LCM Dawn Patrol – 11.07.13 – Gold Price Targets, MS on Aerospace, Tech. JPM on Vod.

Bonjour,

 

 

European stocks set to rally at the open on dovish Fed comments. Ben Bernanke, said late on Wednesday that the bank would pursue a “highly accommodative policy … for the foreseeable future”, adding the current unemployment rate of 7.6 percent may overstate the health of the labour market and interest rates would not automatically be raised when the unemployment rate hits the Fed’s 6.5 percent target.

 

Today : Kuroda’s post-BoJ meeting press conference. US initial jobless claims. U.K., Italy sell bonds, Italy also sells floaters.

 

 

NEWS

 

EU’s scaled-down agency to shut banks fails to please Germany
Portugal president wants ‘salvation’ deal, including opposition
Luxembourg spying scandal breaks Juncker government
Spain does not need further EU aid – Commission report
Second Slovenian bank expects audit as EU worries about debts

Chevron said its oil and gas business is set for a year-over-year drop in the second quarter as lower crude prices and equipment maintenance.
Suedzucker 1Q Rev., Ebit Beat Ests; reiterates FY outlook, 1Q Ebit EU230m, est. EU226.4m.
DNB Q2 Income beats exp – 2Q net interest income growth over (12-month period) 6.8% vs 5.9% in 1Q
-
GSK suspected of bribery and tax fraud in China
Yum! Brands 2Q adj. EPS 56c vs est. 54c; China June comps. fell less than expected. 2Q rev. $2.90b vs est. $2.92b Shrs gain 1.4%post-mkt.
 

CURRENT STUFF

 

The Bank of Japan talked of recovery for the first time since before the 2011 earthquake and tsunami, and maintained its asset purchasing programme as widely expected at its July board meeting ended today. The BoJ maintained its forecast from April that prices would rise 1.9% by April 2015, excluding effects of a planned sales tax hike. (Bloomberg)(Financial Times)

 

South Korea’s central bank kept rates on hold at 2.5%, as widely expected. (Wall Street Journal)

 

China’s big four banks extended a lot of credit so far this month: The banks loaned Rmb170bn in new yuan-denominated credit, the official Shanghai Securities News said today. That compared to an estimated Rmb270bn for all of June, the newspaper said. (Reuters)

 

To readProperty is crushing hedge funds in the alternative investments category. (Bloomberg)

 

 

STRATEGY

 

Gold price targets forecasts (as of yesterday, source: Bloomberg)

 

Firm Analysts (27) As Of Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14
Australia & New Zealand Banking Group Lt M. Pervan 02/08/13

