The Dawn Patrol – 02.04.13 – On US data, Cyprus, Italy, France. Apple off GS’s conviction list, GS cuts Alstom to sell… More.

Hola,

European stocks to open lower today as while we were resting and celebrating Easter (happy Easter by the way), other equity markets dropped on poor manufacturing data in the US and China.

SX5E Futures: 2554.00y 6.00 . Support at 2556 then 2524 & 2509. Resistance 2564 (gap) then 2578 & 2608/11

Today, we’ll start a new diet program (that’s the purpose of diet programs, to be repeated after every holiday, or every Monday). We’ll digest the poor US ISM number which came in at 51.3 vs 54.2 in February while the consensus was expecting 54.

Global equity markets started the second quarter on a cautious note, as weak manufacturing data in the US and China offset demand for growth assets. Wall Street is heading lower, following earlier losses in Asia, after an unexpected slowing in US manufacturing growth. But the housing market was better.
In Europe, we’ll wait for the European PMI and we’ll wait for some announcement in Italy as Napolitano is expected to meet with advisers following Bersani’s failure to form a government.

DATA: EU: PMI Manufacturing Final, Euro Area Unemployment Rate, German CPI, US: ISM New York, Factory Orders, Auto Sales.

Slovakian cyclist pinches backside of ‘podium girl,’ later apologizes after heavy criticism
(I was going to post here about the blood type diet, but it’ll wait).

 

NEWS

BMPS. Monte dei Paschi announced on Saturday that customer’s deposits fell by “a few billion euros” after a scandal erupted in February over loss-making derivatives trades at the lender, the bank said in a document posted on its website. Reuters

EADS. IAG in talks to buy Airbus A350 jetliners for BA unit..

APPLE removed from GS’s Americas Conviction Buy List… (more below);

Spain to Sell Hispasat Stake to Abertis for EU235m, Mundo Says

Glencore Says Talks W/ China Are Now In Final Stages

UBS Carrying Out Due Diligence on Possible Sale of Ex-Renco Unit

CURRENT STUFF

On North korea
President Park Geun-hye has told the South Korean military to respond strongly to any North Korean provocation, in Seoul’s strongest warning yet to Pyongyang. North Korea on Saturday said it had entered a “state of war” with South Korea, raising the stakes on the peninsula, which has been divided since the Korean war. The announcement came as the US and South Korea conduct military exercises. FT

On Cyprus
Slight easing of Cyprus bailout terms:
A draft copy of the loan agreement by the eurozone and the IMF seen by the WSJ gives Cyprus until 2017 — one year longer than previously negotiated — to reach a 4% primary budget surplus. “Putting public finances on a sustainable path is of overriding importance in order to stabilize the economy and to restore the confidence of companies, citizens and foreign investors in the longer-term economic prospects of Cyprus,” the draft agreement says. (Wall Street Journal)

On France
Hollande urges Europe to ease up on austerity demands; the French president warned in an interview that severe budget consolidation measures were fueling social discontent throughout Europe. Hollande said Europe’s leaders were counting on him to deliver this message to Merkel in Germany. WSJ

On US Banks
US banks are weighing tactics to mitigate the effect of EU bonus caps.
“”We are not thinking of transferring people from London to Dubai tomorrow,” said one US banker. “But future growth in Africa could be led out of the Middle East or South Africa.” Other approaches include restructuring remuneration packages. “JPMorgan is among the banks to have considered the introduction of “allowances” that could be increased or decreased annually, according to bank insiders.” (Financial Times)

STRATEGY

JPM (Loeys) The J.P. Morgan View: Local forces are dominating
Asset allocation –– Local risks and opportunities trump global forces in driving investment opportunities. Cross-market correlations to remain much lower than in recent years.
Economics –– US activity data are coming in better than hoped, but we need another 1-2 months to see how consumers are responding to higher taxes.
Fixed Income –– Search for carry to trump Euro area jitters over time.
Equities –– Japan remains our main country overweight.
Credit –– We OW covered bonds in the Euro periphery over senior bank bonds and subordinated vs senior bank bonds in the core.
Currencies –– Cyprus to have minimal further impact on EUR, but a ECB rate cut would push it a few cents lower versus the dollar.
Commodities –– Stay long Brent and short gasoline.

GS (Wilson and al). GLI March Final GLI – Clearly In Slowdown Phase.
Headline Up, Momentum Down
Our March Final GLI came in at 1.7%yoy, up from last month’s revised reading at 1.5%yoy. Momentum was down from last month at 0.28%mom. With some downward revisions to last month’s data point, the GLI now indicates that the global cycle is already in the ‘Slowdown phase’ for the second consecutive month. This is in line with our advanced read for March, which had already signaled some weakening in global activity. While we will wait for confirmation in the coming months, this fits our forecasts for softer global growth in the near term. Still, we expect this to be temporary and see growth accelerating in the later part of the year and into 2014.

UPS&DOWNS

APPLE (GS, Shope), Remove from the Conviction List, but remain Buy rated
We remove Apple from the Americas Conviction List, but we maintain our Buy rating. The most recent product cycle has not driven the market share and new user growth we had anticipated, and we believe Apple may find it difficult to hit consensus expectations in the March and June quarters, and as a result, we lower our estimates and our price target. Since being added the Americas Conviction List on December 12, 2010, AAPL has gained 33.8% versus a 25.9% gain in the S&P 500.

Volkswagen(MS, Pearson) Positive RTI
(THIS IS NOT PROPER RESEARCH, just an analyst short term call)
We believe the share price will rise relative to the industry over the next 60 days. This is because the stock has traded off recently, making short term valuation much more compelling. We estimate that there is about a 70% to 80% or “very likely” probability for the scenario.

Europe: Capital Goods (GS, Ibbotson) A time for stock picking – GEA to Buy, Alstom to Sell
While the sector seems properly valued at the moment, we believe this is a time for stock picking as consensus continues to be inconsistent in reflecting companies quality in forecasts. We make 5 rating changes and reiterate our CL Buys (PRY, ATCO, WEIR).

ALSTOM CUT TO SELL VS NEUTRAL AT GOLDMAN
ASTRAZENECA RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
ERICSSON CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
FIRSTGROUP RAISED TO BUY VS UNDERPERFORM AT BOFAML
FLSMIDTH RATED NEW NEUTRAL AT NOMURA; PT DKK355
GEA RAISED TO BUY VS NEUTRAL AT GOLDMAN
GIVAUDAN RAISED TO NEUTRAL VS SELL AT CITI
IMI CUT TO NEUTRAL VS BUY AT GOLDMAN
METSO CUT TO NEUTRAL VS BUY AT GOLDMAN
NATUREX CUT TO HOLD VS BUY AT SOCGEN
NESTE OIL RAISED TO STRONG BUY VS BUY AT NORDEA
OUTOTEC CUT TO NEUTRAL VS BUY AT GOLDMAN
OUTOTEC RATED NEW REDUCE AT NOMURA; PT EU10.25
REXAM REINSTATED BUY AT BOFAML, PT 640P
SOCIETE GENERALE Raised to Outperform at Cheuvreux
STAGECOACH CUT TO UNDERPERFORM VS BUY AT BOFA
SYNGENTA CUT TO HOLD AT LIBERUM
TALK TALK CUT TO NEUTRAL VS BUY AT BOFAML

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s