LCM Dawn Patrol – 26.04.13 – Week End Edition, S&P earnings update, MS on EM, Earnings… Ziggo placing.


Markets should open lower. US markets dropped last night following headlines of the Bundesbank rejecting the OMT ( but Mr Weidmann’s opposition is a known fact and this shouldn’t have an impact. In Asia, the BoJ made no change to its policy (as expected) and keeps its 2% inflation target (while last night data point to further deflation).

Today, the most important data will be the US Q1 GDP (14:30, expected at 3%) with the Eurozone M3.
In Spain the govt is announcing its Medium Term Fiscal plan at 13:30.
In terms of earnings, we’ll geet Chevron, Goodyear and MetroPCS.

Macro data:

8:45 French Consumer Confidence Indicator,
10:00 Euro Zone M3,
14:30 US GDP QoQ
15:55 U of Michigan.


(I’m being told there is an uncensored version of this video, but for obvious reasons, I won’t give it here…)



DISCO: Electric Guest au Trianon (Ven 26/04 à 19:00) (

RESTO: Aname, le Bistrot Vietnamien (101 rue Nollet 75017) ( Pas cher et très bon.

FILMO: Promised Land ou L’Ecume des Jours pour vous (et Iron Man 3 pour moi…)

SPORT: Rugby (17:50) Direct Coupe d’Europe. Demi-finale. Clermont-Auvergne (Fra) / Munster (Irl). And Samedi: (15:30) Challenge européen. Demi-finale. Leinster (Irl) / Biarritz (Fra).,


BIBLIO: The Power of Now: A Guide to Spiritual Enlightenment (Eckhart Tolle). And yes, I’m reading it…


PPR quarterly revenue trails estimates as Gucci sales disappoint
EADS. French government is selling 2.1% stake in EADS, the shares are being offered at 40.20 euros to market price. BBG
Yakult Says It Will End Strategic Alliance With Danone
BNP Paribas’s Variable Pay Rose 14% in 2012, Agefi Reports
ABI to start Modelo tender offer in coming days, company says in statement. BBG
Ziggo investors selling up to 34.2m shares in book build. BBG
Vodafone, Verizon price gap on Wireless unit seen at USD 30bn. WSJ
Mediaset says no intention to sell Pay-TV business. BBG


BBVA 1Q Net Income EU1.73 Bln; Analyst Estimate EU1.76 Bln
BASF. 1Q results mixed, EBIT came in at EUR 2.214m, +2% vs. consensus of UEUR 2.165m and up 10%yoy, boosted by strong volumes in Oil & Gas and Agriculture Solutions. BBG
Technicolor 1Q Revenue EU775m, Confirms 2013 Objectives
Alcatel Posts Wider 1Q Adj. Operating Loss Than Estimated
Saint-Gobain Rev. Matches Est.; 2H Outlook Confirmed


Spain expected to turn away from austerity: Mariano Rajoy’s government is expected to lay out an agenda that tilts away from austerity, with less-stringent deficit targets and greater emphasis on spurring growth. Rajoy will announce reforms that a government source called “a specific, comprehensive and credible”, which he wants implemented by 2015 in order to gain leeway from the EU on cutting its deficit. (Wall Street Journal)(Reuters)

Some US banks support Europeans against capital rules: European banks have won support from some US rivals, including JP Morgan, in fighting the Fed’s proposal to force US subsidiaries of large foreign banks to hold more capital. However Bank of America, Citigroup and Morgan Stanley have told US officials that they support the moves, despite concerns about a breakdown in regulatory harmony. (Financial Times)

Research suggests Google searches predict markets: People do more searches on terms such as “stocks”, “portfolio” and “economics” when they are worried about the state of the markets. (Financial Times)(Paper)


GS: S&P 500 Results update:

So far, 193 companies have reported 1Q results (51% of total cap). 40% of companies reporting have beaten earnings estimates (below the historical average of 47%) and 12% have missed estimates (vs. average of 15%). The average EPS surprise has been 4.9%, above the 4.8% historical average.

16% of companies reporting have beaten revenue estimates (below the historical average of 36%) and 30% have missed estimates (vs. average of 19%). The average revenue surprise has been (0.5)%, below the 1.1% historical average.

Excluding Financials, 39% of companies beat earnings estimates and 13% missed. 17% of companies beat sales estimates and 29% missed.

Historical averages listed above are calculated on the last 40 quarters of earnings results

MS (Fels)The Global Macro Analyst
Why is EM under Fire?

This has been a strange EM recovery:Since EM growth bottomed in 2H12, EM markets and growth recoveries have faltered, as have commodity prices. Although Japan’s policy-makers have spurred another round of EM monetary policy easing, China and Brazil have already seen monetary policy tighten. Why? In today’s note, Manoj Pradhan and Patryk Drozdzik argue that structural issues have reached a tipping point just as the risk/reward trade-off of using cyclical policy tools has deteriorated.
Taking a deeper dive into China, Russia, Brazil and India, they ask:Have EM growth issues been diagnosed and treated correctly? What specifically are the main impediments to growth in the structurally challenged economies of China, Russia and Brazil? Why is India not among the most structurally challenged economies? Why have the usual cyclical tools been ineffective in this cycle in these economies?


