LCM Dawn Patrol – 01.05.13 – Andritz Pft W, Cyprus Agrees, Chinese PMI okayish, UBS cuts REED.



You shouldn’t be reading this, and I shouldn’t be writing it. Go out and exercise or take some time with your family…


Very few European markets open today (London, Dublin, Copenhagen) so should be dead quiet. In terms of data, we’ll monitor the US April PMIs and ISM and most importantly we’ll watch the FOMC statement.




Apple Said to Offer $17b of Bonds in Record U.S. Sale

IBM boosts buyback by $5b, increases dividend 12%

Invensys. Bid speculation repeated in today’s Guardian, Times and Daily Mail.

Ireland’s Government Lowers 2013 Economic Growth Forecast

Slovenia Credit Rating Cut to Junk by Moody’s on Bank Turmoil

China Manufacturing Expands at Weaker Pace as Economy Slows

Letta Speaks Merkel’s Language on Europe on 1st Trip to Berlin

Cypriot Lawmakers Approve Loan Agreement With Slim Majority

T-Mobile USA to Debut on NYSE Today After MetroPCS Combination

EDF Sees Improved 2H Profit After Power Sales Increase

London Commercial Property Buying Jumps on Foreign Investment

Andritz BIG MISS 1Q Net, Sales Miss Expectations; Sees Lower 2013 Net

SHW Says CEO Wolfgang Krause to Leave by End of the Month

Scotland’s Largest Fund Managers Increase Assets Most in Year

Afren. Daily Mail says shares in the oil explorer rose on the back of bid speculation. Cites Exxon as a potential buyer.



YAHOO pulls out of buying Dailymotion after French Industry Minister says he didn’t want rare French internet success sold to an American giant, WSJ says, citing unidentified people. (Hahahaha)








Fears Remain After Deutsche Bank’s Cash Haul Deutsche Bank’s surprise $3.88 billion capital raise bumped a measure of its health over an important regulatory threshold. But a big question remains—is it enough? (WSJ)


Europe Woes Bolster Case for Rate Cut New readings on euro-zone unemployment and the bloc’s inflation rate increase the likelihood of a rate cut by the ECB on Thursday.


China’s manufacturing growth slows further: China’s official PMI fell to 50.6 in April from 50.9 in March. The slowdown in manufacturing growth appeared to be driven mostly by a slump in new export orders, which fell into contraction territory with a reading of 48.6 in April, compared to 50.9 in March. (Financial Times)







BP (JPM,  Lucas) Message of confidence from CEO – nothing like a big earnings beat to underpin it. A long results call, but throughout the CEO sent a very clear message of confidence on BP’s operational and financial recovery – safer, simpler and more cash flow and value oriented. We may have just a glimpse of BP’s upstream margin expansion potential in Q1 results – there is likely much more to come in H2 2013 and 2014 as high margin fields ramp up. Whilst we view an equitable and outright settlement on Macondo as the key valuation upside trigger, BP remains an attractive free cash flow growth and cash return to owner / capital discipline investment proposition. In this note we roll forward our PT end date 6 months to Dec-13. Our SoTP-based PT remains 525p.


UBS (MS, Van Steenis) Retaining as a most preferred stock in EU financials
We remain OW UBS, which we added back as a most-preferred stock in EU banks/div fins March 25. We think the recovery and restructuring has more legs, though patience is required to deliver 15%+ ROE, higher payout: we model a special divi in 15e.


France: Banks (GS, Neuez) Market share losses in investment banking lead to lower earnings – we prefer BNP
In this note we focus on: (1) market share losses in investment banking leading to lower earnings, (2) French retail revenues offset by the Livret A cut, and (3) positive inflows and market tailwinds in savings management.


Deutsche Telekom (MS, Delfas) Premium Value Already Discounted
DT has been highly returns focused, and the shares already discount a premium valuation for Germany / the US, in our view. A US turnaround faces challenges, while in Germany, we view the upside from EC deregulation as more limited, given cable’s push for market share. We resume at UW.


Portugal Telecom (GS, Boddy): Oi turnaround slower than hoped; off Conviction List, remains Buy
We remain optimistic about PT’s ability to return to growth in 2014/2015, however a weaker-than-expected 1Q at Oi drives forecast downgrades, reducing implied upside a 12-month view. We remove the stock from our Conviction List but retain a Buy rating.


Anheuser Busch (ABI.BR): Nomura cuts price target to 78 euros from 83 euros
Bureau Veritas (BVI.PA): Jefferies cuts price target to 73 euros from 75 euros
Commerzbank (CBKGk.DE): Nomura raises price target to 10.20 euros from 10 euros
Gem Diamonds Ltd (GEMD.L): Nomura raises to neutral from reduce
Imperial Tobacco Group (IMT.L): Nomura raises price target to 2419p from 2386p
National Express Group (NEX.L): Liberum capital raises to buy rating
Norsk Hydro (NHY.OL): Citigroup raises price target to Nok 23 from Nok
Petra Diamonds (PDL.L): Nomura raises price target to 170p from 160p
Qiagen (QGEN.DE): Jefferies raises price target to 14.50 euros from 14 euros
Sylvania Platinum (SLPL.L): CIBC cuts price target to 20p from 30p
UBS AG (UBSN.VX): Nomura raises price target to Sfr 19 from Sfr 18; rating buy






GS US Thematic Views
Portfolio Strategy Research
S&P 500 4Q 2012 ROE update: Returns slip again to 15.4% for 2012
S&P 500 ROE dropped for the fourth straight quarter. Full-year 2012 ROE equaled 15.4%, a 71 bp sequential decline and a 1.3% drop from full-year 2011. Weaker EBIT margins and higher taxes were key drivers of the decline and both were magnified by large, one-time pension expenses in Telecom Services and Industrials that may revert in 1Q. Financials ROE also disappointed in 4Q, falling to 8.9% vs. 10.3% in 4Q 2011, and remains the single strongest headwind to S&P 500 ROE.
We rebalance our 50-stock sector-neutral ROE Growth basket






Asian markets
Nikkei 225 down -54.03 (-0.39%) at 13,807
Topix down -5.90 (-0.51%) at 1,159
Hang Seng up +156.24 (+0.69%) at 22,737

US markets
S&P 500 up +3.96 (+0.25%) at 1,598
DJIA up +21.05 (+0.14%) at 14,840
Nasdaq up +21.77 (+0.66%) at 3,329

European markets
Eurofirst 300 down -2.23 (-0.19%) at 1,201
FTSE100 down -27.90 (-0.43%) at 6,430
CAC 40 down -11.93 (-0.31%) at 3,857
Dax up +40.21 (+0.51%) at 7,914

€/$ 1.32 (1.32)
$/¥ 97.31 (97.41)
£/$ 1.55 (1.55)

Commodities ($)
Brent Crude (ICE) down -0.93 at 101.44
Light Crude (Nymex) down -0.43 at 93.03
100 Oz Gold (Comex) up +2.40 at 1,475
Copper (Comex) down -0.85 at 317.90

10-year government bond yields (%)
US 1.67%
UK 1.69%
Germany 1.21%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.69bps at 94.6bp
Markit iTraxx Europe -1.65bps at 98.79bp
Markit iTraxx Xover -10.49bps at 397.35bp
Markit CDX IG -1.28bps at 75bp

Sources: FT, Bloomberg, Markit





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