LCM Dawn Patrol – 04.06.13 – GS ups SG, GS on E&P, No ECB Bazooka for SMEs, Ahold+, Rexel placing (…)

Bonjour,

European stocks are expected to rise on Tuesday, halting a week-long slide and tracking a rebound on Wall Street as soft U.S. factory data eased worries the Federal Reserve could soon start to scale back its stimulus measures. Dovish comments from the Fed member Lockhart. U.S. shares rose on Monday, with the S&P 500 adding 0.6 percent. Data showed U.S. manufacturing contracted last month and hit the lowest level since June 2009.

Interesting: This could be the 21st up Tuesday in a row… (not sure about the sentence, but you get the point).

NEWS

The Reserve Bank of Australia kept rates unchanged at 2.75 per cent

Fed May Scale Back Quantitative Easing in Early 4Q, UBS Says

General Motors Co. rallied in after-hours activity late Monday on its expected re-inclusion into the S&P 500

COMPANIES

Ahold 1Q Net Income EU1.95b Vs Restated EU285m; Buyback Raised (expected up).
BASF to Invest EU10b in Asia-Pacific Region from 2013-2020. http://tinyurl.com/kmr8ug5
Microchip Tech raises 2Q guidance and sees revenue +4.7% QoQ versus 2.6% previously.
Novartis LDK378 lung cancer drug had 60% response rate in trial
Rexel – placing overnight-Ray Investment selling 10%
Royalty Pharma Takeover of Elan Temporarily Blocked by Judge
Scor to buy Generali’s U.S. reinsurance unit for $750m
STMicro Chief Says Orders Positive in All Regions, Figaro Says
Technip Gets Contract for Karbala Refinery in Iraq
US final vehicle sales breakdown for German OEMs: Volkswagen -1.7%, Audi +15%, Mercedes +8.1%, BMW +13.8%, Porsche +37.7%
Vodafone Gets 12.6b Rupee Penalty From India Telecoms: ET Link
Vodafone rekindles evaluating a bid for Kabel Deutschland according to DJ

CURRENT STUFF

No ECB “bazooka” planned for small-business credit crunch. The central bank is unlikely to commit large resources to improving SMEs’ access to funding, after concluding that clean-up of banks’ balance sheets would do more to encourage lending. Separate ECB plans to work with the European Investment Bank to reopen the ABS market for SME funding are not expected to have a large impact. (Financial Times) Small Italian companies are increasingly turning to “minibonds” to replace bank loans. (Wall Street Journal)

Fed Tapering? The S&P rallied after Federal Reserve Bank of Atlanta President Dennis Lockhart said the FOMC may consider slowing the pace of its $85 billion in monthly bond purchases after this month however the board remains “committed to record stimulus measures”. He went as far as reminding the market that an increase of QE pace can’t be ruled out either. BBG

Japan’s public pension funds are to be recruited to buy stocks and real assets in the Abe government’s latest move to mobilise the country’s savings for growth. A panel will be set up to review investment guidelines for the public funds, which have previously piled into Japanese sovereign bonds, including the mighty Government Pension Investment Fund. The guidelines would come into force by April 2015 under the draft plan. (Reuters)

The most popular brand of bond mutual funds have been caught out by recent jumps in yields. US funds investing in higher-rated debt of less than 10 years’ maturity lost 1.8 per cent in May, their worst performance since October 2008. (Financial Times)

UPS&DOWNS

Global Capital Goods (MS, Uglow) What We Learned in China
The global capital goods team hosted 112 investors and 48 industrial companies at the Fourth China Industrials Summit last week. Although the current demand environment remains sluggish, there was incremental confidence on inflection in several end-markets (albeit from a low base).

France: Banks (GS, Neuez) Balance sheet & return trends favour BNP (CL Buy) and SG (to Buy)
Among the French banks balance-sheet metrics are improving, but differences still exist. Pressure on profitability has prompted cost-saving initiatives. We to continue to like BNP (CL Buy) most, CASA (Sell) least.

