LCM Dawn Patrol – 19.06.13 – GS on the FOMC, JPM OW Taiwan in EM, JPM on Tech, another rainy day…

Bonjour,

European markets indicated to open flat. US markets up on hopes of a dovish message from the Fed today. Should be quiet all day as we wait for Bernanke’s press conference. Consensus is still for tapering to start in September with assets purchases reduced by $15 to 20bn. Bernanke could add that there is a difference between this and rates increases. Let’s try and see through this, find the good companies that make good investments… Anyway, once we know what the plan is, we’ll be able to have more volume and focus again on the fundamentals.

It’s raining so much here, there is only one thing to do (if you’re under 25 or suffer from the Peter Pan syndrome…).

supeman

NEWS

Key headlines : Cyprus president calls for complete bailout (FT), Adobe beats, Huawei denied interest in Nokia, Vodafone will raise Kabel Deutschland offer, Dish will not revise bid for Sprint, MS out with a tactical Buy on Barclays

Sony: an analyst at Jefferies (Atul Goyal) advises to keep the content. Interesting take.

France Considers Tax on Banks to Recoup Dexia Losses: Figaro

Hermes Files Case V LVMH at Paris Commerce Tribunal, Echos Says

EADS CEO Enders Mulls Sale of Part of Defense Unit, Welt Says

Liberty Plans to Offer Assets in Kabel Bid: (Financial Times)

Adobe shares up 4.6% after mkt with Sales/EPS of $1.01bn/36c (ex) vs estimates of $1.01bn/34c thanks to its subscription model (good for MSFT??).

Netflix to launch in the Netherlands in late 2013

Nokia Pares Gains After Huawei Denies Interest in Acquisition

Alcatel will unveil strategic plan, with announcements on asset sales, restructuring, new financial targets all expected (can go higher, but I just don’t trust them)…

RBS breakup suggested as option for Cameron by U.K. lawmakers

BHP says ‘several’ bidders interested in Kelar power station

Sweden to Cut Nordea Stake to 7.8% to Reduce National Debt. 260m shares offered at SEK75-SEK75.5 each in placing.

Shareholders of GSW Immobilien, Berlin’s largest residential landlord by mkt value, passed a no-confidence vote against its CEO following complaints from investors about how his hiring was handled

CURRENT STUFF

Senior bankers should face a criminal offence of ‘reckless misconduct’ under a toughened sanctions regime for failures at UK banks, according to the Parliamentary Commission on Banking Standards. The Commission’s long-awaited 571-page report also criticises UK governments for “clearly not acceptable” interference in the running of part-nationalised lenders (Financial Times).

Dish abandoned its current pursuit of Sprint Nextel. Dish said before a Tuesday deadline for a final offer that it would instead focus on its offer for Clearwire, though it added that it “continues to see strategic value” in a merger. Sprint shareholders will vote on a $21.6bn offer from Softbank on June 25 (Reuters, Wall Street Journal).

EADS’s chief executive said “never say never” to another attempt at a BAE Systems tie-up. But Tom Enders played down the prospects of a rapid return to dealmaking after last year’s planned deal between the two companies foundered on German government opposition (Financial Times).

GS on the FOMC meeting (Jan Hatzius): “We therefore expect the FOMC statement to show only modest  changes, mostly focused on acknowledging the lower inflation  numbers. Moreover, the committee is likely to downgrade its 2013  growth and inflation numbers moderately. While Chairman Bernanke  is likely to reiterate in the post-statement press conference that the QE  tapering decision is data dependent, we expect him to dissuade  markets from frontloading too much of the entire monetary tightening  process—not just the end of QE but also the normalization of the funds  rate—as soon as the committee takes the first step in that direction.”

– John Kay: don’t blame the tax havens — fix corporation tax in the G8 instead. (Financial Times)

STRATEGY

JPM (Mowat) Emerging Markets Equity Strategy.
Jey Trades and Risks.

