DBTODAYGLOBAL／MACRO0825.ppt

Table Of Contents,Section Heading,Section Heading,INDEX,1D 00,Deutsche BankMarkets Research,Global,PeriodicalDB Today-Global/Macro,Greg Poole(+1)212 250-,Amy Wei(+1)212 250-,Wednesday 22nd August 2012,Christopher DiPaola(+1)212 250-Section HeadingSection HeadingGLOBAL MARKET WRAP,Page 00Page 00Page 00Page 00,Section Heading,Close,Page YTD%Chg%Chg,MACRO HIGHLIGHTSGlobal Strategy-Global Strategy Flash-Dominic KonstamU.S.:We continue to believe that policymakers will refrain from further balancesheet expansion or changes to interest on reserves,although a discussion ofthese options will likely be apparent in the July-August meeting minutes.Canada:While we still think that it is more probable that the BOC will begin toadopt a more restrictive policy stance late in the fourth quarter,the recenttame inflation report together with persisting concerns about the European,S&P 500NASDAQDOWDJ STOXX 50FTSE 100 INDEXHANG SENG INDEXMSCI Asia ex JapanBRAZIL BOVESPARTS-2 INDEX,1413.173067.2613203.582490.275857.5219901.38498.56558917.731497.35,-0.4-0.3-0.51.00.6-1.00.5-0.6-1.0,12.417.78.17.55.18.08.73.8-2.0,sovereign debt/currency crisis and also about the health of the US economy,COMMODITY PRICES,increase the possibility that any tightening will not occur until early in 2013.Detailed report on page 8Credit Strategy-Early Morning Reid Colin TanThe FOMC meeting minutes and Junckers visit to Athens are likely the twomain sources for key headlines today.Starting in the US the minutes today willhopefully shed further light on the kind of policy currently under considerationand the economic conditions required before an imminent easing is warranted.,COMMODITIESWest TexasBrentCRBCopperGold(Spot)Alum.(LME)Baltic Dry,Close96.40115.98307.63344.001638.951867.00709.00,1D%Chg0.5-0.30.9-0.40.11.6-0.3,YTD%Chg-2.57.80.80.14.8-7.6-59.2,Our US economists think that the policy toolkit could include the following:pushing out the targeted exit date for fed funds,providing“exit guidance”onbalance sheet measures(i.e.asset sales),various mixes of additional balancesheet expansion(including the possibility of an open-ended QE program)andcutting interest on reserves.They think other less widely anticipated measures,FOREIGN EXCHANGE PRICESFOREX(vs US$)CloseHK$7.76EUR 1.25,1D%Chg0.0-0.1,YTD%Chg0.1-3.8,may also be discussed.As mentioned above any language around economicconditionality will also be of key interest.Detailed report on page 9,JPYGBP,79.311.58,0.00.0,-3.01.6,Source:Bloomberg,Europe Strategy-Consensus Earnings Trends-Lars SlomkaGlobal earnings for 2012E have been downgraded by 1.5%and for 2013E by1.4%over the last month(mid July to mid August).This downgrademomentum is slightly lower than in the previous month,but still quite strongcompared to the last three years.The main drivers of the current downgradescontinue to be the sectors Energy and Materials.So commodity prices seem tohave been a stronger trigger for global downgrades compared to the Q2reporting.Detailed report on page 10,DERIVATIVESSPX 3M Mat ATM-Strike Imp VolSPX 3M Mat 90%-110%IV SkewSPX 3m Mat Realized VolSource:BloombergCREDITCredit Close,Current%-ileValue Rank16.04 11.50%9.85 13.10%15.19 31.40%1D YTD%Chg%Chg,CDX.NA.IGITRX.EuropeCDX.NA.HY,98.56137.2098.49,0.10.00.0,-17.8-20.75.9,Contd on next page,ITRAX.XOVERSOVX.WE,561.48226.22,0.2-0.9,-25.6-36.6,Source:Deutsche Bank_Deutsche Bank Securities Inc.All prices are those current at the end of the previous trading session unless otherwise indicated.Prices are sourcedfrom local exchanges via Reuters,Bloomberg and other vendors.Data is sourced from Deutsche Bank and subjectcompanies.Deutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.DISCLOSURES ANDANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,22 August 2012DB Today-Global/MacroMACRO HIGHLIGHTSFX Strategy-FX Daily Daniel BrehonThe consensus on existing home sales tomorrow looks beatable economists with the best track records of calling thisnumber are bullish and sales are likely to claw back some of the disappointment from last month.This developmentwould add to the nascent recovery in US housing since the beginning of 2012 spurred by attractive valuations andhistorically low mortgage rates.Detailed report on page 11Commodities-Global Commodities Daily-Xiao FuCommodities moved higher across the board supported by equity market strength and renewed USD weakness.Animportant feature for the commodities market this year has been its divergence from the S&P500.Copper needs toadvance above USD9,000/t and WTI needs to rally towards USD110/bbl to catch up with recent rally in the S&P500,which is now at post crisis high,We expect these levels are unlikely due to ongoing tail event risks in Europe andsluggish growth in China.This divergence in risky asset performance highlights a distinct preference by globalinvestors for US exposure vs.Global in our view.There may be some upside risks for the commodities market if thisbias were to change.Detailed report on page 12Japan Economics-Japan FI Morning Memo-Makoto YamashitaFutures rebounded on the 21st.Futures opened flat ahead of the 5-year JGB auction.The 5-year auction(a reopeningwith a 0.2%coupon)went smoothly,with the lowest successful bid exceeding the markets forecast.Futures rosesteadily as cash bonds were bought following the 5-year auction.Detailed report on page 13US Economics-US Daily Economic Notes-Joseph LaVorgnaThe data drought ends this morning with the July existing home sales report.However,this afternoons release of theminutes from the July 31/August 1 FOMC meeting holds the potential to be the most important economic event of theweek,particularly if the minutes detail the catalogue of tools remaining for policymakers or suggest how close Fedmembers are to taking further action.Given the market significance of the September 12-13 FOMC meeting,there arethree critical events through the end of the month which are all Fed-related:todays meeting minutes,the Beige Book(August 29)and Chairman Bernankes address at the Feds annual Jackson Hole,WY symposium(August 31).Ofcourse,the August employment report(September 7)will also be extremely important,particularly if it corroboratesthe recent improvement in other data series,such as retail sales,jobless claims and industrial production,all of whichare pointing to a stronger second half of the year.Detailed report on page 14KEY COMPANY RESEARCHASIA,CNOOC Ltd-David Hurd,Lowering estimates,price target and rating-to Hold.CNOOC reported soft 1H12 results on,the back of substantially higher taxes.The company reported 1H12 EPS of Rmb 0.71 vs ourRmb 0.84 estimate.Revenues were solid at Rmb 118.2bn vs our Rmb 115.2bn,while op incwas Rmb 44.5bn(37.6%-margin)vs our Rmb 49.2bn(42.7%).The dividend payout of 17%waslower than 24%1H11.We lower our rating on CNOOC to Hold on the back of fairer valuationsand continued challenges to ST earnings growth.Detailed report on page 15JAPAN,Dainippon Screen MFG.