On Europe and China. Citi sees first cuts in Credit allocations, GS cuts China Metals & Mining.


Europe set for slightly higher start. US closed slight higher amid rumours EU would consider guaranteeing bank deposits across the eurozone. Asia under pressure after China PMI worse. Macro eyes on UK + German GDP, German IFO + Flash manufacturing and services PMIs for May.


On Europe
As expected, the summit brought nothing but more pictures of worried leaders… They, again, put off decision. They reiterate that it would be better if Greece stays. They devise plans to launch a Euro wide guarantee for banks deposits.

On China
Flash PMI fell to 48.7 for May vs 49.3 in April. The trend is on… Apparently, the new export orders index fell to 47.8 from 50.2 showing further weakness in external demand. No big stimulus package expected in the short term, but we should see further cuts in the lending rates. Since the Production index rose to 50.5 from 49.3, it may indicate that the recovery is stronger in SMEs.


Citi (Faith) Global Credit Survey
The First Cut

(copied/pasted) Large decline in overall positions in credit. Significant trimming in higher-beta sectors and HY. Positions in the periphery now at record short, while longs in the core are reduced. Cash inflows continue to decline, but still strong relative to history. Sovereign fiscal imbalances are the most prominent concern for investors in the near term.

GS (Zhu) China: Metals & Mining
Weaker for longer, but overly discounted; Buy defensive champions.
Interesting piece… The end of the Chinese super cylce of commodities is soon over. Estimates for the industry is reduced by c.8%. Since the names covered are down by 39% from recent peaks, it stands now below cycle average situation. BUY the national champions, buy Cement (low inventory, low valuations).

CITI (Buckland) Global Equity Strategist
Euro Crisis, Global Impact, Again.

They said last week that the risk of Greece leaving the Euro is 50-70%. They also say that this should be manageable but avoiding contagion requires aggressive action. Cheap Equities valuations should limit the downside… ” The Greek situation looks very bad. But why is 0.2% of global population, 0.4% of global GDP and 0.02% of the global equity market getting so much airtime? The answer, of course, is contagion.”
And they recommend buying into weakness as the sentiment indicators are already back in Panic territory…
In the report you’ll find the opposite of what our clients are looking for: the names of non European companies with little/no European exposure.


Out Of Stock.
End of a six decade passion for equities.
Is it the end??? Another article on the end of the equity cult that started in 1954 according to the FT (and to Citi, cf “The Equity Cult is still dying”). The big argument is back on the table… Bonds or Stocks?? http://on.ft.com/Mr0mb7

German Press: “The Greek Exit Is A Done Deal” | ZeroHedge http://bit.ly/KEUBVS


– Raiffeisen 1Q pretax EU685m; 1Q net EU541m vs est. EU479m; 1Q trading result EU82m vs est. EU97m; provisions EU153m vs est. EU232m
– BFA-Bankia will be recapitalised by Spain with as much public money as necessary, as the nationalised group needs at least €9 billion to comply with banking rules
– Santander is said to have picked UBS and Deutsche for Mexico IPO, reports the WSJ

– Rio Tinto says that the Iron Ore market is robust
– ACCOR has signed a deal with Garuda to increase passengers
– Eurazeo says that the company is on a positive, very favourable trend
– BMW plans to triple the number of vehicles it can make in China, risking efforts to avoid overdependence on one market; it is fined SF156 million by the Swiss competition regulator for impeding direct and parallel imports
– Renault plans a new high-end brand and is seeking a partner to help relaunch the Alpine sports car, reports Les Echos
– Salzgitter Raised to Buy vs Neutral at UBS

The EU is teaming up with drug makers to develop new antibiotics, reports the WSJ
– Bayer has submitted a new drug application to FDA for regorafenib in treatment of metastatic colorectal cancer
– GlaxoSmithKline may find its next acquisition among more than a dozen companies it collaborates with to develop new treatments
– Rhoen Klinikum’s management plans to back a €3.1 billion sale of the German hospital operator to Fresenius, according to Bloomberg
– NOVOZYMES is to provide enzymes for a commercial-scale plant in Brazil that will produce cellulosic ethanol
– Shell does not rule out raising its offer for Cove, says the WSJ
– BP will invest $400 million in environmental upgrades to reduce harmful emissions at its Whiting refinery, Indiana, as part of a settlement with the US over alleged Clean Air Act violations
– SYMRISE denies speculation that Henkel has expressed an interest in the company
– GDF Suez Raised to Neutral vs Underperform at Credit Suisse
– Meda Cut to Underperform vs Neutral at BofA

– Siemens plans to invest up to $1 billion by 2017 in Brazil
– Tele2 Upgraded to Buy vs Hold at Jefferies after de-rating
– Telefonica PT Cut to EU10.6 vs EU10.8 at Berenberg; Kept at Sell
– STMicroelectronics Kept at Buy at SocGen on near-term guidance reiteration; PT unchanged at EU6

– Adidas has filed a criminal complaint and is working with Indian authorities investigating the matter
– Remy Cointreau terminates its share buyback programme; it bought back 1.4 million shares between December 6th and May 23rd at an average of €67.29 each

– Bridge energy 1Q revenue NK33.2m; 1Q net NK23.2m
– KWS Saat 9M rev. EU793.7m; 9M Ebit EU171m; sees FY2012 rev. at EU980m, Ebit of EU140m, Ebit margin of just over 14%
– Norwegian Energy 1Q revenue NK176.7m; 1Q net loss NK150.9m; sees ‘significant’ growth in production in coming quarters as new fields start-up
– S Immo 1Q net income EU6m
– Premafin’s board agrees on a 0.85% holding in new Unipol post-merger
– Aquarius PLATINUM PT Lowered to R11 vs R16 at Morgan Stanley
– Cherkizovo Group Cut to Underweight vs Neutral at JPMorgan
– Great Portland Estates PT Raised 6% to 360p at Exane; Kept at Underperform
– L.D.C. PT Raised 12% to EU86 at Exane; Kept at Neutral
– Schoeller-Bleckmann PT Raised to EU76 vs EU74 at Berenberg; Kept at Buy
– Straumann Holding PT Raised to CHF175 vs CHF165 at Berenberg
– SPORTINGBET PT Cut to 56p vs 60p at Barclays; Reiterates Overweight
– Sonova Raised to Overweight vs Neutral at HSBC
– XING Initiated at Buy at Berenberg; PT EU57


Louis Capital Markets UK,LLP
Authorised and regulated by the FSA and Banque de France
39-41 rue Cambon
75001 Paris

T +33 (0)1 53 45 10 74
E mkamir
I http://www.louiscapital.com


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