LCM Dawn Patrol – 30.05.13 – Lots of analysts reco changes.

Bonjour,

European stocks were expected to open slightly higher on Thursday, clawing back some of the previous day’s heavy losses but staying rangebound on uncertainty over when the U.S. monetary policy will wind down its stimulus programme. Senior Federal Reserve official Eric Rosengren reiterated that position on Wednesday evening, but said an abrupt end to purchases would be undesirable.

Today is a busy day with US GDP, jobless, Pending home sales, DOE inventories, ECB Costa, Italy 10y auction, US 7y auction, Costco earnings

 

NEWS

Brazil’s central bank tightened interest rates 50bps to 8% despite growth slowing in Q1. (Financial Times)

Berkshire Hathaway on Wednesday agreed to buy NV Energy, a power company serving customers in Nevada, for $5.6bn

Repsol Says It’s Preparing Transaction on Preferred Shares

Novartis Says Relapsing MS Patients More Satisfied With Gilenya

Alstom, Siemens May Sell More Trains to U.S.: Les Echos

Total CEO May Face Trial for Iranian Bribes, Prosecutor Says

Roku Receives $60m Investment From BskyB, Hearst, News Corp.

Glaxo Wins FDA Approval for Two New Targeted Skin Cancer Drugs

Fiat Said to Prepare Up to $10b in Financing for Chrysler Merger

Ryanair. U.K. Competition Commission publishes its provisional report on Ryanair’s Aer Lingus stake before stock market trading opens.

CURRENT STUFF

Google is preparing an attack on Apple’s iPhone with a device that is more aware of its surroundings and smart enough to anticipate how it will be used next, according to the head of the internet company’s Motorola subsidiary. (Financial Times)

European companies’ optimism for business prospects in China is declining amid slowing growth, rising labor costs, regulatory obstacles and intensified competition, a survey showed. Optimism for future revenue growth among 526 respondents dropped to4-year low of 71%, while 62% lack confidence or aren’t sure govt has resolve to introduce market-driven change, according to a business confidence survey released today in Beijing.

British SMEs’ external borrowing declines: The quarterly SME Finance monitor found 39% of the 5,000 firms surveyed had used finance such as loans, overdrafts and credit cards. That was down from half in the same three months last year and was the lowest since the survey began in early 2011. (Reuters)

Blackstone is weighing a bigger than expected withdrawal from SAC Capital. Ahead of a Monday deadline for SAC clients, Blackstone is planning to withdraw up to $400m, people familiar with the matter said, which would be double the amount expected early this month. (Wall Street Journal)

Stop With the “Money Printing” Madness

UPS&DOWN

Oil Services (MS, Pulleyn) Moderating Outlook for Future Oil Services Growth
Industry View: Attractive to In-Line

Subsea 7: OW to EW, PT kr170 to kr140
Wood Group: EW to OW, PT £10.65 to £10.40
Vallourec: OW to EW, PT €47
TGS Nopec: EW to UW, PT kr243 to kr220
CGG Veritas: EW to UW, PT €23 to €21
SBM Offshore: EW to UW, PT €16 to €15
We lower our sector view to In-Line and rebalance our Oil Services portfolio with 5 stock downgrades, 1 upgrade, as we expect industry capex growth closer to 5% in future years vs. 18% CAGR since 2003. Within this revised industry view, we prefer exposure to offshore development capex.

Tesco (JPM,  Vazquez) Sector Fundamentals Weigh (downgrade to N)
We downgrade Tesco from OW to Neutral to be more consistent with our cautious view on the UK food retail market as a whole, of which Tesco represents 30%. UK industry EBITDAR is at an all time high despite ongoing pressure on sales densities from selling space growing faster than demand, as well as from the growth of online and private players. We lower our Dec-13 TP from GBp425 to GBp390 (based on 12.0x 2012/13e PE). Next newsflow: 1Q sales on 5 June.

Delhaize (JPM, Olcese) More focus and discipline to drive further rerating. Upgrading to Overweight
We acknowledge we have missed a good part of this year’s rally but believe there is still upside to the current 10x 2013E P/E. We upgrade the stock to Buy and increase our TP from €48 to €56, based on 11.5x 2014E P/E.

ENI (GS, della Vigna): The Italian consumer squeeze starts to show; downgrade to Neutral
After 8% relative outperformance vs. the European integrated oils we now see the investment case as more balanced and downgrade to Neutral. Management has executed very well on exploration and disposals and the company is now in a stronger position.

Europe: Automobiles (GS, Burgstaller) Still attractive opportunities in EU Autos; adding Faurecia to CL Buy
EU Autos are up 12% ytd despite earnings cuts. We reiterate our Attractive coverage view as Autos remains the cheapest cyclical. We add Faurecia to CL Buy and reiterate our CL Buys on Daimler, Valeo & Volvo. Renault is down to Sell, Pirelli up to Neutral.

ALLIANZ RAISED TO BUY VS NEUTRAL AT NOMURA
CGG VERITAS CUT TO UNDERWEIGHT VS EQUALWEIGHT: MORGAN STANLEY
DELHAIZE RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
ENI CUT TO NEUTRAL VS BUY AT GOLDMAN
EUROPEAN OIL SERVICES SECTOR CUT TO IN-LINE AT MORGAN STANLEY
LINDE CUT TO NEUTRAL VS BUY AT CITI
NORCROS RATED NEW BUY AT CANACCORD GENUITY, PT 20.3P (EARLIER)
PFEIFFER VACUUM CUT TO HOLD VS BUY AT WARBURG
PIRELLI RAISED TO NEUTRAL VS SELL AT GOLDMAN
RENAULT CUT TO SELL VS NEUTRAL AT GOLDMAN
SBM OFFSHORE CUT TO UNDERWEIGHT VS EQUALWEIGHT: MORGAN STANLEY
STATOIL RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE
SUBSEA 7 CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY
TESCO CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
TGS-NOPEC CUT TO UNDERWEIGHT VS EQUALWEIGHT: MORGAN STANLEY
VALLOUREC CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY
WOOD GROUP RAISED TO OVERWEIGHT VS EQUALWEIGHT: MORGAN STANLEY
ZHONGDE CUT TO HOLD VS BUY AT WARBURG

OVERNIGHT MARKETS: DOWN

Asian markets
Nikkei 225 down -473.97 (-3.31%) at 13,852
Topix down -28.43 (-2.41%) at 1,150
Hang Seng down -110.37 (-0.49%) at 22,445

US markets
S&P 500 down -11.70 (-0.70%) at 1,648
DJIA down -106.59 (-0.69%) at 15,303
Nasdaq down -21.37 (-0.61%) at 3,468

European markets
Eurofirst 300 down -22.94 (-1.84%) at 1,224
FTSE100 down -134.84 (-1.99%) at 6,627
CAC 40 down -76.44 (-1.89%) at 3,974
Dax down -144.29 (-1.70%) at 8,337

Currencies
€/$ 1.30 (1.29)
$/¥ 101.05 (101.13)
£/$ 1.51 (1.51)

Commodities ($)
Brent Crude (ICE) up +0.32 at 102.75
Light Crude (Nymex) up +0.10 at 93.23
100 Oz Gold (Comex) up +3.40 at 1,395
Copper (Comex) down -0.03 at 3.26

10-year government bond yields (%)
US 2.13%
UK 2.02%
Germany 1.54%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.63bps at 82.05bp
Markit iTraxx Europe +5.99bps at 100.18bp
Markit iTraxx Xover +25.74bps at 410.62bp
Markit CDX IG +1.3bps at 77.01bp

Sources: FT, Bloomberg, Markit

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