LCM Dawn Patrol – 03.07.13 – MS on Chemicals, News and mood.

Howdy,

 

European stocks are set to drop again today following sharp losses in Europe on poor Chinese data and tensions in Egypt which pushed WTI crude oil above $100. EM were in the red again in Mexico and Brazil. Portugal, Egypt, China, tapering are all the reasons for yesterday’s poor performance but volume was quite low and it feels like investors are just cautious ahead of Thursday’s ECB and Friday’s NFP as US markets will be closed tomorrow.

 

Looking at technicals, Eurostoxx failed to break its downside trend and remains locked below its mav200 – Supports 2572/78 then 2556. S&P can’t push above its 50-day moving average of 1,624,
that becomes an area of resistance and it means this is a rally that’s starting
to fade – This is the third time we’ve tested it

 

Today, we’ll watch the US ADP private employment figures; US initial jobless claims; European services PMIs.

 

 

Le Tour.
Cagnes sur Mer / Marseille

cagnes

 

 

NEWS

 

Barclays, Credit Suisse, Deutsche Bank credit ratings cut by S&P / UBS affirmed : S&P says banks’ debtholders face “heightened credit risk owing to the industry’s tighter regulation, fragile global markets, stagnant European economies, and rising litigation risk stemming from the financial crisis.”

U.S. steel groups filed trade case with ITC against overseas pipemakers, seek remedies against 9 nations; names India, South Korea, Philippines, Taiwan, others > very good news for X, TS, Vallourec and companies’ suppliers, and “essentially the entire steel industry”
HSBC judge approves $1.9b accord on money laundering
GDF plans to raise >EU600m selling stakes in wind, solar – DJ
BMW trims Mercedes’s 2013 luxury lead as 3 series demand soars
Telefonica, Vodafone, Orange sign agreement to share vertical infrastructure of fiber optics in buildings in Spain, cos. say in joint e-mailed statement late yday.
EDF needs to improve safety to extend Reactor Lives – Echos :  EDF’s plan to prolong the usage of its 58 nuclear reactors to 60 years.

Roche. Leukemia Drug (obinutuzumab) granted priority review by FDA (BL)

 

CURRENT STUFF

 

The Fed plans to introduce capital requirements that go beyond Basel III. At a board meeting yesterday in which the central bank agreed to force US banks comply with Basel III rules, it also outlined proposals including forcing the biggest banks to hold a higher leverage ratio, and capital charges targeted at banks most exposed to short-term wholesale funding. Officials have previously mentioned the ideas in speeches but not as firm policy goals. (Financial Times)

 

Investors pulled a record $9.9bn from Pimco in June: It was the largest outflow in the 26-year history of Pimco’s flagship Total Return bond fund. (Financial Times)(NYT Dealbook)

 

China’s services sector PMIs improved slightly in June, with the HSBC/Markit measure rising to 51.3 from 51.2 in May, but new orders sub-index was 50.5, its lowest since November 2008. (Reuters)

 

German Elections : GS Bottom Line:” Less than three months before the German elections take place, Chancellor Merkel’s party isstill, by a wide margin, the most popular with voters. However, based on the latest polls, Chancellor Merkel would need a coalition partner to form a government. Her current coalition partner, the FDP, has weak support, making a so-called ‘Grand Coalition’ with the Social Democrats still the most likely outcome.”

 

Moody’s has placed the credit ratings of the three biggest US custody banks on review for a downgrade in a move that illustrates the continued pressure of record low interest rates on the businesses of some of the largest financial institutions. Bank of New York Mellon, Northern Trust and State Street would most likely see their ratings trimmed by one notch, Moody’s said in a statement on Tuesday.” (Financial Times)

 

 

 

UPS&DOWNS

Chemicals (MS, Walsh) Cannonball Run 2013: Another Bad Sequel
Evonik: EW, PT €30 to €28
K+S: UW, PT €35 to €30
Lanxess: EW, PT €60 to €55

Conditions have failed to improve sequentially in Q2, with the hope of an H2 recovery remaining just that given current order books. Our “realistic downside case” report looks increasingly likely. Our 8-year bull run thesis seems to be playing out, but current weakness may create opportunities.