EM ‘It did get worse’. Roundup of recent EM equity market action. We remain bearish EM vs. DM. It is in  Japan and the US that growth is resilient. We are upgrading Taiwan to OW. This market is performing well,  led by financials and technology. The tech case is volume; this benefits the operationally leveraged  component stocks. Our new year-end target for MSCI EM is 950. The message remains EM  is low beta, high alpha. The problem in EM is large caps, particularly government -linked companies, and  beyond these are many growth stories. In 2012, median EPS growth was 7% vs. -3% for the index. Both are  forecast to be 14% in 2013

JPM (Sandeep  Deshpande). European  Technology
Tech  CEO  conference  takeaways

Order  recovery  continues though uncertainties of sustainability remain.  J.P. Morgan hosted the European Technology  CEO conference in London yesterday. 22 executives spoke at the conference. The executives of companies  in  the  semis/hardware  space  were  broadly  positive.  Semis  companies  continue  to  see  bookings  improvement  thus  the  expectation  is  that  sales  estimates  will  continue  to  be  upgraded  on  the  back  of  improving orders. In terms of negatives, companies expo sed to the Galaxy S4 supply chain have indicated  incremental  order  softening  for  relevant  components  though  exposure  is  not  necessarily  an  indication  of  estimate declines due to one company seeing improvement in other businesses which masks weakness.

UPS&DOWNS

Barclays Bank (MS, Manners) Seeing through to 17% ‘core’ i-bank returns by 2015e
We think the market underestimates the ‘core’ return of the Investment Bank; our new analysis reinforces our conviction Barclays can beat cost of capital by 2015 and thus re-rate to above 1x tangible book, vs. the current 0.8x Dec 13e trading multiple.

Dassault Systemes (MS, Wood) Postcard from Le Bourget.
We are impressed that Dassault Systemes (DS) still believes solid double-digit growth is possible even at its larger A&D customers. This suggests better mid-term group growth than the market expects as the move to solution-based selling drives broader adoption. We remain OW – while the share price has moved beyond our PT, we still see an attractive risk/reward vs. the sector.

Nokia (GS, Schafer): Assessing what the future of NSN means for Nokia; retain Sell
Recent expiry of the Nokia Siemens Networking (NSN) shareholder agreement and press conjecture regarding potential strategic options for the JV have caused us to revisit our industry positioning framework and valuation. We remain Sell rated.

AGGREKO CUT TO NEUTRAL VS BUY AT UBS
AXIS RAISED TO BUY VS HOLD AT NORDEA
CARLSBERG RAISED TO OUTPERFORM VS SECTOR PERFORM AT RBC
ELISA CUT TO SELL VS HOLD AT BERENBERG
GENERALI RESTARTED BUY AT KEPLER CHEUVREUX, PT EU16
HEIDELBERGER DRUCK RAISED TO HOLD VS SELL AT WARBURG
ING RATED NEW BUY AT UBS, PT EU9.5
ISRAEL CHEMICALS CUT TO NEUTRAL VS BUY AT BOFAML
KABEL DEUTSCHLAND RAISED TO HOLD VS SELL AT BANKHAUS LAMPE
KABEL DEUTSCHLAND RAISED TO HOLD VS SELL AT WARBURG
KERYX BIOPHARMA RATED NEW OVERWEIGHT AT JPMORGAN, PT $13
KINGFISHER RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
KPN RAISED TO HOLD VS SELL AT BERENBERG
LANCASHIRE CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
PENNON CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
RHOENKLINIKUM CUT TO HOLD VS BUY AT BANKHAUS LAMPE
RTL GROUP RESTARTED HOLD AT SOCGEN, PT EU59
SEVERN TRENT CUT TO UNDERPERFORM VS SECTOR PERFORM AT RBC
TURK TRAKTOR RAISED TO BUY VS UNDERPERFORM AT BOFAML
WACKER CHEMIE RATED NEW SELL AT H&A, PT EU40

