Good morning,

Markets are called to open flat this morning. This is what's happening today:

  • The Japanese yen strengthened for a second day as Bank of Japan policy makers meet and after a Group of Seven official expressed concern about the currency’s slump;
  • Apple has a team of about 100 product designers working on a wristwatch-like device that may perform some of the tasks now handled by the iPhone and iPad;
  • Obama Seeks Minimum Wage Increase to $9/hr to Stimulate Economy;
  • Comcast agrees to buy GE’s NBC Universal stake for $16.7b in cash

Companies in Europe reporting results today: Total, Reckitt Benckiser, Heineken, Peugeot, Societe Generale, ING Groep, Edenred, Schibsted, Telenor, Storebrand, Trelleborg, Orpea, TUI, BIC, Husqvarna, Tullow Oil, Telecity, African Barrick Gold, Pan African Resources, Sampo, Modern Times, Euler Hermes, Corio, Saipem

If Dutch bonds are anything to go by, investors still need convincing the debt crisis is ending. The AAA-rated country sold five-year notes yielding 0.884% yesterday, less than the 1.094% buyers charged Italy or the 1.55% they demanded from Spain to borrow for just one year. Yields on Dutch two-year bonds are more than a percentage point less than their average since February 2008, even after the government said the takeover of bank SNS Reaal NV will widen the budget deficit.

Societe Generale, France’s second-largest bank, posted a fourth-quarter loss after writing down its stake in derivatives broker Newedge Group and setting aside 300 million euros for legal expenses. The net loss was 476 million euros, compared with a 100 million-euro profit a year earlier. That missed the average estimate for a loss of 203 million euros by analysts. The bank had goodwill writedowns of 392 million euros in the quarter, mostly on Newedge.

Societe Generale cut jobs and sold assets last year to cope with stricter international capital and liquidity rules after French banks had their access blocked to U.S. dollar funding and European debt markets. The writedowns and litigation costs in the quarter offset a rebound in earnings at the corporate- and investment-banking unit, where the firm trimmed about 1,600 jobs in 2012 after shuffling management at the business.

BNP Paribas, which is scheduled to report earnings tomorrow, will probably have a 1.01 billion-euro fourth-quarter profit, up from 765 million euros a year earlier, according to the average estimate of analysts. Deutsche Bank AG, Europe’s biggest bank by assets, last month posted a 2.17 billion-euro quarterly loss as it eliminated more than 1,400 staff and set aside 1 billion euros for legal costs.

Deutsche Bank have a HOLD rating on both BNP and Societe Generale. This is what they said in their latest report on French Bank, 'French banks are now trading at P/E multiples close to their long-term average; we also see PTBV multiples as close to fair. We downgrade BNPP from Buy to Hold due to the limited upside potential to our target price of E46, and as we expect lower flow FICC revenues in 2013E and see risk from French earnings. Overall, we expect a lack of positive earnings revisions in 2013 for French banks and rate BNPP, SocGen and CredAg Hold. Sector risks: 1) the macro situation in Europe, 2) the sovereign debt crisis in Europe and 3) regulatory


For further information on Societe on BNP, or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli