LCM Dawn Patrol – 02.05.13 – Siemens not so bad, Sanofi lower and many more earnings. The Apple bond, the ECB cut, Iron Man… All you need to know.

Bonjour,

Hope you enjoyed this day off. The markets didn’t. After the FOMC meeting, US stocks dropped on poor ADP payrolls and manufacturing data. The FOMC statement wasn’t really bearish but it wasn’t too bullish either. Today, European futures indicate a lower opening, on these growth concerns and ahead of an important ECB meeting as everybody (well not exactly) now expects a 25bp rate cut to 0.5% on its main interest.

SX5E Futures: 2669.00y -4.00. Support at 2659 then 2633 & 2608. Resistance 2670 (intra day gap) then 2692

Macro numbers: Eurozone PMIs (10:15-11:00), ECB rates (13:45) US Jobless claims (14:30), US Trade Balance (14:30) and US productivity Data (14:30).

I liked it.
I really enjoyed this movie, it’s entertaining, Ben Kingsley is the best.
But according to some friends, I’m not what you would call a cinema lover in the French intellectual sort of way…

NEWS

BMW First-Quarter Profit Drops as European Plunge Hits Pricing

Global Growth: Taiwan’s April headline manufacturing PMI fell 0.5-pts to 50.7.

SAP Loses Bid to Overturn $345 Million Patent Verdict Loss

Siemens CEO Loescher Sees ‘Economic Headwinds’ in Next Quarters (se eranings below).

T-Mobile Shares Climb in NYSE Debut After MetroPCS Merger

UBS’ AGM today, and activist investor Knight Vinke have published an open letter demanding a more radical strategy

VOD may trade lower after Bharti falls on disappointing 4Q
SAP loses bid to overturn $345 Million patent verdict loss
DTE/TEF expand fixed net cooperation.
Genmab says Phase II Results for Ofatumumab ‘Encouraging’

Yield Compression Accelerates as Pimco Cuts Spain: Euro Credit

Expectations are high for an ECB rate cut today to 0.5% from 0.75%. The rate decision is due at 11:45am GMT, and the news conference at 12.30pm. (Reuters)

EARNINGS

BMW 1Q Profit Beats Est., Rev. Misses; Confirms FY Forecast
Cap Gemini 1Q Rev. Declines; Sticks to 2013 Guidance
DSM 1Q Ebitda Beats, Had Good Start to Year, Repeats 2013 Goal
Hugo Boss 1Q Rev., Adj, Ebitda Misses; Confirms 2013 Outlook
Infineon Sees 3Q Sales Above Estimates as 2Q Revenue Beats
Lufthansa 1Q Loss Wider Than Est.; Confirms FY Forecast
Metro 1Q Rev. In-Line With Est., Adj. Ebit Rises
Orkla 1Q Sales Rise, Sees Need for Competitiveness Improvements
Rexel 1Q Sales In-Line With Ests., Confirms 2013 Forecasts
Sanofi Q1 misses forecasts, sees growth return in H2
Statoil 1Q Adj. Net NK12b vs Est. NK13.7b; Takes NK4.9b Charge
Swiss Re 1Q Net $1.38b vs Est. $1.06b; RoE 16.6% Vs 15.3%
Swisscom 1Q Sales, Net Income Miss; Reiterates FY Forecast
Tenaris 1Q Net, Ebitda, Sales Miss Estimates

Siemens 2Q Profit Misses, Sees FY Earnings at Low End of Range. But the order book seems stronger at €21.6bn vs €18.5bn expected. So all in all, could be taken positively.
Siemens says FY net income from cont. ops. to “approach the low end” of EU4.5b-EU5b target.
• 2Q net income from cont. operations EU982m, est. EU1.21b
• Books EU161m in charges for train delays, EU84m for wind transmission
• Net income EU1.03b, est. EU1.13b
• Sales EU18b, est. EU18.8b
• Orders EU21.5b vs EU17.9b
• Sees FY restructuring charges of as much as EU900m
• CEO Peter Loescher: “While we were able to clearly increase orders, we still have challenges regarding revenue and profit’’

Sanofi still sees 2013 business EPS flat to 5% lower vs 2012 at CER. Would expect the stock to drop initially, but see support as guidance reiterated.
• Says impact from loss of Plavix and Avapro exclusivity in U.S. expected to impact business net income in 1H by ~EU800m at CER
• 1Q business EPS EU1.22 vs est EU1.35
• 1Q rev. EU8.1b vs est. EU8.3b
• Says two new units will be created
• Peter Guenter appointed Executive Vice President, Global Commercial Operations
• Pascale Witz appointed Executive Vice President, Global Divisions & Strategic Commercial Development
• Conf. call at 2:30pm CET on +44-203-367-9453, pw 279651#

CURRENT STUFF

On the Fed
(GS) There were no major surprises from the May FOMC statement, which was very little changed from the March statement. The most notable change introduced additional flexibility around purchases, noting that "the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes."

