The Dawn Patrol – 18.7.12 – On the Fed, the Markets and Peugeot. ASML out. BHP grest production numbers. GS sees more European downgrades.

Bonjour,

Markets expected to open down this morning following Bernanke’s presentation and the lack of new measures in the short term. Asian markets were down too as BHP released its 4th quarter iron ore produciton which is above analysts expectations (another record) but iron ore prices cause concerns… Today macro eyes on Spanish house prices, Boe minutes, Bernanke and debt auctions by Germany and Portugal.

Credit Suisse Profit Beats Est.; 2Q Net SF815m vs est. SF802.8M ; 2Q Pretax Profit Sf1.1b vs. est. Sf1.02b ; 2Q Net New Asset Inflow Sf4.4 Bln ; says that it plans immediate capital actions adding Sf8.7b

LindeRaised To Buy VS Neutral at Goldman

Sell BBVA and Santander,Berenberg Says Ahead of Earnings

Vivendiis working with Goldman and Barclays to find buyers for Activision, reports the WSJ

ASML sees 3Q sales, gross margin in line with ests.; sees 3Q sales ~EU1.2b vs est. EU1.23b, 3Q gross margin ~43% vs est. 42.9%; CFO sees FY revenue EU4.7b to EU4.9b (vs. est. EU4.92b)
Ericsson 2Q Sales Beat, Net Misses;2Q sales SEK55.3b vs est. SEK54.8b;2Q Net Sk1.11b vs. est. Sk1.61b;2Q EPS SEK0.34 vs est. SEK0.51; Sees 3Q rev. little changed Q/q

AFTER HOURS

INTC: 0.2% : 2Q EPS 54c vs est. 52c. 2Q rev. $13.50b vs est. $13.55b. Sees 3Q rev. $14.3b plus/minus $500m, est. $14.58b. Sees 3Q gross margin 63%, plus or minus couple pct pt., vs est. 64%. Reiterates sees 2012 gross margin 64% plus/minus few percentage points, est. 63.8%. Intel sees yr rev. up 3%-5%; prev. saw high single digits growth, est. 5% growth.

Accor2Q Rev. Misses Ests., 2Q LFL Sales Slows From 1Q; 2Q LFL sales up 3.1% LFL; 2Q rev. EU1.475b vs. est. EU1.61b; Expects ongoing trends of emerging mkts “robust,” Europe “generally stable” to carry on in summer season even with “low visibility and the uncertain economic environment” in some areas

CURRENT THEMES

On the Fed (from LCM NY)
Bottomline: The only reason there is any question about doing QE3 is the range of views about efficacy and some concerns about potential costs…but we are prepared to provide more accommodation if the labor market doesn’t improve (paraphrasing here, but it’s nearly a quote). Teh tone was slightly more downbeat than it was in last week’s minutes, but still no hint of new measures before a while.

On the Markets (from LCM NY)
Investors continue to debate many of the same themes: 1) earnings season (so far not so bad); 2) eco growth (cooling); 3) the state of Europe (quiet); and 4) policy responses. Sentiment is pretty much universally negative w/the consensus focused on slowing growth and (the perception of) policy responses having become emasculated.

This market for the time being continues to have a very hard time sustaining weakness and rallies are catching people more by surprise than sell-offs. There is nervousness everywhere but shorts/sellers are more jittery and quicker to reverse than bulls (so rallies can snowball and pickup momentum easier thanks to covering while shorts just don’t have the conviction to press very hard on the downside and as a result sell sell-offs lack momentum.

On Peugeot
Some interesting remarks on ZeroHedge: Peugeot, Its Record High Default Probability, And A Brief Primer On Corporate Viability Under Socialism | ZeroHedge http://bit.ly/M8oYoD

OTHER STUFF

Mohamed El-Erian on the Fed: Dear Congress, don’t look to Bernanke for salvation | The A-List http://on.ft.com/NV7miH

16 Words That Will Make You Sound Like A Wall Street Hotshot – Business Insider http://read.bi/MvS5Xq

STRATEGY

GS (Walterspiler) Europe. Strategy Matters.
Adjusting our earnings forecasts and expecting a weak season.

(copied pasted): “As the macro environment has softened, many European companies – both domestic and international – have issued profit warnings, while consensus earnings expectations have been revised down. We lower our earnings growth forecast for 2012 to -3% (-5% ex-financials) from -1%, which implies further downside risk to consensus. We continue to expect a moderate rebound of 12% in earnings in 2013. In our view, the upcoming earnings season is likely to be weak, but the potential for negative surprises should be partly mitigated by lowered expectations.”