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +140.75 (+1.08%) at 13,148
Topix up +14.61 (+1.34%) at 1,101
Hang Seng down -264.54 (-1.25%) at 20,961

US markets
S&P 500 up +12.77 (+0.78%) at 1,651
DJIA up +138.38 (+0.91%) at 15,318
Nasdaq up +30.05 (+0.87%) at 3,482

European markets
Eurofirst 300 down -0.92 (-0.08%) at 1,184
FTSE100 up +43.72 (+0.69%) at 6,374
CAC 40 up -3.11 (-0.08%) at 3,860
Dax up +13.78 (+0.17%) at 8,229

Currencies
€/$ 1.339 (1.34)
$/¥ 95.21 (94.88)
£/$ 1.56 (1.57)

Commodities ($)
Brent Crude (ICE) down -0.03 at 105.99
Light Crude (Nymex) down -0.08 at 98.36
100 Oz Gold (Comex) down -2.00 at 1,364
Copper (Comex) up 0.01 at 3.16

10-year government bond yields (%)
US 2.19
UK 2.14
Germany 1.57

CDS (closing levels)
Markit iTraxx Europe +0.2bps at 108.1bp
Markit iTraxx Xover +1.2bps at 442.4bp
Markit CDX IG -0.1bps at 81.7bp

Sources: FT, Bloomberg, Markit

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Bonjour,

European markets indicated to open flat. US markets up on hopes of a dovish message from the Fed today. Should be quiet all day as we wait for Bernanke’s press conference. Consensus is still for tapering to start in September with assets purchases reduced by $15 to 20bn. Bernanke could add that there is a difference between this and rates increases. Let’s try and see through this, find the good companies that make good investments… Anyway, once we know what the plan is, we’ll be able to have more volume and focus again on the fundamentals.

It’s raining so much here, there is only one thing to do (if you’re under 25 or suffer from the Peter Pan syndrome…).
Description: http://d1oi7t5trwfj5d.cloudfront.net/9c/e1/cc5f98e84cffb616f9e690d850c1/man-of-steel-poster.jpg

NEWS

Key headlines : Cyprus president calls for complete bailout (FT), Adobe beats, Huawei denied interest in Nokia, Vodafone will raise Kabel Deutschland offer, Dish will not revise bid for Sprint, MS out with a tactical Buy on Barclays

Sony: an analyst at Jefferies (Atul Goyal) advises to keep the content. Interesting take.

France Considers Tax on Banks to Recoup Dexia Losses: Figaro

Hermes Files Case V LVMH at Paris Commerce Tribunal, Echos Says

EADS CEO Enders Mulls Sale of Part of Defense Unit, Welt Says

Liberty Plans to Offer Assets in Kabel Bid: (Financial Times)

Adobe shares up 4.6% after mkt with Sales/EPS of $1.01bn/36c (ex) vs estimates of $1.01bn/34c thanks to its subscription model (good for MSFT??).

Netflix to launch in the Netherlands in late 2013

Nokia Pares Gains After Huawei Denies Interest in Acquisition

Alcatel will unveil strategic plan, with announcements on asset sales, restructuring, new financial targets all expected (can go higher, but I just don’t trust them)…

RBS breakup suggested as option for Cameron by U.K. lawmakers

BHP says ‘several’ bidders interested in Kelar power station

Sweden to Cut Nordea Stake to 7.8% to Reduce National Debt. 260m shares offered at SEK75-SEK75.5 each in placing.

Shareholders of GSW Immobilien, Berlin’s largest residential landlord by mkt value, passed a no-confidence vote against its CEO following complaints from investors about how his hiring was handled

CURRENT STUFF

Senior bankers should face a criminal offence of ‘reckless misconduct’ under a toughened sanctions regime for failures at UK banks, according to the Parliamentary Commission on Banking Standards. The Commission’s long-awaited 571-page report also criticises UK governments for “clearly not acceptable” interference in the running of part-nationalised lenders (Financial Times).

