LCM Dawn Patrol – 05.05.13 – China slower, Greece better, JPM View. Not much really.


European markets expected to open flat today. Following last week’s rise and as Britain (and Japan) is closed today, we should have a quiet session. In terms of data, we’ll look at the European PMI Services in Italy, France, Germany and the EC (from 9:45 to 10:00) and the EC retail sales. This week’s data include trade data from China and German manufacturing orders and production numbers. Should the data be positive, it shouldn’t be considered as a sign of global demand but mainly re-stocking.

The economic data is now at the end of this page…

I really hope you had a great Week End. If you’re in London, you can get on your bikes or get your running shoes and exercise. It’s easier in the morning…
If you’re looking for a shortcut: I’m not sure I would recommend it though…


DJ French Fin Min: Govt Doesn’t Intend To Privatize Companies, Rather Manage Its Stakes

German’s Schaeuble Tells Les Echos Reforms Must Continue

French FM Pierre Moscovici declared the era of austerity over after his German counterpart offered flexibility on deficit cutting, an interpretation that portends renewed bickering between Europe’s two biggest economies (yoohoo! It means the crisis is over, right?).

France Won’t Allow Peugeot Dividends or Buybacks, Minister Says

European Puts Lowest Since 2008 on Stimulus Speculation: Options

Facebook still worth probably no more than $25 a share: Barron’s (


Linde (LIN GR) 7:30, 1Q adj. GAAP EU307.1m

Natixis (KN FP) post-mkt, 1Q adj. net EU238.2m

Banco Comercial Portugues (BCP PL) post-mkt, 1Q adj. net loss EU136.8m

• Enel Green Power (EGPW IM) afternoon, 1Q adj. net EU122m

AXA (CS FP) post-mkt, 1Q sales

JCDecaux (DEC FP) post-mkt, 1Q sales

Eurazeo (RF FP) TBD, 1Q sales


China’s services sector growth slowed sharply in April, according to the HSBC/Markit services PMI survey. The April PMI was 51.1, a big fall from 54.3 in March and the lowest figure since August 2011. Staffing levels in the sector were below 50 for the first time since January 2009. (Reuters)

Greek Minister Sees Signs of Recovery . Greece’s crisis-ravaged economy is beginning to turn the corner while the country’s efforts to mend its public finances could allow it to return to financial markets as early as next year, the country’s finance minister said. (WSJ)

Norway to Raise Taxes on Oil Companies . Norwegian Prime Minister Jens Stoltenberg, who faces an election in September, laid out plans for a modest tax cut for mainland businesses while increasing taxes on oil companies and multinationals.

No big news at Berkshire Hathaway’s annual meeting: Warren Buffett was probed on succession by a bearish invitee, short seller Doug Kass of Seabreeze Partners, but remained insistent that his son would become non-executive chairman, and that a decision had been made on who would replace Buffett senior himself, although it wouldn’t be revealed. Buffett said he remained uninterested in gold despite its recent falls. (Financial Times)(Wall Street Journal)(Bloomberg)

To read:
– British skyline gap: More cranes in London than rest of the country put together. (Financial Times)

– Ruchir Sharma: The oil and gold booms are both over. (Bloomberg)


ENI (GS, Della Vigna): Off the Conviction List following relative outperformance; remains Buy
This was published on Friday. But I’ve been pushing ENI for a while. I still think it’s the cheapest FCF generator in the sector for Europe…
We remove ENI from our Conviction List as a result of 14% relative outperformance versus the European integrated oils. We retain our Buy rating.



Boliden Cut to Sell from Hold at Nordea


Connecta Raised to Hold from Sell at Nordea

Fiskars Raised to Buy from Hold at Nordea



JPM (Loeys) The J.P. Morgan View
Low-vol economy boosts risk assets
Asset allocation
–– We stay with a theme of low fundamental volatility that leads to continue tightening in risk premia. We believe best value is in equity and credit risk premia, and rather not earn from duration or liquidity.
Economics –– The broad set of data are consistent with a slowdown in industry in Q2 on higher inventories. But we see no reason to alter our view that global growth will stay sub-trend in Q2 and little changed from Q1.
Fixed Income –– Spread compression favors EA periphery and EM.
Equities –– The US reporting season has delivered a big positive Earnings per-Share surprise fueling the equity rally, despite a negative Revenue-per Share surprise.
Credit –– Tempered growth, low volatility and low default rates suit carry strategies. We focus on HY globally.
Currencies –– We buy MXN vs USD.
Commodities –– Stay OW energy vs. base metals and long oil via a bullish Brent time spread and open a long Brent vs. WTI trade.


Date Time Event Survey Actual Prior Revised
09:45 IT PMI Services Apr 45.9 45.5
09:50 FR PMI Services Apr F 44.1 44.1
09:55 GE PMI Services Apr F 49.2 49.2
10:00 EC PMI Services Apr F 46.6 46.6
10:00 EC PMI Composite Apr F 46.6 46.5
10:30 EC Sentix Investor Confidence May -15.2 -17.3
11:00 EC Euro-Zone Retail Sales (MoM) Mar -0.10% -0.30%
11:00 EC Euro-Zone Retail Sales (YoY) Mar -2.20% -1.40%
14:30 CA Building Permits MoM Mar 1.00% 1.70%
16:00 CA Ivey Purchasing Managers Index SA Apr 58 61.6


Asian markets
Nikkei 225 down -105.31 (-0.76%) at 13,694
Topix down -5.09 (-0.44%) at 1,153
Hang Seng up +219.60 (+0.97%) at 22,910

US markets
S&P 500 up +16.83 (+1.05%) at 1,614
DJIA up +142.38 (+0.96%) at 14,974
Nasdaq up +38.01 (+1.14%) at 3,379

European markets
Eurofirst 300 up +12.07 (+1.00%) at 1,219
FTSE100 up +60.75 (+0.94%) at 6,521
CAC 40 up +54.19 (+1.40%) at 3,913
Dax up +160.58 (+2.02%) at 8,122

€/$ 1.31 (1.31)
$/¥ 99.06 (99.04)
£/$ 1.56 (1.56)

Commodities ($)
Brent Crude (ICE) up +0.55 at 104.74
Light Crude (Nymex) up +1.02 at 96.63
100 Oz Gold (Comex) up +11.20 at 1,476
Copper (Comex) down -2.25 at 329.10

10-year government bond yields (%)
US 1.74%
UK 1.73%
Germany 1.24%

CDS (closing levels)
Markit iTraxx SovX Western Europe -3.16bps at 90.47bp
Markit iTraxx Europe -4.03bps at 91.52bp
Markit iTraxx Xover -9.67bps at 377.71bp
Markit CDX IG -2.79bps at 71.48bp

Sources: FT, Bloomberg, Markit


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