The Dawn Patrol, 17.07.12 – On Bernanke and GDP revisions. GS’ GOAL report. Barclays on VIV. Alcatel pft warning…

Bonjour,

Markets expected to open today with some kind of hopes that Bernanke may hint at further easing measures. Some more bad news for Italian banks and a profit warning from Alcatel. Macro eyes on the ZEW, the UK CPI, the US industrial production, US CPI and NAHB Housing Market Index.

VIVENDI: Barclays reiterates its OW (see in the Equities section for more).
SIEMENS raised to Buy at Berenberg whereas SANDVIK and SCHNEIDER cut to Hold.

ALCATEL-LUCENT said it now expects to miss its target for full-year adjusted operating-profit margin, citing “year-to-date performance and the difficult macro-economic environment.” The company earlier this year predicted that its profit margin will rise this year.

AFTER HOURS

Bernanke anticipation helped offset the ongoing European uncertainty, sluggish growth figures, and heightened China fears (the Shanghai Comp hit a 3.5yr low overnight) but this was far from a “strong” market today. All the big eco sensitive/higher-beta groups continue to come for sale, inc. semis/tech, industrials, materials, and discretionary. The earnings season so far has been dominated by banks and while the #s have been OK, they aren’t causing investors to forget about the market’s very negative fundamental backdrop or the pretty busy preannouncement season. Tues, we get earnings (GS, JNJ, KO, Rio Tinto, and STT).

CURRENT THEMES

On Bernanke’s speech
Nobody really knows what the Fed will say, or do we? We can assume that Bernanke will say he’s ready to act if things get worse and may hint at further easing options. But there isn’t much more to be expected today in terms of announcements despite the feeling that things are not getting much better (except housing).

On The World GDP
JPM cut its Q2 and Q3 GDP outlook fir the US and it YoY annual projection for 2012 is no 1.7% from 1.9% before. And GS lowered its Q2 US GDP to 1.3% from 1.5% on this week’s trade and wholesale and inventory reports.

STRATEGY

GS (Nielsen and Co) GOAL: Global Opportunity Asset Allocator
In this report, GS give its views of the world and where we should allocate our assets…
They’re still waiting for more data to confirm signs of a rebound in growth and see improvements in growth in Europe and China. In terms of assets:
Commodities: GS upgrades commodities to OW on a 3m basis.
Equities: Remain Neutral (OW on 12 months) and prefer non US equities.
Credit: moderatly cautious short term but Neutreal, Upgrade to OW on 12 months.
Bonds: The risk/reward is skewed to the downside and GS is UW both on 3m and 12m horizons.

OTHER STUFF

There is an interesting article by Jean-Claude Juncker in the Spiegel. Euro Group President Juncker Discusses Path Forward in Euro Rescue – SPIEGEL ONLINE http://bit.ly/LubjeA

Companies Feel China’s Slower Growth – WSJ.com http://on.wsj.com/ODCFLc

US Climate Update: Warmest 12 Months On Record | ZeroHedge http://bit.ly/PbvLRY

EUROPEAN EQUITIES

VIVENDI (Barclays. Julien Roch. OW, PT: €17.5).
Bye bye old Vivend, buyb buy new Vivendi (
someone felt like being very creative).
Reiterate 1-Overweight with a slightly lowered €17.50 price target (SOTP driven). Despite Vivendi’s recent rally, the stock continues to look attractive in terms of the discount to its trading sum-of-the-parts (ie, each division at market prices). And we see two positive catalysts to drive the shares higher from here: 1) corporate action (increasingly likely following the resignation of the Jean Bernard Levy as CEO) either in the form of a complete break up or asset sales; and 2) an announcement of significant cost cutting at SFR (likely at the 1H results on 30 August).