Fed could raise QE: “In a new line added to its regular statement, the rate-setting Federal Open Market Committee said it could move the rate of asset purchases up as well as down depending on what happens to prices and jobs.” (Financial Times)(Wall Street Journal)(Statement)

On China
China may set an economic growth target of 7% for next year to address problems created by rapid expansion under the administration of former Premier Wen Jiabao, Market News International reports. China Premier Li Keqiang has requested a study on lowering the growth target from 7.5% to see if it is feasible, the report cites the unidentified person as saying. The Chinese government is worried about the effects of the previous administration’s “credit binge,” the report cites the unidentified person as saying

On Apple
Apple’s bond issue helps avoid $9bn in potential tax.
Experts estimate the company would need to repatriate $26bn in order to generate in the US the equivalent of $17bn raised in its debt issue this week, which is going towards a $55bn share buyback programme. (Financial Times)

UPS&DOWNS

Andritz AG (GS, Wyman): Reducing estimates post announced provision; maintain CL Buy
We reduce estimates following the 1Q13 warning, principally attributable to a material provision of €60 mn related to a large scale pulp mill in Latam. Our revised 6-month multiple-based price target is €66 (from €73).

Kering Named a Most Preferred Stock at Citi, Replaces Richemont

ABB CUT TO HOLD VS BUY AT BERENBERG
ACTIVE NETWORK CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
ALSTOM RAISED TO BUY VS HOLD AT BERENBERG
ATLAS COPCO CUT TO SELL VS HOLD AT BERENBERG
BANK ZACHODNI RATED NEW EQUALWEIGHT AT MORGAN STANLEY
BANK ZACHODNI RATED NEW SELL AT GOLDMAN, PT 290 ZLOTY
BANK ZACHODNI WBK RATED NEW BUY AT UBS, PT 315 ZLOTY
BAUER RAISED TO HOLD VS SELL AT BERENBERG
BETFAIR CUT TO ADD VS BUY AT NUMIS
BUREAU VERITAS CUT TO HOLD VS BUY AT SOCGEN
Buzzi Unicem Cut to Market Perform vs Outperform at Bernstein
CELLCOM CUT TO UNDERPERFORM VS NEUTRAL AT BOFAML
Credem Cut to Neutral vs Outperform at Exane
IMI CUT TO HOLD VS BUY AT BERENBERG
LEGRAND CUT TO SELL VS HOLD AT BERENBERG
MAN CUT TO SELL VS HOLD AT BERENBERG
PFEIFFER VACUUM RAISED TO BUY VS HOLD AT BERENBERG
PLAYTECH RATED NEW OVERWEIGHT AT JPMORGAN; PT 690P
RHEINMETALL CUT TO HOLD VS BUY AT BERENBERG
ROSENBAUER CUT TO HOLD VS BUY AT BERENBERG
ROTORK CUT TO SELL VS HOLD AT BERENBERG
SAFT RAISED TO HOLD VS SELL AT BERENBERG
SCHALTBAU HOLDING CUT TO HOLD VS BUY AT BERENBERG
SKF RAISED TO BUY VS HOLD AT BERENBERG
SMITHS CUT TO HOLD VS BUY AT BERENBERG
VIVENDI CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
VOSSLOH CUT TO SELL VS HOLD AT BERENBERG
VTG CUT TO HOLD VS BUY AT BERENBERG
WACKER NEUSON CUT TO SELL VS HOLD AT BERENBERG
WINCOR NIXDORF CUT TO SELL VS HOLD AT BERENBERG
ZUMTOBEL RAISED TO BUY VS HOLD AT BERENBERG

OVERNIGHT MARKETS: DOWN

Asian markets
Nikkei 225 down -147.02 (-1.07%) at 13,652
Topix down -7.55 (-0.65%) at 1,151
Hang Seng down -67.18 (-0.30%) at 22,670

US markets
S&P 500 down -14.87 (-0.93%) at 1,583
DJIA down -138.85 (-0.94%) at 14,701
Nasdaq down -29.66 (-0.89%) at 3,299

European markets
Eurofirst 300 up +0.87 (+0.07%) at 1,202
FTSE100 up +21.17 (+0.33%) at 6,451
CAC 40 down -11.93 (-0.31%) at 3,857
Dax up +40.21 (+0.51%) at 7,914

Currencies
€/$ 1.32 (1.32)
$/¥ 97.28 (97.38)
£/$ 1.56 (1.56)

Commodities ($)
Brent Crude (ICE) up +0.03 at 99.98
Light Crude (Nymex) up +0.07 at 91.10
100 Oz Gold (Comex) up +9.70 at 1,456
Copper (Comex) up +1.50 at 309.75

10-year government bond yields (%)
US 1.63%
UK 1.68%
Germany 1.21%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.67bps at 93.93bp
Markit iTraxx Europe +1.51bps at 100.3bp
Markit iTraxx Xover +5.58bps at 402.93bp
Markit CDX IG +2.77bps at 77.77bp

Sources: FT, Bloomberg, Markit

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