1690

1755

1785

1780

1760

1743

Bank of America Merrill Lynch M. Widmer 05/28/13

1400

1495

1500

1500

1600

 
Barclays PLC S. Cooper 04/26/13

1450

1500

       
BNP Paribas SA H. Tchilinguirian 05/10/13

1575

1625

1590

1525

1490

1470

Cantor Fitzgerald LP R. Chang 04/18/13

1645

1630

       
Capital Economics Ltd R. Strachan 12/03/12

2000

2000

1950

1900

1850

 
China International Capital Corp Hong Ko J. Kong 04/15/13

1340

1320

1300

1250

1210

1200

Citigroup Inc D. Wilson 04/23/13

1555

1455

       
Commerzbank AG E. Weinberg 06/03/13

1500

1650

1750

1700

1775

1850

Credit Suisse Group AG T. Kendall 04/03/13

1570

1540

1520

1520

1480

1470

Danske Bank A/S C. Tuxen 06/28/13

1150

1000

975

950

925

900

Deutsche Bank AG D. Brebner 05/17/13

1500

1525

1500

1500

1500

1500

DZ Bank AG G. Vogel 06/12/13

1300

1200

1150

     
Incrementum AG R. Stoeferle 06/27/13

1244

1289

1322

1480

1422

1587

Intesa Sanpaolo SpA D. Corsini 07/01/13

1200

1250

1250

1200

1150

1100

Itau Unibanco Holding SA I. Goldfajn 07/03/13

1210

1190

1180

1173

1165

1158

LBBW T. Proettel 07/08/13

1250

1250

1225

1200

   
National Australia Bank Ltd A. Knight 04/09/13

1530

1500

1460

1430

1390

1360

Norddeutsche Landesbank Girozentrale N. Rudschuck 06/27/13

1400

1450

1300

1225

1275

1350

Oversea-Chinese Banking Corp Ltd B. Gan 06/24/13

1320

1350

       
Prestige Economics LLC J. Schenker 07/01/13

1290

1390

1400

1425

1450

1475

RBC Capital Markets E. Lashinski 01/10/13

1410

1275

       
Societe Generale SA R. Bhar 06/12/13

1300

1200

1175

1150

   
Standard Chartered Bank D. Smith 04/15/13

1750

1800

1900

1900

1900

1900

Toronto-Dominion Bank/Toronto B. Melek 06/27/13

1275

1200

1175

1150

1175

1250

UniCredit Markets & Investment Banking J. Hitzfeld 07/08/13

1300

1300

1400

1500

   
Westpac Banking Corp J. Smirk 07/01/13

1300

1308

1263

1188

1086

1111

 

 

UPS&DOWNS

 

 

Aerospace & Defence (MS, Vig) 2Q13 PreviewPositive RTI’s: Safran, Thales SANegative RTI’s: MTU Aero Engines, Finmeccanica
We expect A&D 2Q results to highlight continued positive trends in OEM and on-track program execution. For suppliers, we expect 1Q trends to have continued, whilst for defence, we believe a seemingly better budget environment could be offset by 2Q margin pressue.

 

Vodafone (JPM,  Dattani) Assessing Vodafone’s growth outlook. US exposure remains key to our OWThe Telco reporting season kicks off next week. We expect a solid quarter from VZW and a growth rebound at Vodafone (albeit diluting these positives, note Q2 13/14 will be hampered by large MTR cuts in Spain and Turkey). Results aside, Vodafone remains our top pick within the large cap universe. The company’s US exposure remains under-valued and we believe a VZW deal could materialize this year crystallising this upside. Supporting this, recent analysis from Moody’s suggests VZ’s need for VZW dividend receipts rises materially over time potentially adding pressure on management to execute on a deal.

 

Technology (MS) Q2 PreviewsQ2 results from Samsung, HTC and BBRY leave us cautious on high-end smartphones. All three companies saw weakness at the high end in the June quarter, whilst lower end Chinese component suppliers SPRD and MTK have reported strong results. This suggests the shift to low-end smartphone is continuing, and could be negative for ARM. However, we note that ARM’s share price is down 15% since highs in May, and is now trading on 33x PER, which we believe implies an ASP of 4c. The shares could rise on a beat and raise; however the company needs to address concerns that Intel could possibly take market share in FY13 and FY14.

 

 

 

OVERNIGHT MARKETS: MIXED

 

Asian markets
Nikkei 225 down -90.79 (-0.63%) at 14,326
Topix down -11.34 (-0.95%) at 1,184
Hang Seng up +455.85 (+2.18%) at 21,360

US markets
S&P 500 up +0.30 (+0.02%) at 1,653
DJIA down -8.68 (-0.06%) at 15,292
Nasdaq up +16.50 (+0.47%) at 3,521

European markets
Eurofirst 300 up +1.07 (+0.09%) at 1,190
FTSE100 down -8.12 (-0.12%) at 6,505
CAC 40 down -3.03 (-0.08%) at 3,841
Dax up +8.73 (+0.11%) at 8,066

Currencies
€/$ 1.31 (1.30)
$/¥ 98.67 (99.64)
£/$ 1.51 (1.50)

Commodities ($)
Brent Crude (ICE) down -0.24 at 108.27
Light Crude (Nymex) up +0.05 at 106.57
100 Oz Gold (Comex) up +33.90 at 1,281
Copper (Comex) up +0.08 at 3.18

10-year government bond yields (%)
US 2.59%
UK 2.43%
Germany 1.66%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.43bps at 100.2bp
Markit iTraxx Europe +1.64bps at 113.57bp
Markit iTraxx Xover +9.58bps at 455.56bp
Markit CDX IG +1.12bps at 86.56bp

Sources: FT, Bloomberg, Markit

 

 

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