FINANCIALS/ REAL ESTATE
– Handelsbanken
2Q Net Beats Est.; Net Interest Income Rises; 2Q net SK3.41b vs est. SK3.29b; 2Q EPS SK5.4 vs est. SK5.19; 2Q net interest income SK6.58b; 2Q net fee and commission income SK1.83b; 2Q loan losses SK288m
– Gjensidige Forsikring 2Q Net NK950M vs. est. NK831M; EPS NK1.9 vs est. nk1.697; Combined ratio 83.9% vs est. 87.6%; Targeting cost ratio of 15% by 2015
Moody’s cut by between one and two levels the long-term debt and deposit ratings for 10 Italian banks, and issuer ratings for three Italian institutions
U.K. financial regulator said it’s investigating 7 banks over attempts to manipulate interbank offered rates as lawmakers criticized it for not opening the probe earlier
Banks face combined losses of up to $42b on Libor scandal
– HSBC did business with firms linked to terrorism, let money- laundering safeguards in its Mexico operations erode and circumvented U.S. sanctions against Iran, according to U.S. Senate investigators
– Royal Bank of Scotland is refusing to turn over crucial information to Canadian regulators, The New York Times reported; CEO expects that customers affected by a computer glitch will receive “tens of millions” of euro in compensation
– SEB Raised to Hold VS Sell at Deutsche Bank
– Unibail-Rodamco
Cut to Hold vs Buy at ING; PT EU151 Maintained


INDUSTRIAL/MINERS/SERVICES
– SGS
1H sales beat estimate, profit rises; Rev. SF2.7b, est. SF2.6b; Net SF245m, vs SF241m; Sees “solid top line growth”; Sees improved 2012 oper result at constant FX
– Rio Tinto’s June Qtr Iron Output Unchanged Y/y in Line With Est.; the company’s shares decline, reversing 1.2% earlier gain
– Technip was awarded a drill centre expansion contract in the North Sea, Bloomberg reports
– Siemens (& GE)’s high backlogs may mask weak pricing, Bloomberg reports; Raised to Buy From Hold at Berenberg
– G4S Cut to Hold VS Buy at Deutsche Bank
– Schneider Electric Cut To Hold From Buy at Berneberg

UTILITIES/OIL/HEALTHCARE/CHEMICALS
– ROYAL DUTCH SHELL is to negotiate exclusively with Codexis the terms of new a agreement under which Shell would grant rights, licenses in biofuels field to develop, sell cellulase enzymes on worldwide basis, except Brazil, Bloomberg reports
– GDF Suez Named a Most Preferred Stock at Citi
– E.ON Named a Least Preferred Stock at Citi

TMT
– Alcatel-lucent
says that, in light of YTD performances and the difficult environment, itwill not be able to reach its adj. op margin guidance for FY 2012
– Pearson
may buy stakes in India’s Manipal, Bloomberg reports
– Portugal Telecom
“reaffirms the commitment of its CEO Zeinal Bava” to co.’s “future business project,” Bloomberg reports
– Nokia
Cut to Underperform From Hold at Jefferies, PT EU1.19
– Sandvik Cut To Hold From Buy at Berenberg
TeliaSonera Removed From Ubs’s Least Preferred List

RETAIL/CONSUMER/LUXURY
– Burberry has exercised its option to withdraw from the current contract with INTERPARFUMS on Dec. 31, 2012; Interparfums says Burberry perfume contract talks are continuing, Bloomberg reports
– L’oreal
Raised To Neutral VS Underperform at Credit Suisse

SMALL/MIDCAPS
– Georg Fischer reports 1H sales of SF1.87b, meeting estimates; 1H Ebit SF113m vs. est. SF119.2m; 1h net SF80m; Sees positive cashflow in 2H
– Helvetia isto buy the French transport insurance portfolio of Gan Eurocourtage, a subsidiary of Groupama SA
– Medica
sees solid 1H growth and confirms its FY revenue growth target
– Thomas Cook
is increasing prices for long-distance vacations this winter due to unfavourable exchange rates for the dollar and higher flight and hotel costs
– Buzzi Unicem
Cut To Sell VS Neutral at UBS
– Eurocommercial Properties
Cut to Hold vs Buy at ING
– Novorossiysk
Raised To Buy VS Hold at Deutsche Bank

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