Dish abandoned its current pursuit of Sprint Nextel. Dish said before a Tuesday deadline for a final offer that it would instead focus on its offer for Clearwire, though it added that it “continues to see strategic value” in a merger. Sprint shareholders will vote on a $21.6bn offer from Softbank on June 25 (Reuters, Wall Street Journal).

EADS’s chief executive said “never say never” to another attempt at a BAE Systems tie-up. But Tom Enders played down the prospects of a rapid return to dealmaking after last year’s planned deal between the two companies foundered on German government opposition (Financial Times).

GS on the FOMC meeting (Jan Hatzius): “We therefore expect the FOMC statement to show only modest  changes, mostly focused on acknowledging the lower inflation  numbers. Moreover, the committee is likely to downgrade its 2013  growth and inflation numbers moderately. While Chairman Bernanke  is likely to reiterate in the post-statement press conference that the QE  tapering decision is data dependent, we expect him to dissuade  markets from frontloading too much of the entire monetary tightening  process—not just the end of QE but also the normalization of the funds  rate—as soon as the committee takes the first step in that direction.”

– John Kay: don’t blame the tax havens — fix corporation tax in the G8 instead. (Financial Times)

STRATEGY

JPM (Mowat) Emerging Markets Equity Strategy.
Jey Trades and Risks.

EM ‘It did get worse’. Roundup of recent EM equity market action. We remain bearish EM vs. DM. It is in  Japan and the US that growth is resilient. We are upgrading Taiwan to OW. This market is performing well,  led by financials and technology. The tech case is volume; this benefits the operationally leveraged  component stocks. Our new year-end target for MSCI EM is 950. The message remains EM  is low beta, high alpha. The problem in EM is large caps, particularly government -linked companies, and  beyond these are many growth stories. In 2012, median EPS growth was 7% vs. -3% for the index. Both are  forecast to be 14% in 2013

JPM (Sandeep  Deshpande). European  Technology
Tech  CEO  conference  takeaways

Order  recovery  continues though uncertainties of sustainability remain.  J.P. Morgan hosted the European Technology  CEO conference in London yesterday. 22 executives spoke at the conference. The executives of companies  in  the  semis/hardware  space  were  broadly  positive.  Semis  companies  continue  to  see  bookings  improvement  thus  the  expectation  is  that  sales  estimates  will  continue  to  be  upgraded  on  the  back  of  improving orders. In terms of negatives, companies expo sed to the Galaxy S4 supply chain have indicated  incremental  order  softening  for  relevant  components  though  exposure  is  not  necessarily  an  indication  of  estimate declines due to one company seeing improvement in other businesses which masks weakness.

UPS&DOWNS

Barclays Bank (MS, Manners) Seeing through to 17% ‘core’ i-bank returns by 2015e
We think the market underestimates the ‘core’ return of the Investment Bank; our new analysis reinforces our conviction Barclays can beat cost of capital by 2015 and thus re-rate to above 1x tangible book, vs. the current 0.8x Dec 13e trading multiple.

Dassault Systemes (MS, Wood) Postcard from Le Bourget.
We are impressed that Dassault Systemes (DS) still believes solid double-digit growth is possible even at its larger A&D customers. This suggests better mid-term group growth than the market expects as the move to solution-based selling drives broader adoption. We remain OW – while the share price has moved beyond our PT, we still see an attractive risk/reward vs. the sector.

Nokia (GS, Schafer): Assessing what the future of NSN means for Nokia; retain Sell
Recent expiry of the Nokia Siemens Networking (NSN) shareholder agreement and press conjecture regarding potential strategic options for the JV have caused us to revisit our industry positioning framework and valuation. We remain Sell rated.

AGGREKO CUT TO NEUTRAL VS BUY AT UBS
AXIS RAISED TO BUY VS HOLD AT NORDEA
CARLSBERG RAISED TO OUTPERFORM VS SECTOR PERFORM AT RBC
ELISA CUT TO SELL VS HOLD AT BERENBERG
GENERALI RESTARTED BUY AT KEPLER CHEUVREUX, PT EU16
HEIDELBERGER DRUCK RAISED TO HOLD VS SELL AT WARBURG
ING RATED NEW BUY AT UBS, PT EU9.5
ISRAEL CHEMICALS CUT TO NEUTRAL VS BUY AT BOFAML
KABEL DEUTSCHLAND RAISED TO HOLD VS SELL AT BANKHAUS LAMPE
KABEL DEUTSCHLAND RAISED TO HOLD VS SELL AT WARBURG
KERYX BIOPHARMA RATED NEW OVERWEIGHT AT JPMORGAN, PT $13
KINGFISHER RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
KPN RAISED TO HOLD VS SELL AT BERENBERG
LANCASHIRE CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
PENNON CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
RHOENKLINIKUM CUT TO HOLD VS BUY AT BANKHAUS LAMPE
RTL GROUP RESTARTED HOLD AT SOCGEN, PT EU59
SEVERN TRENT CUT TO UNDERPERFORM VS SECTOR PERFORM AT RBC
TURK TRAKTOR RAISED TO BUY VS UNDERPERFORM AT BOFAML
WACKER CHEMIE RATED NEW SELL AT H&A, PT EU40

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +140.75 (+1.08%) at 13,148
Topix up +14.61 (+1.34%) at 1,101
Hang Seng down -264.54 (-1.25%) at 20,961

US markets
S&P 500 up +12.77 (+0.78%) at 1,651
DJIA up +138.38 (+0.91%) at 15,318
Nasdaq up +30.05 (+0.87%) at 3,482

European markets
Eurofirst 300 down -0.92 (-0.08%) at 1,184
FTSE100 up +43.72 (+0.69%) at 6,374
CAC 40 up -3.11 (-0.08%) at 3,860
Dax up +13.78 (+0.17%) at 8,229

Currencies
€/$ 1.339 (1.34)
$/¥ 95.21 (94.88)
£/$ 1.56 (1.57)

Commodities ($)
Brent Crude (ICE) down -0.03 at 105.99
Light Crude (Nymex) down -0.08 at 98.36
100 Oz Gold (Comex) down -2.00 at 1,364
Copper (Comex) up 0.01 at 3.16

10-year government bond yields (%)
US 2.19
UK 2.14
Germany 1.57

CDS (closing levels)
Markit iTraxx Europe +0.2bps at 108.1bp
Markit iTraxx Xover +1.2bps at 442.4bp
Markit CDX IG -0.1bps at 81.7bp

Sources: FT, Bloomberg, Markit


Max Kamir | Cross Asset Sales | Louis Capital Markets | 39, rue Cambon – 75001 Paris | T: +33 1 53 45 10 74 | M: +33 6 30 41 27 57 | F: +33 1 55 04 04 59 | mkamir@louiscapital.com | www.louiscapital.com

Authorised and regulated by the Financial Conduct Authority,

Banque de France and l’Autorité de Contrôle Prudentiel 

http://www.louiscapital.com/pdf/Disclosures.pdf

 


IMPORTANT NOTICE:

Unless otherwise stated within the attachment, the above information is not determined to be research and is not from LCM Research but it may refer to a research analyst/research report. Unless indicated, these views are the author’s and may differ from those of the research department of Louis Capital Markets, LP or its affiliates. We do not represent this is accurate or complete and we may not update this.

The information contained herein is confidential and is intended solely for the addressee(s). It shall not be construed as a recommendation to buy or sell any security. Any unauthorized access, use, reproduction, disclosure or dissemination is prohibited. Neither Louis Capital Markets, LP nor any of its subsidiaries or affiliates shall assume any legal liability or responsibility for any incorrect, misleading or altered information contained herein.

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