The Dawn Patrol – 29.06.12 – On the Euro 2012 (Germany vs Italy), lots after hours.

Bonjour,

Markets to open up after an eventful night at the Summit. Spain and Italy are the clear winners as they obtained what they bargained for and Germany made a huge concession. The Euro/Dollar shot up 1.20% to 1.26 at some point and all Asian markets rallied on the news. Today, Macro eyes will watch German retail sales, French GDP, Eurozone M3, US Michigan confidence index and the Chicago Purchasing manager. My own eyes will look at laser beams.

VIVENDI upgraded at JPM and Nomura from Neutral to Overweight.
BMW Raised to Buy VS Neutral at UBS
Deutsche Post Raised To Buy VS Neutral at Citi
AB INBEV agrees to buy rest of GRUPO MODELO for $20.1 bln cash
SCOR downgraded at MS to UW due to lower earnings trajectory

AFTER HOURS

RIM fell 15% as losses were worse than expected. RIM posted Q1 Sales/EPS of $2.8bn/-99c vs $3.1bn/-1c. The new platform has been pushed back to 2013.

NIKE dropped 13% as Q4 Sales/EPS reached $6.47bn/$1.17 vs analysts expectations of $6.51bn/$1.37

ACN earnings were better than anticipated with Sales/EPS of $7.155bn$1.03 vs expectations of 7.160/99c (using comparable sales). The company suffers from currency headwinds and a clear slowdown. But this has been well flagged and expected so in the current environment, this is much better than feared and should help the European IT companies today.

CURRENT THEMES

On the Euro 2012
IT must have been a tough night for the Germans, first they lose against Italy and then they lose against Italy… again… I saw the game, not the negotiations. But the first headlines mentioned a great North-South divide as Italy refused to agree on a package of economic measures until Germany agreed to some short term measures aimed at lowering the cost of borrowing for Italy and Spain. Apparently the negotiations became really tense at some point, and you’ll read all the details in your favourite economic daily.
The point is that Italy and Spain obtained more than the Germans initially planned. Apparently the (to be) rescued countries will no longer be under strict control programs. The banks will have access to direct recapitalisation through the EFSF (and the ESM).

Key takeaway: Politics are like football and Italians are good player.
Positive: for Spanish and Italian banks… Negative: not much has been agreed for the longer term.

The Euro shot up and we should see Southern European yields fall today.

EUROPEAN EQUITIES

FINANCIALS
Financial Services Authority will say tomorrow that some UK banks misrepresented products sold to small business designed to protect against a rise in interest rates, Reuters reported
U.K. financial-services firms may cut an estimated 11,000 jobs in the second quarter, Bloomberg reports
– Lloyds and RBS also accused of distorting financial data used to set interest rates, Bloomberg reports
– RBS will face a fine of $233m for a market manipulation, reports the Times; RBS, Credit Suisse, BofAML win bids for Maiden Lane III portfolio of assets, NY Fed says
– Barclays was ordered to address the impact of Libor probe on older case; the CEO says he will appear at a meeting of U.K. lawmakers after the bank was fined a record $451m for interest-rate manipulation
– Danske Bank’s Irish unit will close branches and seek voluntary job cuts in the Republic of Ireland
– BBVA says it agreed to buy back EU638.2m of securities after a tender offer announced June 20
– Deutsche Boerse Raised to Overweight From Neutral at JPMorgan
– Getin Noble Bank Rated New Buy At Citi
– DNB Raised to Buy From Hold at Berenberg
– Credit Suisse Increases Overweight of UK to 18% From 16%

