LCM Dawn Patrol – 29.07.13 – JPM on EU strat, some results, PUB and OMC…

Bonjour,

 

European markets to open slightly up today as the Fed, the BoE and the ECB hold meetings this week and they should continue their accommodative policy in the short term.

 

This week will be busy : We’ll monitor CBs meeting with:  FOMC, BOE and ECB,  NFP, Jul PMI & Earnings from European Banks. Italy’s Supreme Court meets on Tuesday to examine the Berlusconi’s fraud trial. He could be banned from public office.

 

Today: BoJ’s Kuroda is speaking about QQE (PDF). Japan retail sales. UK M4 money supply, mortgage approvals, consumer credit. US pending home sales.

 

NEWS

 

Schaeuble Says Pressure on Greece Must Remain Ahead of Election

 

Barclays May Announce Capital Raising Plan, WSJ Says (indicated down 2%)
Danone 2Q LFL Sales, Vol. Beat Ests.; Confirms 2013 Outlook (indicated up)
Dia 2Q Net Income EU33.4 Mln Vs EU35.2 Mln a Year Ago
Elan Said to Near Sale of Company With Perrigo a Frontrunner
Liberty Global Increases Ziggo Ownership to 28.5%
Publicis to Combine With Omnicom to Create Advertising Leader
RECKITT BENCKISER 2Q LFL SALES EX-RBP UP 6%; EST. 5.2% RISE
Ryanair 1Q Profit After Tax Drops 21%; Says Heatwave a Concern
SAP’s McDermott Plans EU200 Million Savings Program
Siemens to Replace CEO as Loescher Fails to Mimic German Peers

 

CURRENT STUFF

 

Hilsenrath & Peterson: Fed doves have a better record of predicting US economy. (Wall Street Journal)

 

Publicis and Omnicom’s $35bn tie-up will create the world’s largest advertising and marketing services group by revenues, and is a bold bet that size matters in a new media world that is increasingly controlled by technology. (Financial Times) Big data is making Madison Ave more like Wall St. (Wall Street Journal).

 

Siemens is preparing to remove CEO Peter Loescher, following a series of profit warnings and operational mishaps. The company said on Saturday its supervisory board would on Wednesday “decide on the early departure of the President and CEO”. Two people close to the company said Joe Kaeser, chief financial officer, was set to be nominated as the new chief executive. (Financial Times)

 

Ryanair hasn’t seen any offer for its 29% ownership in Aer Lingus since recent revelation that it would be open to sell to “any successful bidder,” and is still eager to buy controlling stake itself, Barron’s said, citing interview with CEO Michael O’Leary; “nobody wants it except us,” O’Leary told Barron’s (Barrons).

 

FT reports European demand for oil is on the rise for the first time in two years in a sign of increased economic activity across the continent. But some analysts cautioned against reading too much into the European demand figures. Some of the increase may have been due to a  cold spring encouraging consumption of fuel and heating oil. And while demand may be increasing, it still remains at a low level.

STRATEGY

 

JPM (Matejka) Europe Equity Strategy
Evidence supporting Europe is coming through – Discretionary, Financials and Value are attractive
We upgraded Europe to OW within a global portfolio on 15th July. Most recently a number of supportive datapoints have materialized – PMIs moving above breakeven point, consumer confidence moving higher, bank lending standards easing, as well as the demand for credit bottoming out. We list in the report 21 corporates which have seen an improvement in European activity. All these help the investment case which in our view is the following: Europe is attractively priced on what are potentially trough earnings and ROE – if these were to normalize the upside could be substantial. Discretionary (OW) and Financials (OW) show the highest correlation to European domestic activity. We reiterate our upgrade of Autos on 24th June where we keep the preference for domestic over the premium players. Value style should start performing. On the other side, we think Germany might struggle to retain leadership, we are cautious on bond proxies and expensive EM plays which have shown minimal repricing so far (UW Chemicals and Capital Goods, N Staples and Luxury)

 

 

UPS&DOWNS

 

AIR FRANCE RAISED TO OUTPERFORM VS SECTOR PERFROM AT RBC
AVIA SOLUTIONS GROUP CUT TO HOLD VS BUY AT ING
AXEL SPRINGER RAISED TO OVERWEIGHT FROM NEUTRAL AT HSBC, PT EU47
CREDIT AGRICOLE CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
H&M RAISED TO BUY VS HOLD AT DEUTSCHE BANK
ICADE RESUMED AT HOLD AT SOCGEN; PT EU70
JULIUS BAER CUT TO SELL VS HOLD AT BERENBERG
MARSTON’S CUT TO HOLD VS BUY AT JEFFERIES, PT 155P
PIAGGIO RAISED TO NEUTRAL FROM UNDERPERFORM AT MEDIOBANCA
PROSEGUR CUT TO HOLD VS BUY AT KEPLER CHEUVREUX
REXEL CUT TO HOLD FROM BUY AT DEUTSCHE BANK, PT EU18.50
REXEL CUT TO HOLD VS BUY AT BERENBERG
REXEL CUT TO HOLD VS BUY AT DEUTSCHE BANK
TELKOM SA RAISED TO OUTPERFORM FROM NEUTRAL AT CREDIT SUISSE
VICTREX RATED NEW OVERWEIGHT AT BARCLAYS; PT 1,860P
VOLKSWAGEN RATED NEW BUY AT BERENBERG; PT EU230
WOOLWORTHS HOLDINGS RAISED TO BUY VS NEUTRAL AT GOLDMAN
WPP RAISED TO BUY VS NEUTRAL AT UBS

OVERNIGHT MARKETS: DOWN

 

Asian markets
Nikkei 225 down -305.72 (-2.16%) at 13,824
Topix down -27.80 (-2.38%) at 1,139
Hang Seng down -125.35 (-0.57%) at 21,844

US markets
S&P 500 up +1.40 (+0.08%) at 1,692
DJIA up +3.22 (+0.02%) at 15,559
Nasdaq up +7.97 (+0.22%) at 3,613

European markets
Eurofirst 300 down -3.92 (-0.32%) at 1,205
FTSE100 down -33.16 (-0.50%) at 6,555
CAC 40 up +12.82 (+0.32%) at 3,969
Dax down -54.07 (-0.65%) at 8,245

Currencies
€/$ 1.33 (1.33)
$/¥ 97.86 (98.24)
£/$ 1.54 (1.54)

Commodities ($)
Brent Crude (ICE) down -0.13 at 107.04
Light Crude (Nymex) down -0.36 at 104.34
100 Oz Gold (Comex) unchanged 0.00 at 1,322
Copper (Comex) unchanged 0.00 at 3.11

10-year government bond yields (%)
US 2.56%
UK 2.34%
Germany 1.67%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.47bps at 92.64bp
Markit iTraxx Europe -0.9bps at 102.5bp
Markit iTraxx Xover -3.18bps at 413.07bp
Markit CDX IG +1.12bps at 86.56bp

Sources: FT, Bloomberg, Markit

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