The Dawn Patrol – 05.07.12 – On the ECB and China Loan to Deposit Ratio. The LCM RCUBE Monthly report is out!!!!!! Edouard Carmignac letter to M. Hollande.

Bonjour,

Markets to open flat today, as Asian markets were quite weak and most expect the ECB to announce a 25bp cut to 0.75% and the BOE to remain at 0.50%. Macro eyes will monitor German factory orders, Jobless claims and the ISM non manufacturing. Also there are some European bond auctions today: Spain at 10:30, France at 11:00 and Ireland at 11:30.

ImerysCut To Underweight From Neutral at HSBC

Veolia Environnement Cut To Sell VS Neutral at UBS

CentricaCut To Neutral VS Conviction Buy at Goldman

GemaltoRaised To Buy at Goldman

CURRENT THEMES

On the ECB
Bets are open on the size of the cut. Barclays, Jefferies, Nomura and SocGen are all on a 50bp cut, all the others expect 25bp. On the deposit rates the dispersion is a bit wider. As this is widely expected, it shouldn’t be the surprise factor, but waht will be is any announcement on further liquidity related announcement such as an LTRO. Also the Q&A with Mr Draghi may bring hints of further moves and on the role of the ECB in terms of the banking union.

On China
The Chinese government is studying the removal of the 75% loan-deposit ratio, an operational mandate that analysts widely believe acts as a constraint on the ability of banks to lend, official sources have told MNI. Two sources within the banking regulator and central bank confirmed that government departments are looking at completely removing the requirement, rather than relaxing the ceiling, as had been expected.

STRATEGY

HSBC survey shows 40% of Fund Managers bullish on stocks for 3Q – 70% of surveyed prefer N.American stocks; no respondents bearish towards Asia Pacific equities; 50% bullish on Greater China – More fund managers are cautious on bonds as they view some bonds as overvalued; most continue to prefer high-yield bonds

LCM – RCUBE.

The LCM RCUBE monthly report for July is out. It’s of course a must read.
You’ll find that we were right in terms of market movement, but a bit early. Since the more bulish call, Earnings Revisions Ratios haved rolled over and the picture on that front less attractive…

LCM – Rcube – Global Macro Monthly Report – July 2012

OTHER STUFF

To Hollande, With Love | ZeroHedge http://bit.ly/M0EZkM

CHART: The 10-Year US Treasury Note Yield Since 1790 – Business Insider http://read.bi/MWGDiS

EUROPEAN EQUITIES

FINANCIALS
European banks have rushed to raise capital amid positive sentiment after last week’s Eurozone summit. Société Générale, Danske Bank and Intesa Sanpaolo are among those taking advantage of narrowed spreads and stronger appetite for debt issues, reports FT
– Bankia’s CEO resigned, reports Bloomberg
EasyJet’s No. 1 investor Stelios Haji Ioannou plans to force a vote on the removal of Michael Rake as chairman over his role as a director at Barclays
– Svenska Handelsbanken Cut to Neutral from Buy at Nomura
European Banks Raised to Outperform from Neutral at Exane

INDUSTRIAL/MINERS/SERVICES
– GKN is said to purchase Volvo’s Aero unit for about GBP 700 million. The deal may be announced tomorrow, Bloomberg reports
– AIRBUS faces engine problems on military airlifter, says Reuters
– International Consolidated Airlines Group said passenger traffic jumped 8.9% in June, boosted by its purchase of BMI and restrained by Spanish carrier Iberia
– GM-Peugeot Citroen’sdeal review will be extended as the German Antitrust Agency as it needs more time to gather information from 3rd parties
– Volkswagen is to buy the remaining 50.1% Porsche stake for $5.6b
– Siemens is working with adviser Credit Suisse “to formalize an offer” for Finmeccanica’s Ansaldo Energia “in coming days”
– Syngenta announces $50m investment to build new seeds processing plant in Argentina, total investment over next 12-months in Argentinean network close to $100m
– Fielmann increases sales, pretax in first half of this year
European Food Producers Cut to Benchmark at Credit Suisse
– Arcelormittal Cut To Neutral From Overweight at HSBC
– Chr Hansen Cut To Hold VS Buy at DNB Markets
– Evraz Cut To Neutral VS Buy at UBS
– Imerys Cut To Underweight From Neutral at HSBC
– Vallourec PT Cut to €52 at Morgan Stanley; Kept at Overweight

UTILITIES/OIL/HEALTHCARE/CHEMICALS
– Exxon Mobil said it was exploring the sale of German Esso gas stations
– Royal Dutch Shell andBASFwere granted an injunction from Brazil’s Superior Labor Court suspending the payment of 1 billion reais in escrow as part of lawsuit
– Merck says Erbitux gastric cancer trial misses primary endpoint
– Sanofi is set to cut 1,000 to 2,000 jobs in France, reports Le Figaro; Sanofi sells 19.3% of the stake group Yves Rocher to Rocher Holding Co
– Centrica Cut To Neutral VS Conviction Buy at Goldman
– Lanxess Raised To Overweight From Neutral at HSBC
– Verbund Cut To Equalweight VS Overweight at Morgan Stanley
– Veolia Environnement Cut To Sell VS Neutral at UBS

TMT
– Telenor explores an alliance with Tata, reports Bloomberg
– MEDIASET-RTL Group’s deal is seen as unlikely, the WSJ reports
Cinven has no plans to sell its Ziggo stake
– Vivendi’s debt ratings may be cut by one level within 3 months depending on the outcome of its strategy review following the ouster of Chief Executive Officer Jean-Bernard Levy, Standard & Poor’s said
Telefonica is plotting to claw back control from Google Inc. in Latin America, reports Bloomberg
– Gemalto Raised To Buy at Goldman
– Eutelsat Communications Cut To Sell From Hold at Berenberg

RETAIL/CONSUMER/LUXURY
It is still too early to buy European Food Retail according to JP Morgan
– DE Rated New Sell at UBS; PT €9
– Morrison Cut To Sell From Buy at Berenberg
– Edenred bought Barclay Vouchers in Japan, based on an enterprise value of EU28m and Brazil’s Comprocard, based on an enterprise value of EU24m

SMALL/MIDCAPS
– Barry Callebaut 9-month sales rev. SF3.59b vs SF3.51 Y/y; 9-mo. 8.4% growth Y/y in local FX; Sales vol. up 6.6% to 1.04m metric tons in 9 mos. ended May 31
– Banca Generali says that its June net inflows amount to EU139m, of which EU75m in managed products
– LSE acquires 5% stake in Delhi Stock Exchange, reports Bloomberg
Praktiker jumps 15% In pre-market trading at Lang & Schwarz
– Premier Foods seeks buyers for more ‘named’ brands
– Tom Tailor will sell 1.65 million new shares at €12.25 to €12.50, representing about 10% of current outstanding shares; Tom Tailor falls 3.3% In L&s Pre-market trading on share sale
– Sartorius aims at 1ppt Ebita margin growth annually, reports Bloomberg
– Almirall Raised To Buy From Hold at Berenberg
– Amplifon PT Cut to €4.7 vs €4.9 at Citigroup; Kept at Buy
– Bellway reiterates neutralas ‘base case looks solid, but priced in,’ UBS says
– Drax Group Cut To Neutral From Overweight at HSBC
Buy Ladbrokes,asretail opportunities are overlooked by consensus, says UBS
– Sulzer Raised To Buy From Hold at Berenberg

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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