EUROPEAN EQUITIES

FINANCIALS
– Credit Suisse Profit Beats Est.;
2Q Net SF815m vs est. SF802.8M ; 2Q Pretax Profit Sf1.1b vs. est. Sf1.02b ; 2Q Net New Asset Inflow Sf4.4 Bln ; says that it plans immediate capital actions adding Sf8.7b
– Swedbank
2Q Net Misses Est.;2Q net SK3.16b vs est. SK3.24b; 2Q EPS SK2.88 vs est. SK2.97; 2Q ROE 13% vs est. 13%; Reiterates SK1b Cost Cuts For 2012
– Nordea
2Q Net Eu820mvs. Est. Eu722m
– Axa
may announce more layoffs than planned at its German unit
– Generali
is among the insurers cut by Moody’s on Italy creditworthiness
– Credit Agricole
enters into exclusive talks with Kepler on Cheuvreux
– Linde
Raised To Buy VS Neutral at Goldman
– Schroders
Added To Conviction Buy List at Goldman
Sell BBVA and Santander,Berenberg Says Ahead of Earnings


INDUSTRIAL/MINERS/SERVICES
– BHP BILLITON
4Q Iron-ore output, copper beats estimates; forecasts production of >1.3mt at world’s largest copper mine in FY15, implying >747.5kt for BHP’s share
– VOLVO
plans to build plant in Zhangjiakou in northern Hebei province, with a capacity of 200,000 units

UTILITIES/OIL/HEALTHCARE/CHEMICALS
– EDP 1H electricity distribution in Spain and Portugal falls 4.1%
– Eni is selling 179 million shares in Snam, Bloomberg reports
– Fresenius
chair says that China’s growth is now ‘north of 30%’, reports the WSJ
– GlaxoSmithKline
&Amicus Therapeutics announced an expansion of their collaboration to develop and commercialize the investigational pharmacological chaperone migalastat HCl for Fabry disease
– Solvay starts the output of specialty polymers compounds in China
– OMV restarts production in Yemen after pipeline repaired
Overweight Total as it may resume div. growth in 3Q/4Q, JPMorgan


TMT
– TeliaSonera
2Q Net Beats Estimates; 2Q sales SEK26.3b vs est. SEK26.5b; 2Q net income SEK4.25b vs est. SME Direkt SK3.89b; 2Q Ebitda SEK8.86b vs est. SEK9.19b; lowers FY guidance of Ebitda margin to 35%; sees net sales growth in local currencies of 0%-1%
– ASML sees 3Q sales, gross margin in line with ests.; sees 3Q sales ~EU1.2b vs est. EU1.23b, 3Q gross margin ~43% vs est. 42.9%; CFO sees FY revenue EU4.7b to EU4.9b (vs. est. EU4.92b)
– Ericsson 2Q Sales Beat, Net Misses;2Q sales SEK55.3b vs est. SEK54.8b;2Q Net Sk1.11b vs. est. Sk1.61b;2Q EPS SEK0.34 vs est. SEK0.51; Sees 3Q rev. little changed Q/q
– Finmeccanica
’s CEO considers alliances with its rivals, says the WSJ
– Universal Music
may offer major concessions to get EMI, says the WSJ
– Vivendi
is working with Goldman and Barclays to find buyers for Activision, reports the WSJ

RETAIL/CONSUMER/LUXURY
– Accor 2Q Rev. Misses Ests., 2Q LFL Sales Slows From 1Q; 2Q LFL sales up 3.1% LFL; 2Q rev. EU1.475b vs. est. EU1.61b; Expects ongoing trends of emerging mkts “robust,” Europe “generally stable” to carry on in summer season even with “low visibility and the uncertain economic environment” in some areas
– Swatch
’s CEO confirms SF 8 Bln 2012 sales target, reports Reuters

SMALL/MIDCAPS
– Orpea 1H Revenue EU685m; confirms full-year sales target of EU1.43b and sees improved profitability
– FCC
isclose to refinancing EU660m of debt, El Economista reports
Kloeckner & Co Cut to Neutral From Overweight at HSBC, PT EU8.40
– Laurent-Perrier
says 1Q growth can’t be extrapolated over FY
– Ashmore Raised To Buy VS Neutral at Goldman
– IMI Rated New Reduce at Nomura, PT 750p
– Mobistar 2Q Consensus Ebitda May be 2% Too High, Berenberg Says

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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