The Dawn Patrol – 28.03.13 – Chinese banks, Blackberry, Cyprus. JPM on Iliad, MS on BASF, GS on oil services.


European futures very slightly down. US markets slightly down y’day with banks down on US concerns. Chinese banks and property developers getting slammed, Shanghai down 2.3% on new banking regulations and property curbs. Volumes are c. 15%/20% lower this week as its a short week and Passover.

SX5E Futures: 2548.00y -29.00. Support at 2524 then 2509. Resistance 2556 then 2578

Today, in Cyprus, we’ll look at footages of Cypriots queuing to get their money out of the banks as they reopen. In Italy, the political mess will continue as Mr Bersani is failing to form a government . We’ll also monitor Blackberry numbers (which are not a reason to buy the stock! We bought in November to play the buzz, next we’ll get some if we see some sales traction).

On the macro front: Eurozone M3/M1, German Retail Sales, German Unemployment, Italian Economic Sentiment and in the US: 4Q GDP, Initial Jobless Claims, Chicago Purchasing Manager.


FILMO: Nothing to see in theatres this week…

RESTO: L’Entredgeu, 83 rue Laugier 75017 Paris. Great food, cheap prices.



I know I’ve let you down somewhat, but with all the skiing, there was no need to train. Now… Enough is enough! Get back on your feet. Go running, go yoga, go boxing… Whatever. Summer is here. Get this book:


Moody’s: Portugal rating affirmed owing to ‘significant’ progress in fiscal consolidation. Portugal’s Minister for State and Finance, Sandra Gaspar said [Portugal] will seize on coming market opportunities for bond issuance. BBG

Air France has filled its existing ground staff departure plan for 2,767 employees and may introduce a further plan in coming months. La Tribune

Deutsche Telekom. Institutional Shareholder Services, an investor-advisory firm, recommends against T-Mobile USA’s merger with MetroPCS Communications. BBG

German unemployment declines by 2,000, keeping rate unchanged, according to economists.

VTB Group to Acquire Tele2’s Russian Phone Unit for $2.4 Billion

Barry Callebaut Plans to Raise Shr Capital, Elect 2 Brd Members

Sanofi Drug to Treat Polycythemia Vera Gets FDA Orphan Status


On Cyprus

Cyprus imposed severe capital controls: “Cyprus is to become the first eurozone country ever to apply capital controls – with limits on credit card transactions, daily withdrawals, money transfers abroad and the cashing of cheques – intended to prevent a vast outflow of euros when its banks open on Thursday. Under drastic measures that some analysts say are incompatible with monetary union, depositors would be able to withdraw no more than €300 in cash each day, said people familiar with the move. Transfers over €5,000 would require permission of the central bank.” (Financial Times)

On Cyprus II

Mohamed El-Erian, CEO of Pimco, says risk of bank run exists predominantly in Cyprus and must be monitored as it will difficult to avoid contagion once it starts, Bild reports. 2nd aid package for Cyprus brings improvement though transformation will be “anything but easy”: El-Erian. Euro leaders still have to make a fundamental decision on whether they want a smaller, more homogeneous currency union or want to find a more long-term and wider plan to support weaker euro-area members: El-Erian

On Italy

Effort to Form Italian Coalition Falters. Democratic Party leader Bersani’s attempts to form a governing alliance stumbled, prompting him to say “only an insane person would have the itch to govern Italy right now.” (WSJ)

On China
The rules issued Wednesday by China’s banking regulator came as China’s four biggest state-run banks said they had more than 3 trillion yuan ($467 billion) worth of such products outstanding at the end of last year. They are typically short-term investments that banks market as a high-yield alternative to bank deposit rates, which are kept low by the government. About half are invested in low-risk assets such as government and corporate bonds and money-market products, according to research firm Cnbenefit. But many others are backed by everything from loans to developers to accounts receivable to valuables such as gold and jewels. (WSJ)

To Read
Suspicious transactions: Cypriot parliament investigating capital flight. Spiegel

Crisis in France: Hollande failing to handle unemployment. Spiegel


Iliad (JPM, Wittig) EBITDA growth visibility. Remaining Overweight but removing from AFL
Iliad’s shares have been strong, but so was the second half 2012 performance. We believe the stock remains attractive due to its EBITDA growth potential. We emphasize the visibility of this growth and the shareholder returns potential it opens up. While we remain Overweight, we remove Iliad from the European Analyst Focus List because operating momentum should now slow a little, and because the stock is trading not too far from our YE2013 price target of €180 (up from €160).