Saipem: (MS, Pulleyn) Upgrade to OW on Under-Valued Earnings Potential
EW to OW, PT €25 to €30

We see an opportunity to buy Saipem at depressed levels of 1.5x P/BV for only the second time in a decade. Strong fundamentals should support EPS potential of €2.57 +/- €0.45 & strong growth beyond 2015, in our view. We still have concerns, but see an attractive entry point, with 46% upside.

ARM Holdings plc (GS, Schafer): Raising PT to 1,400p as market share momentum continues; CL Buy
We raising our 12M PT to 1,400p (from 1,250p) on our higher royalty estimates given continued momentum in market share gain; Remains CL Buy.

Anheuser-Busch InBev (GS, Collett) Sell: Too expensive for growth and returns profile; on to Conviction Sell
ABInBev has significantly rerated and now trades at a 15% premium to European Consumer Staples despite weakening conditions in Brazil, the company’s main EM. Given 10% downside potential to our 12m price target, we add it to the Conviction Sell List.

Adidas AG : Berenberg starts with buy; price target 95 euros
Aixtron SE (AIXGn.DE): Canaccord Genuity cuts price target to $13 from $14; rating hold
AstraZeneca (AZN.L): Bernstein cuts target to 3474p from 3563p; rating market perform
BIC (BICP.PA): SocGen cuts price target to 84 euros from 92.5 euros; ratinghold
British American Tobacco (BATS.L): Nomura ups target to 4041p from 4012p; rating buy
ETFS Leveraged Platinum (LPLA.L): KBW raises target price to $36 from $35
Delhaize (DELB.BR): Raymond James cuts to market perform from outperform
Fugro (FUGRc.AS): ING cuts to hold from buy
Fugro (FUGRc.AS): ING raises price target to 47 euros from 45 euros
Kering (PRTP.PA): SocGen cuts price target to 205 euros from 230 euros;rating buy
KPN (KPN.AS): Berenberg cuts price target to 1.62 euros from 2.20 euros;rating sell
Ladbrokes Plc (LAD.L): Jefferies cuts target price to 230p from 265p; rating buy
Mail.Ru (MAILRq.L): Morgan Stanley ups target to $45 from $40.70; rating overweight
Novartis AG (NOVN.VX): SocGen raises price target to Sfr 78 from Sfr 72
Puma SE (PUMG.DE): Berenberg starts with hold; price target 235 euros
Randstad (RAND.AS): Jefferies cuts target price to 37.50 euros from 38 euros; rating buy
Saipem SpA (SPMI.MI): Morgan Stanley raises to overweight from equal weight
Saipem SpA (SPMI.MI): Morgan Stanley raises price target to 30 euros from 25 euros
SDL Plc (SDL.L): Canaccord Genuity cuts price target to 372p from 400p; rating hold
SSAB AB (SSABa.ST): Jefferies cuts target price to Sek 50 from Sek 55; rating hold
SSAB AB (SSABa.ST): Nomura cuts to neutral from buy
SSAB AB (SSABa.ST): Nomura cuts target price to Sek 48 from Sek 55
STMicroelectronics (STM.PA): Jefferies raises to buy from hold
STMicroelectronics (STM.PA): Jefferies raises target price to 6.45 euros from 5.75 euros
Turkish Airlines (THYAO.IS): Renaissance Capital raises to buy from hold
Turkish Airlines (THYAO.IS): Renaissance Capital raises price target to Tl9.2
Unibail-Rodamco SE (UNBP.AS): SocGen cuts to hold from buy
Unilever NV : Berenberg raises target price to 36 euros from 35 euros; rating buy
Unilever NV (UNc.AS): ING raises target price to 31.50 euros from 28.50 euros; rating hold
Unilever Plc (ULVR.L): Berenberg raises target price to 3000p from 2800p; rating buy
Vivendi Cut To Underperform VS Neutral at BofAML
Volvo (VOLVb.ST): Baird raises price target to Sek 107 from Sek 103; rating outperform


Asian markets
Nikkei 225 up +27.40 (+0.20%) at 13,953
Topix down -4.89 (-0.42%) at 1,168
Hang Seng up +197.80 (+0.88%) at 22,599

US markets
S&P 500 up +0.01 (0.00%) at 1,579
DJIA up +24.50 (+0.17%) at 14,701
Nasdaq unchanged 0.00 (0.00%) at 3,290

European markets
Eurofirst 300 up +8.82 (+0.74%) at 1,201
FTSE100 up +10.83 (+0.17%) at 6,443
CAC 40 down -2.47 (-0.06%) at 3,840
Dax up +73.83 (+0.95%) at 7,833

€/$ 1.30 (1.30)
$/¥ 99.12 (99.25)
£/$ 1.55 (1.54)

Commodities ($)
Brent Crude (ICE) down -0.46 at 102.95
Light Crude (Nymex) down -0.46 at 93.18
100 Oz Gold (Comex) up +9.60 at 1,471
Copper (Comex) unchanged 0.00 at 323.80

10-year government bond yields (%)
US 1.71%
UK 1.74%
Germany 1.24%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.61bps at 96.43bp
Markit iTraxx Europe -0.77bps at 105.51bp
Markit iTraxx Xover -3.88bps at 428.11bp
Markit CDX IG -1.02bps at 79bp

Sources: FT, Bloomberg, Markit


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