Syngenta (GS, Patel) Buy: Structural drivers should lead to decoupling from Ag cycle; CL-Buy
We add Syngenta to our Conviction Buy List recognising that while there is likely to be near-term weakness at 1H on delayed planting, the long-term fundamentals remain strong. We estimate the group can return over US$4 bn over the next four years.

 

AB Inbev (ABI.BR): ING cuts price target to 73.80 euros from 75 euros;rating hold
British Land (BLND.L): Jefferies cuts price target to 540p from 554p; rating hold
Derwent London Plc (DLN.L): Jefferies raises price target to 2406p from 2375p; rating hold
Grainger Plc (GRI.L): Jefferies raises price target to 177p from 176p; rating buy
Great Portland (GPOR.L): Jefferies raises price target to 522p from 516p; rating hold
Hammerson (HMSO.L): Jefferies cuts price target to 505p from 539p; rating hold
Hansteen (HSTN.L): Jefferies raises price target to 88p from 87p; rating hold
Intu Properties Plc (INTUP.L): Jefferies cuts price target to 314p from 317p; rating hold
Land Securities (LAND.L): Jefferies cuts price target to 908p from 924p; rating hold
Londonmetric Property (LMPL.L): Jefferies cuts price target to 105p from 110p; rating hold
Mediaset (MS.MI): Berenberg raises price target to 3.60 euros from 2.80 euros; rating buy
Ocado (OCDO.L): Jefferies raises price target to 275p; rating hold
Panalpina (PWTN.S): Morgan Stanley ups target to Sfr 130 from Sfr 110; rating overweight
Randgold Resources (RRS.L): Citigroup cuts to neutral from sell
Randgold Resources (RRS.L): Citigroup raises price target to 4491p from 3926p
Segro (SGRO.L): Jefferies cuts price target to 244p from 245p; rating hold
Shaftesbury (SHB.L): Jefferies raises price target to 566p from 560p; rating hold
Stagecoach (SGC.L): Morgan Stanley ups target to 330p from 310p; rating equal weight
Syngenta AG (SYNN.VX): Berenberg cuts price target to Sfr 510 from Sfr 515; rating buy
Unibail-Rodamco (UNBP.AS): Jefferies ups target to 193 euros from 190 euros; rating hold
Unite Group (UTG.L): Jefferies raises price target to 450p from 425p; rating overweight
Workspace (WKP.L): Jefferies raises price target to 385p from 380p; ratinghold

OVERNIGHT MARKETS: DOWN

 

Asian markets
Nikkei 225 down -15.27 (-0.11%) at 14,083
Topix up +1.24 (+0.11%) at 1,173
Hang Seng down -388.98 (-1.88%) at 20,270

US markets
S&P 500 down -0.88 (-0.05%) at 1,614
DJIA down -42.55 (-0.28%) at 14,932
Nasdaq down -1.09 (-0.03%) at 3,433

European markets
Eurofirst 300 down -4.81 (-0.41%) at 1,159
FTSE100 down -3.84 (-0.06%) at 6,304
CAC 40 down -24.91 (-0.66%) at 3,743
Dax down -73.15 (-0.92%) at 7,911

Currencies
€/$ 1.30 (1.30)
$/¥ 100.69 (100.62)
£/$ 1.51 (1.52)

Commodities ($)
Brent Crude (ICE) up +0.80 at 104.80
Light Crude (Nymex) up +2.01 at 101.61
100 Oz Gold (Comex) up +3.70 at 1,247
Copper (Comex) unchanged 0.00 at 3.14

10-year government bond yields (%)
US 2.47%
UK 2.40%
Germany 1.71%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.43bps at 94.67bp
Markit iTraxx Europe -0.95bps at 113.87bp
Markit iTraxx Xover -5.28bps at 454.7bp
Markit CDX IG +1.46bps at 85.95bp

Sources: FT, Bloomberg, Markit

 

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