BASF(MS, Walsh) Attractions Increasing Post Recent Sell Off
BASF’s ~10% share price correction indicates the relative attractions of the shares are increasing amid a volatile environment for European chemicals stocks. A 4% dividend yield, ~10x PE and >7% FcF yield for 2014e support this view, on our numbers.

Europe: Energy: Oil Services (GS, Tarr) Sector growth still challenged; SBM Offshore to CL Buy
We believe a flat oil price environment will lead to lower growth and we are 6%/10% below consensus in aggregate for the sector in 2014/15E. We add SBM Offshore to the C. Buy list in place of Saipem, and downgrade Wood Group and Subsea 7 to Neutral.

ALSTOM Lowered to Neutral at Exane

Barratt Developments Raised To Neutral At JPMorgan

Bellway Raised To Overweight Vs Neutral At JPMorgan

Bellzone Mining Cut To Hold Vs Buy At Canaccord

Bg, Croda Cut From Goldman’s Directors Of Research List

Bovis Homes Raised To Neutral Vs Underweight At JPMorgan

Energias De Portugal Cut To Sell Vs Hold At Socgen

H&R Ag Cut To Sell Vs Buy At Bankhaus Lampe

Hamburger Hafen Raised To Hold Vs Sell At Independent Research

Heineken Reinstated Neutral At Credit Suisse, Pt Eu63

Homeserve Cut To Hold Vs Buy At Jefferies

Ifs Raised To Buy Vs Sell At Nordea

Kghm Raised To Overweight Vs Neutral At JPMorgan

Lsr Raised To Neutral Vs Underweight At JPMorgan

Paddy Power Cut To Hold Vs Buy At Jefferies

Polski Holding Rated New Neutral At Ubs, Pt 27 Zloty

Ryanair Raised To Buy Vs Neutral At Citi

Saipem Cut From Conviction Buy List At Goldman, Still A Buy

Salamander Energy Rated New Accumulate:Tudor Pickering(Earli…

Sbm Added To Conviction Buy List At Goldman

Subsea 7 Cut To Neutral Vs Buy At Goldman

Taylor Wimpey Raised To Overweight Vs Neutral At JPMorgan

Valeo Cut To ’Underweight’ At HSBC

Wood Group Cut To Neutral Vs Buy At Goldman


Asian markets
Nikkei 225 down -173.29 (-1.39%) at 12,321
Topix down -14.93 (-1.43%) at 1,032
Hang Seng down -250.21 (-1.11%) at 22,215

US markets
S&P 500 down -0.92 (-0.06%) at 1,563
DJIA down -33.49 (-0.23%) at 14,526
Nasdaq up +4.04 (+0.12%) at 3,257

European markets
Eurofirst 300 down -4.51 (-0.38%) at 1,184
FTSE100 down -11.81 (-0.18%) at 6,388
CAC 40 down -37.00 (-0.99%) at 3,712
Dax down -90.58 (-1.15%) at 7,789

€/$ 1.28 (1.28)
$/¥ 94.16 (94.43)
£/$ 1.51 (1.51)

Commodities ($)
Brent Crude (ICE) up +0.24 at 109.93
Light Crude (Nymex) up +0.04 at 96.62
100 Oz Gold (Comex) down -1.10 at 1,605
Copper (Comex) up +1.35 at 344.85

10-year government bond yields (%)
US 1.84%
UK 1.75%
Germany 1.27%

CDS (closing levels)
Markit iTraxx SovX Western Europe +2bps at 104.71bp
Markit iTraxx Europe +5.3bps at 128.42bp
Markit iTraxx Xover +9.22bps at 491.29bp
Markit CDX IG +2.08bps at 92.49bp

Sources: FT, Bloomberg, Markit


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