-Yoshikazu Higurashi,Need to reconfirm likelihood of margin improvement.We revise our earnings forecasts forDainippon Screen(DNS)and lower our rating to Hold.SPE orders remain high and we look for,them to climb further from Oct-Dec.That said,measures to improve profitability,includingintroduction of new cleaning system products,have yet to meet with the success we hadanticipated.Based on projections for earnings power,we think the likelihood of a sharp rally inthe share price has diminished.Detailed report on page 16Contd on next page,Page2,Deutsche Bank Securities Inc.,22 August 2012DB Today-Global/MacroKEY COMPANY RESEARCHJAPAN,Tokyo Electron-YoshikazuHigurashiBank sector-YoshinobuYamada,Pace of earnings recovery slowing,becoming less attractive investment.We have reviewedour earnings forecasts for Tokyo Electron and lowered our rating to Hold.We expect thecompanys SPE orders to start recovering in earnest from Oct-Dec,but see less likelihood theoverall value of orders will surpass the previous peak.We do not expect the firm to meet ourprevious forecasts and see limited upside potential in the share price,despite earningsrecovering from new product launches and cost reductions,since the recovery in sales tendsto lag somewhat.Detailed report on page 17CoCos issuance unnecessary.We have used banks earnings and capital adequacy ratios(Basel 2)to estimate their common equity Tier 1 ratios(CET 1,Basel 3)as of end-1Q.We,estimate that accumulation of profits and reduced risk assets supported increased ratios forMUFG(Buy,JPY372),Mizuho FG(Hold,JPY132)and Resona HD(Hold,JPY326)comparedwith end-March.Ratios were almost flat at SMFG(Buy,JPY2,512)and SMTH(Hpld,JPY221)owing to declines in other comprehensive profits.Using 1Q outcomes to calculate forwardtrends,we estimate that the banks will easily clear the requirement,including the G-SIBsurcharge(which we estimate at 1.0%for the three megabanks),at end-FY3/19.Althoughbanks operating under international standards need to maintain Tier 1 capital other than CET 1(AT1,or Additional Tier 1)at 1.5%or higher,we calculate that they can meet the requirementfor Total Tier 1 without issuing new AT1 securities(e.g.,CoCos).The grandfathering period forinternational-standard banks government-owned preferred shares ends in January 2018.Resona HD operates under domestic standards.We estimate that the FSA will announce howit is to be treated,in addition to releases of DSIB details,in March 2013.Detailed report onpage 18EUROPE,Kingfisher PLC-RodWhitehead,UK housing&French DIY data poor,putting pressure on H2 and 13/14 fcasts.KGF is still anexcellent self-help story,and we estimate there will be a 5%boost to EPS from sourcing gains,for each of the next 5 years.But the other key ingredient to our buy case has always beeneventual cyclical recovery in DIY,which our forecasts assume from H2 in the UK,and from2013/14 in France.Recent data suggests neither may happen,which reduces our conviction onDBe forecasts.So,we increase the discount on our DCF from 10%to 15%,which reduces ourPT to 315p,and we downgrade to Hold.Detailed report on page 19NORTH AMERICA,Dell-Chris Whitmore,Poor PC results overshadow Infrastructure progress.Dell posted revs of$14.5B and non-GAAPEPS of$0.50,which missed the top line but beat EPS expectations(vs.DB and Street at$14.8B/$0.46).EPS upside was primarily from a$70M gain and lower tax rate.Also,Dell cutFY13 non-GAAP guidance to$1.70+(vs.Consensus$1.90+)on PC erosion/pricing and macroweakness.We cut ests and PT to$16,but at$12 in the aftermarket and 4x CY12 EPS x-cashDELL remains very cheap,in our opinion.Buy.Detailed report on page 20,Deutsche Bank Securities Inc.,Page3,nd,22 August 2012DB Today-Global/MacroTODAYS HEADLINESMarkets:Equities creep higher in the EU as peripheral bond yields continue to nudge lower,but US pares early gains toend down,euro hits six-week high,gold up$16/oz.Asian bourses softer early Weds.USA:Feds Lockhart says sees risk of monetary policy being too aggressive,all considerations being weighed,includedopen-ended or set amount bond buys.USA:Feds