Europe: Energy: Oil & Gas – E&P (GS, Jost) Looking for value and scale: Coastal Energy, Gulf Keystone, Heritage & IGas up to Buy
We identify stocks which offer M&A potential through value and exposure to strategic assets. We also highlight exploration winners and development losers.
Bankers Petroleum Buy to Neutral
Coastal Energy Neutral to Buy
Gulf Keystone Neutral to Buy
Heritage Oil Neutral to Buy
IGas Energy Neutral to Buy
Maurel et Prom Buy to Neutra

AIXTRON SE CUT TO HOLD VS BUY AT HAMBURGER SPARKASSE (EARLIER)
ALENT RATED NEW BUY AT GOLDMAN, PT 426P
ASIAN CITRUS CUT TO HOLD AT KIM ENG, PT HK$2.76
BANKERS PETROLEUM CUT TO NEUTRAL VS BUY AT GOLDMAN
BIOMARIN RAISED TO BUY VS HOLD AT DEUTSCHE BANK, PT $75
COASTAL ENERGY RAISED TO BUY VS NEUTRAL AT GOLDMAN
DAIRY CREST CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
DE LA RUE RAISED TO ADD VS HOLD AT NUMIS
DEUTSCHE BOERSE CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
GOLAR LNG PARTNERS CUT TO MARKET PERFORM AT RAYMOND JAMES
GULF KEYSTONE RAISED TO BUY VS NEUTRAL AT GOLDMAN
HERITAGE OIL RAISED TO BUY VS NEUTRAL AT GOLDMAN
HEXAGON COMPOSITES RAISED TO BUY VS HOLD AT DNB
IGAS ENERGY RAISED TO BUY VS NEUTRAL AT GOLDMAN
MAUREL ET PROM CUT TO NEUTRAL VS BUY AT GOLDMAN
SOCIETE GENERALE RAISED TO BUY VS NEUTRAL AT GOLDMAN
SVENSKA CELLULOSA RATED NEW BUY AT NOMURA, PT SEK210
SWEDBANK CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY

ECONOMIC CALENDAR

Time Event Survey Actual Prior
01:50 JN Monetary Base Avg Amount YoY May 31.60% 23.10%
10:30 UK PMI Construction May 49.8 49.4
11:00 EC Euro-Zone PPI (MoM) Apr -0.20% -0.20%
14:30 US Trade Balance Apr -$41.1B -$38.8B
14:30 CA Int’l Merchandise Trade Apr -0.50B 0.02B

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +142.96 (+1.08%) at 13,404
Topix up +14.45 (+1.32%) at 1,111
Hang Seng down -65.19 (-0.29%) at 22,217

US markets
S&P 500 up +9.68 (+0.59%) at 1,640
DJIA up +138.46 (+0.92%) at 15,254
Nasdaq up +9.46 (+0.27%) at 3,465

European markets
Eurofirst 300 down -8.52 (-0.70%) at 1,207
FTSE100 down -57.97 (-0.88%) at 6,525
CAC 40 down -27.92 (-0.71%) at 3,920
Dax down -63.04 (-0.76%) at 8,285

Currencies
€/$ 1.30 (1.30)
$/¥ 99.61 (100.64)
£/$ 1.53 (1.52)

Commodities ($)
Brent Crude (ICE) down -0.26 at 101.80
Light Crude (Nymex) down -0.43 at 93.02
100 Oz Gold (Comex) down -0.70 at 1,411
Copper (Comex) unchanged at 3.33

10-year government bond yields (%)
US 2.12%
UK 2.00%
Germany 1.52%

CDS (closing levels)
Markit iTraxx SovX Western Europe at 85.95bp
Markit iTraxx Europe +4.8bps at 107.4bp
Markit iTraxx Xover +17ps at 438.4bp
Markit CDX IG -0.6bps at 78.5bp

Sources: FT, Bloomberg, Markit

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