in the group
European Big Oils remain challenged by lack of growth opportunities, high maintenance capex, declining returns and increasing unproductive capital. We reiterate our Cautious coverage view, with BG and ENI as CL Buys and TOTAL, Shell and OMV as Sells.

SIEMENS (MS, Uglow). Siemens: Time for a Reappraisal – Disposals & Margin Gains
EW to OW, PT €90 to €99 | **Added to MS Best Ideas**

The market may be too sceptical on the potential to improve returns via selective disposals and the ‘Siemens One’ cost program. We are optimistic on both counts and see important catalysts emerging, for the first time in two years.

Technip (JPM, Dobbing) Weak order intake provides attractive entry point; SPM meeting reinforces lack of read-across TEC’s share price has struggled to recover from a sell-off triggered by what was widely viewed as negative read-across from the Saipem profit warning, and to a lesser extent from slightly disappointing earnings guidance for this year, and a slow down in awards YTD. Having met Saipem’s deputy CEO Hugh O’Donnell yesterday we remain confident that any negative read-across is unjustified, and we recommend taking the opportunity to accumulate holdings in TEC ahead of an attractive near-term outlook for order intake, and our confidence in the structural long term growth trends to which TEC is well positioned.

Beiersdorf Raised To Buy VS Neutral at Citi

Danone Removed From Citi Focus List Europe

GlaxoSmithKline Consumer Cut to Neutral on Valuation at JPM

Nestle Raised To Buy VS Neutral at Citi

Randstad Added To Ubs’s Least Preferred List, Removes Atkins

Reckitt Benckiser Added To Citi Focus List Europe

Reckitt Benckiser Added To Citi’s Europe Focus List, Danone Cut

William Hill PT Cut to 485p vs 510p at JPMorgan

Xilinx, Infineon, Samsung, TSMC, MediaTek Top Picks: JPMorgan

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +153.28 (+1.23%) at 12,622
Topix up +12.03 (+1.15%) at 1,058
Hang Seng up +15.54 (+0.07%) at 22,272

US markets
S&P 500 up +10.37 (+0.67%) at 1,559
DJIA up +55.91 (+0.39%) at 14,512
Nasdaq up +25.09 (+0.78%) at 3,254

European markets
Eurofirst 300 up +3.97 (+0.33%) at 1,199
FTSE100 down -8.62 (-0.13%) at 6,433
CAC 40 up +53.81 (+1.43%) at 3,830
Dax up +54.18 (+0.68%) at 8,002

Currencies
€/$ 1.29 (1.29)
$/¥ 95.69 (95.98)
£/$ 1.51 (1.51)

Commodities ($)
Brent Crude (ICE) down -0.08 at 108.64
Light Crude (Nymex) down -0.23 at 93.27
100 Oz Gold (Comex) unchanged 0.00 at 1,608
Copper (Comex) up +3.30 at 346.85

10-year government bond yields (%)
US 1.96%
UK 1.89%
Germany 1.39%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.98bps at 101.9bp
Markit iTraxx Europe n/abps at 118.48bp
Markit iTraxx Xover n/abps at 477.4bp
Markit CDX IG n/abps at 89.43bp

Sources: FT, Bloomberg, Markit

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