INDUSTRIAL/MINERS/SERVICES
– Airbus A380s have had a new regime of inspections introduced by regulators after cracks were discovered in wing components, Bloomberg reports; Airbus is to build a Plant in Mobile, Alabama, Bloomberg reports
– Air France-KLM French division works council has only enough cash to keep running until Aug. 20, Bloomberg reports
– Peugeot Citroen will close its Aulnay site, Les Echos says
– Renault is to cut 300 jobs at its Flins plant, Le Monde reports
– EADS is to acquire Carl Zeiss Military Optical unit, Bloomberg reports
– ACS says it will raise capital for as much as EU646m depending on how many shareholders opt to receive shares as part of a scrip dividend
– Bouygues group, including Bouygues unit Colas, Spie Batignolles, Alstom, Meridiam Infrastructure was preferred bidder for rail order, reports Bloomberg
– LAFARGE’s CEO says that cement markets will grow by 1% to 4% in 2012, and that the world cement market will grow 4.6% a year to 2015
Fidelity, opposed to Glencore merger terms,sells Xstrata stock
– BMW Raised to Buy VS Neutral at UBS
– Randstad Holding Cut to Hold From Buy at Berenberg
– PGE Rated New Underperform at Exane, PT PLN20

UTILITIES/OIL/HEALTHCARE/CHEMICALS
– Suez Environnement increases provisions, cost-cut targets. Includes additional 1H EU85m provision for Melbourne desalination plan, recognizes EU60m loss on mkt value of Acea stake
Veolia Environnement sold a U.K. unit to a Morgan Stanley-backed venture for about 1.2 billion pounds ($1.9 billion) as the French water company cuts debt.
– BHP Billiton’s decision on expanding Olympic Dam in South Australia will likely be a “go slow” approval, effectively delaying the project, says JP Morgan; BHP may sell its Cannington silver mine in Australia
– GlaxoSmithKline mustface Humana’s lawsuit over costs tied to injuries from Avandia; dips on renewed talk of interest in BioMarin bid Bloomberg reports
– Royal DSM files to register ADRs up to $2.5m
– Actelion gets FDA approval for second-generation of Veletri
– Arkema Raised To Buy From Sell at ING
– Clariant Raised To Buy From Sell at ING
– United Utilities Rated New Buy At UBS, PT 725p

TMT
Telcos Raised to Overweight at Barclays; Tech Downgraded
– Vivendi’s CEO Jean-Bernard Levy to step down after “divergence” on strategy; Raised to Overweight vs Neutral at JPMorgan, PT EU16.90 ; Upgraded to Buy from Neutral at Nomura
– Telekom Austria is to drop the acquisition of the discount brand Yesss! because it isn’t willing to offer remedies to regulator, Bloomberg reports
– KPN offer was declared to be unconditional by America Movil
– Telecom Italia Media Vice Chairman gives up his post
– Vodafone Cut to Hold from Buy at Jefferies
– Deutsche Post Raised To Buy VS Neutral at Citi
– M6 Cut to Neutral from Outperform at Exane
– Mediaset PT Cut 23% to Eu1 at Exane; Kept at Underperform

RETAIL/CONSUMER/LUXURY
– Anheuser-Busch InBev may buy half of Modelo as soon as today, Reuters reports
– Nestle seeks a €7 billion Euro loan for Pfizer Nutrition, says Reuters
– Colruyt Raised To Hold From Sell at ING

SMALL/MIDCAPS
– London Stock Exchange Cut to Underweight vs Neutral at JPMorgan
– Fondiaria receives a new proposal from two funds, reports Reuters
– Sorin sees 2012 impact of EU35m-EU40m from earthquake on profit
– Cairn U.K. is selling 66.8 mln shares in Cairn India
– Pennon is ‘Most Likely M&A Candidate,’ in U.K. Utilities, UBS Says
– MDxHealth says it plans to raise EU10m in private placement to finance expansion of sales team and scale-up commercial laboratory in U.S.
– Elia System Operator Rated New Overweight at Morgan Stanley
– Ocado Cut To Neutral VS Buy at Goldman
– Ladbrokes PT Cut 1% to 168p at Exane; Kept at Neutral

Max Kamir

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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