LCM (after) Dawn Patrol – 28.06.13 – Week End, Accenture: bad… Great strat piece by BAML and Kian (JPM) on global banks…

Bonjour,

Sorry I’m late… Took the bike.

Europe set to open flat today as we close the quarter. The US closed slightly below where we left them but above the 1600 level with stabilising US10y. The softer US data consumption and speeches by some Fed members helped. Let them speak, don’t spend your days trying to second guess what Fed members say… It’s the Week End, the end of the month and the quarter. It’s been tough, take a step back and relax.

We’ll monitor today German retail sales & CPI, Chicago purchasing manager and Michigan – US Earnings today are due from BBRY, FINL and AZZ. we have another round of Fed speakers lined up today including the San Francisco Fed’s Williams, Richmond Fed’s Lacker and Reserve Governor Jeremy Stein.

WEEK END

tour

SPORT: It’s tomorrow!

RESTO: THE FISH CLUB, 58 rue Jean Jacques Rousseau. http://www.lefooding.com/restaurant/restaurant-the-fish-club-paris.html

FILMO: FETE DU CINEMA! http://www.timeout.fr/paris/films/cinemas/fete-du-cinema?intcid=leader

BIBLIO: WHITE NOISE by Don DeLillo. Not another ultra liberal economics guide, just a very good book.

NEWS

Clariant confirms mid-term 2015 targets at Capital Markets Day

Lanxess. S&P cuts credit rating to negative.

Peugeot Family does not plan to sell its stake (BFM)

Nike shares declined 1% to $61.75 in heavy volume following the comments made on its earnings call. Before the call, shares were up more than 3% in after-hours.
Accenture down 7% AH on earnings miss and poor guidance. NEGATIVE for the usual suspects.

CURRENT STUFF

Fixed Income outflows
Redemption flows from fixed income also remains a main theme for markets.  According to the FT (which cited Lipper flow data), investors withdrew $8.6bn  from US bond funds in the last week with the four-week total up to $23.7bn, marking the worst month of outflows since October 2008 when investors  redeemed a record $44bn from bonds. The picture isn’t also any better for EM  debt funds. Both hard and local currency EM debt funds saw a total of $5.6bn  leave the asset class (or about 2.36% of AUM) for the week ended 26th June.This  is a historic high in USD terms and close to the largest weekly outflow since  November 2008 in AUM terms.

The after-Bernanke
WSJ is reporting that the Obama administration is  currently compiling a shortlist of candidates to succeed Bernanke when his term  ends in January. Names being discussed in the media include current Vice Chair  Janet Yellen and former treasury secretaries Larry Summers and Tim Geithner. The  article says while there is no front-runner candidate, Obama could try and  persuade Bernanke to serve a 3rd four-year term. Past Fed chair nominations have  tended to be made anywhere between June and October (WSJ).

STRATEGY

BAML (Hartnett) The Thundering Word
Confessions of an English Liquidity-Eater
Published yesterday, this is a great piece and a very informative one…

Watchful of bond risks, we remain equity bulls. BofAML contrarian trading rules are turning bullish, arguing for a bounce. New equity highs require higher rates to  cause strongereconomic growth (banks stocks are best barometer of macro  rehabilitation). A trade-up in EM equitieshas begun, but until China eases, cheap  DM banks remain our favored equity investment. In fixed income, government  bonds backed by the strongest balance sheets will likely outperform, in our view.
Here is some data:
The opiate of investors has been central bank liquidity. The degree of stimulus in the past 5-6 years has been unprecedented:
„- $12 trillion of financial asset purchases by the big 5 central banks
„- 520 central bank rate cuts
„- $33 trillion of fiscal and monetary stimulus according to the BIS(an amount equivalent to (46% of the world economy)
„- The lowest US government bond yields in 220 years
„- 50% (or $20tn) of global government bond market cap trading with a yield below 1%

UPS&DOWNS

Buy The Dip, Insurance Raised to Overweight, Citi Says

Global Investment Bank Tracker (JPM, Abouhossein) Bond selloff in June drives FICC -17% q/q: OW equity geared, restructuring IBs: UBS, CSG, MS
We give global IBs a score of A+ for 2Q risk control with high global bond and EM FX volatility, taking limited losses as risk/inventory sits with “real” money investors and not IBs. Hence, we estimate 2Q13E IB revenues to be -14% q/q with FICC -17%, equities -10% (ex SG) & IBD -7% (ex UBS) q/q. However, we highlight a step-decline in FICC revenue environment in June with global issuance volumes in DCM (-47%), HY (-72%) while rates & securitisation (ABS & MBS) issuance volumes were also down -53% on avg. m/m in June. We have seen some stabilization in bond markets but take a ‘wait-and-see’ strategy on 2H13E IB revenues at -16% 2H13/2Q13 watching 2H EM and securitization activity level (European Banks – Fed tapering: Who is afraid of EM sell-off?). We continue to prefer i) WM/equity gearing over FICC and ii) restructuring Tier II FICC IB players. Our pecking order in Global IBs: UBS, CS, MS, BARC, DBK & GS.

Europe: Consumer Staples (GS, Colombo) A rare entry point – time to buy quality after the de-rating: Unilever & Diageo to CL Buy
We see the recent sector de-rating as a rare entry point on quality staples stocks. We highlight 6 Buy-rated large caps that we believe can outperform even in a rising yield environment and add Unilever and Diageo to the Conviction List – Buy.

ACCENTURE CUT TO NEUTRAL VS BUY AT UBS
ASPEN PHARMA RAISED FROM UNDERPERFORM AT CREDIT SUISSE
ASPEN PHARMA RAISED TO OUTPERFORM AT CREDIT SUISSE
BAE SYSTEMS CUT TO HOLD VS BUY AT DEUTSCHE BANK AHEAD OF 1H
BRITVIC RAISED TO BUY VS HOLD AT SOCGEN ON VALUATION
Debenhams Raised to Overweight vs Neutral at JPMorgan
EUROPEAN INSURANCE RAISED TO OVERWEIGHT BY CITI STRATEGISTS
FBD HOLDINGS RATED NEW BUY AT BERENBERG; PT EU16.6
GN Store Nord Rated New Overweight at JPMorgan; PT DKK127
GREENE KING RAISED TO BUY VS NEUTRAL AT CITI
HANNOVER RE CUT TO NEUTRAL VS OUTPERFORM AT EXANE
HEINEKEN CUT TO REDUCE VS NEUTRAL AT NOMURA
MUNICH RE CUT TO UNDERPERFORM VS NEUTRAL AT EXANE
POP. MILANO RATED NEW HOLD AT SOCGEN, PT EU0.34
SCHRODERS RAISED TO OUTPERFORM VS NEUTRAL AT EXANE
SIPEF RATED NEW HOLD AT ING, PT EU54
VODAFONE RAISED TO BUY VS HOLD AT DEUTSCHE BANK
YAPI KREDI RAISED TO NEUTRAL VS SELL AT GOLDMAN


Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s