Evans says Fed should provide more accommodation to spur growth,says strong action needed t tackleunemployment,says Fed funds should stay around 0%until jobless rate.USA:ICSC-GS chain store sales rise 3.1%yoy last wk.CAN:Wholesale sales down 0.1%mom in June,below mkt,up 6.3%yoy.UK:PSNB deficit an unexpected GBP1.8bn in July.UK:CBI total orders index down 15pts to-21 in August,below mkt.SWE:Total number of employees up 2%yoy in Q2.BEL:Consumer confidence down 3pts to-16 in Aug.JPN:Trade deficit widens to JPY325.7bn(sa)in July,exports fall 8.1%yoy,much weaker than expected.AUS:DEWR skilled vacancy index falls 3.1%mom inAUS:Westpac leading index rises 0.5%in June.THE DAY AHEAD.USA:Fed releases FOMC Minutes,MBA New Mortgage Applications,Existing Home Sales(Jul)CAN:BoCs Carney speaks,Retail Sales(Jun)DNK:Retail Sales(Jul)NOR:Unemployment rate(Jun)JPN:Supermarket Sales(Jul)Source:Excerpts from DB Daily published on 22 August,2012,Page4,Deutsche Bank Securities Inc.,22 August 2012DB Today-Global/MacroFORECASTG7 Quarterly GDP growth,%qoq saar/annual:%yoyUSJapanEurolandGermanyFranceItalyUKCanadaG7,Q1 110.1-7.72.95.53.80.41.93.60.0,Q2 112.5-1.70.71.1-0.21.2-0.4-1.01.0,Q3 111.37.80.42.31.0-0.92.44.52.5,Q4 11F4.10.1-1.3-0.70.2-2.7-1.41.91.7,2011F1.8-0.71.53.11.70.40.82.41.4,Q1 12F2.04.70.12.10.1-3.2-1.31.91.7,Q2 12F1.54.0-1.30.7-1.3-3.8-2.82.91.0,Q3 12F2.72.1-0.71.8-2.0-1.72.33.21.8,Q4 12F2.81.30.10.9-0.7-0.31.63.01.8,2012F2.43.1-0.50.8-0.3-2.30.02.51.5,2013F2.51.20.31.00.0-0.41.83.01.8,Sources:National authorities,DB Global Markets ResearchCommodities,USDWTI(bbl)Brent(bbl)US Natural Gas(mmBtu)GoldSilver,Q1 12102.93118.352.51169133,Q2 1293.35108.762.35161229,Q3 1288982.75170033,Q4 12901003.1190038,201293.57106.282.68172633,201395.751043.75205043,20141001104.25180036,Aluminium,USc/lbUSD/t,100.72219,91.62019,86.21900,95.32100,93.42060,99.82200,99.82200,Copper,USc/lbUSD/t,377.98329,355.27829,331.27300,363.08000,356.87865,3638000,340.37500,Source:Deutsche Bank,Figures are period averagesCENTRAL BANK POLICY,Current,Sep-12,Dec-12,Mar-13,USEurolandJapanUKChinaIndia,0-0.250.750.10.53.008.00,0-0.250.750.10.53.008.00,0-0.250.750.10.53.007.50,0-0.250.750.10.53.007.50,Deutsche Bank Securities Inc.,Page5,-,-,-,-,-,22 August 2012DB Today-Global/MacroFORECAST.ContinuedFOREIGN EXCHANGE RATES,Countries,Spot Rate,3M,6M,12M,USEuroJapanUKSwitzerlandChina,DB US$Index(Fwd.Rates)US$/Euro(Fwd.Rates)Yen/US$(Fwd.Rates)US$/(Fwd.Rates)Sfr/US$(Fwd.Rates)CNY/USD(Fwd.Rates),68-1.2779-1.570.956.36,67-1.281.2780791.541.570.950.946.286.36,67-1.301.2782791.551.570.930.946.236.43,691.251.2886791.511.570.970.946.156.46,GOVERNMENT RATES,Current,Q3 2012,Q4 2012,Q1-2013,US 10Y yieldEUR 10Y yield,1.82.0,1.501.75,1.502.00,2.502.25,Source:Deutsche BankINDEX FORECASTS,Current,2012,DJ Stoxx 600FTSE 100DaxMSCI HKS&P 500Source:Deutsche BankPage6,27056276945130001406,275640071001475Deutsche Bank Securities Inc.,22 August 2012DB Today-Global/MacroUPCOMING CONFERENCES/TRIPS,DateSeptember 5,2012September 5-6,2012September 5-7,2012September 6,2012September 10-11,2012September 11-13,2012September 15-30,2012September 17-19,2012September 18,2012September 19-20,2012September 27,2012October 3-5,2012October 9-11,2012October 11-14,2012October 17,2012October 18,2012October 19,2012October 24-25,2012November 6-7,2012November 12-13,2012November 15-16,2012December 3-4,2012December 4-5,2012,Conferences2nd Annual Aircraft Finance and Leasing Conference New YorkDbAccess European TMT Conference London2012 Global Emerging Markets One-on-One Conference New YorkAviation and Transportation Conference New YorkDbAccess Philippines Corporates Days LondonTechnology Conference Las VegasMetals and Mining Trip Ja