EFTA Document EFTA02147503

From: Sent Tue 2/26/2013 10:57:31 AM Subject Early Tour 2.26.13 Good Morning ... Europe off 1.3%-2.4% (IBEX -3.1%, MIB 4.7%) ... ASX -1.03%, NKY - 2.26%, KOSPI -0.47%, TWSE -0.84%, SHCOMP -1.40%, HSI -1.32% EUR 1.3087 (+0.19%) JPY 91.96 (-0.16%) EURJJPY 120.34 (+0.34%) NZD 0.8319 (-0.21%) SEK 6.464 (+0.26%) RUB 30.58 (-0.47%) Futures: Dow +23, Nasdaq +3, S&P +2 DXY $81.81 (+4c) Crude 592.28 (-83c) Gold $1594.10 (+$7.50) Copper -0.35% No surprise that Asia was lower overnight following the move in the US. Markets did rebound from the initial sell-off, but rolled over again in the afternoon to close near the lows in most cases. JPY bounced back from yesterday's low of 90.88, hitting 92.74 intra-day before settling around 92. Overall news flow was light as Europe takes focus for the time being. European markets lower across the board on the messy election results out of Italy that have delivered a strong anti-austerity/anti-reform message, created a political vacuum in Italy, and in the process complicated the broader European policy outlook. While Bersani squeaked out a narrow victory over Berlusconi (followed by Grillo and Monti) in the lower house that secures his center-left coalition a majority of the seats there given the rules, nobody was able to secure a majority in the upper house (Senate) — resulting in a hung Parliament. So either a grand coalition needs to be formed or new elections will have to be called. Wolfgang Munchau of the FT makes a case for a grand coalition here but market consensus seems to be that we are inevitably headed for fresh elections (nothing new to Italy which is facing its 62nd government since WW II). The coalition talks are not officially supposed to take place until the presidents for the lower and upper houses have been elected on March 15, so it is likely to be a few weeks before we have any real visibility. This political uncertainty is driving periphery yields sharply higher this morning with Italy 10yr +30bps to 4.79% and Spain 10yr +12bps to 5.29% (but off the highs of the day 4.93% and 5.60% respectively). Italy sells E8.75 billion of 6-month bills at 1.237% vs 0.731% on Jan 29. Also note Italy is scheduled for a 5-I0yr bond auction tomorrow which is likely to prove a struggle given the circumstances. Italian banks down 7-10% and leading EMU Bank Index lower - 5.3%. Volumes in Europe currently 2.4x the 20d average. Bernanke before Congress @ 10am and is likely to be pressed for any clarity on the future of the Fed's QE program given last week's FOMC minutes. US futures up small after yesterday's ugly close as European markets try to stabilize from opening levels and ahead of Bernanke's testimony later. SPA's +2 handles = 1489.50 last. EFTA_R1_00806423 EFTA02147503 •••Bernanke Semi-Annual Senate testimony © 10am, JPM analyst meeting today• ***Case-Shiller Home Price Index © 9am / Consumer Confidence & New Home Sales © 10am*" •"AMT, AZO, HD, M, PCS earnings pre-open / AVGO, FSLR, PCLN, DWA Ws post close••• •••Italy's Bersani to hold press conference © 5pm CET in Rome (11am EST)'•• • Autodesk mixed O4 results (revs up but margins light) gave weak guidance (trading -2%) • Stifel eps/revs beat (profit up 48%) on strong gains in wealth mgmt & institutional biz • Apollo (University of Phoenix) moves from being on notice to probation (trading -3%) • Carlyle Group hires banks to sell Arinc (Aerospace & Defense) for $1.2B-$1.5B (Reuters) • Samsung teases Galaxy S4 launch (March 14) with company postings on Twitter/Facebook (FT) • Berlusconi says he needs time to reflect but that returning to the polls will not be useful (DJ) • Sky Deutschland CEO sees 2013 growth of at least that seen in 2012, probably stronger (trading - 2.0%) • Vivendi FY sales & net inline, EBITDA & revs better, Activision strong, bids for GVT stake below (trading -0.95%) • SEB ebit inline, net income slight better (€25M depreciation), net debt ok, outlook cautious (trading - 3.6%) • BASF O4 EBIT/op income light (indust segments weigh), performance products weak (trading - 2.9%) • CRH FY ok, EBITDA inline, EPS better, outlook retrained, Europe stabilizing, CEO steps down (trading +0.80%) • GKN FY solid, EPS better (lower tax rate), revs/PBT ahead, aerospace/underlying good, broker d/g (trading unch) • Redrow H1 sales slight better, PBT and EPS ahead, H2 started well, sees recovery continuing (trading -5.5%) • Pandora Q4 sales better, EBITDA inline, div good, DKK700 shr buyback better, cautious outlook (trading +2.5%) • Whitbread Q4 solid, Costa strong (again), LFL's okay, cautious on hotel competition, broker d/g (trading -2.8%) • Fresenius Medical FY sales & EBIT slight better, EPS inline, margin inline, guidance ok (trading +1.5%) • Fresenius SE O4 revs & EBIT slight ahead, sees profit exceeding El billion in 2013 (trading +3.8%) EFTA_R1_00806424 EFTA02147504 • William Demant (WDH DC) H2 sales light, EBIT below, net miss, weak guidance (trading -2.2%) • Veripos (VPOS NO) Q4 solid, EBITDA & revenues ahead of estimates, better dividend (trading unch) • Croda O4 prelims EBIT & EPS slightly better, net debt ok, muted guidance (trading +1.1%) • Imperial Tobacco confirms FY results on track, dividend inline, cost savings going well (trading - 0.1%) • UBS's Tom Price sees iron ore plunging 54% to lowest level since 2009 on supplies (Bloomberg) Leading European Sectors: Media -0.07%, Food/Bev -0.08%, Basic Res -0.16% Lagging European Sectors: Banks -2.83%, Insurance -1.97%, Utilities -1.48% IRBT $25M buyback — SYKE guides down — OKE cuts yr net view CZR revs light — MELI eps beats ests — VVUS loss wider than ests CHMT #'s below ests — HEAT cfo resigns — MR earnings better TWI revenue missed — SPRD guides up — AXTI buyback Secondaries (announced/priced): RDN ($200M convert), EEQ, MAA, SMP LN IPO's: Sempra Mexico (pricing March 21 thru CS & DB) US Key Research: Barcap initiates LBTYA (ow) & CVRR (ew), Citi initiates CVRR (neut) & TPH (buy) • Cowen initiates KORS/LULU/NKE/RUTUMI (op's) & COH/COST/TGT/UAANMT (neut's) Jeff initiates IP (buy), Stifle upgrades SUPX (buy), UBS initiates CVRR (buy) • Wells initiates EDE (mp) & upgrades AILS, Bofa reinstates CBOE/CME (neut) & NDAQ (buy) r Johnson Rice downgrades CHK, CS cuts OKS, RBS upgrades SNDK, Evercore cuts TXN • Piper downgrades MDP, BMO downgrades ADM, CLSA initiates SWK (buy) EFTA_R1_00806425 EFTA02147505 Europe Key Research: • Nomura downgrade CLAB SS, BofAML upgrade PAG LN, HSX LN, DB upgrade FR FP, Initiate SRT GY (h) • SocGen add BNP FP, HEIA NA to prem list, LLOY LN, SREN VX removed, Beren initiate STJ LN (h) • UBS downgrade PFG SJ, GS initiate TPE PW (s), remove STJ LN from focus list • JPM downgrade MMT FP, GKN LN, MS downgrade PGIL LN, Citi downgrade BVS LN • HSBC downgrade DTC SJ, upgrade RSL2 GY, ISP IM, ABN initiate SUBC NO (h) • ABG upgrade STERV FH, Investec downgrade CFR VX, DNB upgrade ARCHER NO • Bern upgrade TEF SM, JEFF initiate HU LN (b),SEB add HUSQB SS to overweight list • Numis downgrade RED LN, DVO LN, WTB LN, Centrobanca downgrade A2A IM • Intermonti downgrade BGN IM, MED IM, BP IM, UCG IM, ENEL IM, upgrade TRN IM, ENI IM • Danske downgrade EKTAB SS, RAYJ downgrade DIA SM, RAIFF downgrade LNZ AV Reporting Pre-Open: AMT, AZO, ECL, EXPD, HD, M, PCS, SRE, THC, AG, AKRX, ALX, AMCX, ASTE, AUXL, BZ, CAS, CBRL, CDI, CIE, CMLP, CRZO, CTHR, EME, EXH, EXLP, GPX, GSJK, THE, HTI, HFC, HSII, IPXX, LDL, MSO, PEI, RBA, RRD, RSH, SFI, SHOO, SKS, SLCA, SPRD, SSP, TDS, TRS, TSL, UNFI, UNS, USM, UTHR, VSI, WPC Reporting Post-Close: AVGO, EIX, FSLR, PCLN, VNO, VRSK, ACCL, ASCMA, AVID, AWK, BGFV, BID, BTUI, CCF, CO, DGI, DL, DWA, DY, ENPH, EPR, ERIE, EXAC, GA, GPOR, GWRE, HSTM, HXM, INN, JAZZ, KAI, KWQU, LMAT, LYV, MAKO, MIDD, NATL, NUVA, ORA, PZZA, QCOR, REXX, RIMG, RNIN, SPN, STV, TIVO, TTEC, UNXL, VICR, WFT, WTI, ZAGG Economic Data: S&P/Case-Shiller Home Price Index @ 9am, Richmond Fed Manufacturing Index / Consumer Confidence / New Home Sales t 10am Treasury Auction of 5-yr Notes @ 1 pm ($35B), API crude oil inventories c 4:30pm Conferences: Citi Healthcare (NYC), JPM High Yield & Leveraged Finance (Miami), MS TMT (SF), RBC Healthcare (NYC) Conferences: UBS SMID Cap One-on-One Symposium (Boston), Baird Business Solutions (NYC), Wells Real Estate Securities (NYC) EFTA_R1_00806426 EFTA02147506 Analyst/Investor Days: DLPH, JPM, DRI, JNPR, WBSN Non-Deal Roadshows: AFFX, AFL, CA, CPHD, CRK, CSRE, ESV, GIVN, 1O, JAH, LOGM, OAK, OPTR, OZRK, RPRX, SLTC, SPNS, VAC, VMC, WWD Shareholder Meetings: RITT, NDSN, ARCP, TTEK Equity/Mixed Shelfs: NURO ($20M) Other Newspaper Articles & Stories • Helicopter Money: Or How I Stopped Worrying and Love Fiscal-Monetary Cooperation interdependence.orq • Sticking With Stocks for the Long Run Barron's • Rio Tinto warned of possible rating cut FT • US seeks maximum fine in BP spill trial FT • Bundesbank tells France to stick to budget FT • Hostility mounts to Portugal's austerity FT • Brussels challenges Madrid on regulator plan FT • Fate sealed on pound's loss of haven status FT • Apple: core arguments Lex • Deutsche Berse: aisle be seeing you Lex • Elan / Royalty Pharma: gone shopping Lex • Hong Kong property: bubbling up Lex • Science must be spared Washington's axe FT • Banks face hurdle in Libor fight WSJ EFTA_R1_00806427 EFTA02147507 • Big Investors Differ on Gold's Prospects WSJ • Fraud probe fuels Spanish discontent WSJ • Italian generation feels fiscal squeeze WSJ • Ikea's meatballs get the giddy up WSJ • Easy Money Fuels Race to Cliff WSJ • Elections, Italian Style WSJ • A single European telecoms market WSJ • Jobs will go as RBS winds down in India The Times • FT not for sale The Times • Persimmon and Bovis load up on prices and profits The Times • Nokia tempt 2bn technophobes with budget model The Times • Crisis looms again as Italians defy EU austerity Telegraph • Trillion pound cash mountain to the rescue? Telegraph • Italy election sparks fresh fears for euro Guardian Key Events This Week Wednesday: First repayment for LTRO2 (put-back results announced last Friday), Durable Goods, Apple Shareholder Meeting, MBA Mortgage Applications, Pending Home Sales, Bofa Agriculture Conference (Miami), KBW Boston Bank Conference (Boston), Earnings (DLTR, CNP, JOY, TGT, TJX, LINTA, GRPN, JCP, MNST) Thursday: GDP, China PMIs (both NBS & HSBC), Chicago PMI, Kansas City Fed, Eurozone CPI, Earnings (BBY, CVC, KSS, SHLD, CRM, GPS, TEG) Friday: Automatic spending cuts of sequestration set to begin ($1.2 trillion over 10 years, 50% from defense), Personal Income & Spending, U. of Michigan Confidence, US Manufacturing PMI, Bernanke speech (tow Long-Term Interest Rates") c 10pm, Earnings (POM, XLS) Key Events on the Horizon EFTA_R1_00806428 EFTA02147508 March 7 — Fed to release stress test results for big banks March 14 — Fed to release decisions on proposed capital plans of banks, Samsung launch event in NYC (Galaxy S4) March 19 — BOJ governor Masaaki Shirakawa stepping down (Successor likely to be named by end of Feb) April 15 — #NoBudgetNoPay deadline for Congress May 19 - US debt ceiling limit July 1 — Mark Carney takes over as BOE Governor September — German elections EFTA_R1_00806429 EFTA02147509 This e-mail and any files transmitted with it are confidential and intended only for the person or entity to which it is addressed. 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