The Dawn Patrol – 30.08.12 – RCUBE shorts the US consumer discretionary. On the Beige Book, Spain and Japan. Some Earnings and more.

Sawubona,

Markets to open slightly down, there is no volume, everyone awaits Jackson Hole and there is a US 3 day week end ahead of us, so no one moves. We’ll watch the German unemployment, eht EU consumer confidence (11:00) and the US jobless claims because it’s already Thursday…

PERNOD: Numbers are OK but expectations were really high and outlook is vague. Expect the stock to open down. More after the conf call (9 paris time).

CARREFOUR: Strong numbers with current op. income of €769m vs ests of €705m.

GEMALTO: Good numbers and guidance revised up. This company will continue to perform as the phone wars continues and with the NFC adoption.

WPP CUTS FULL-YEAR SALES GROWTH FORECAST TO ABOUT 3.5% FROM 4% (down 3%)

Ups/Downs: Barclays sees too much negative sentiment on G4S (OW) and reiterates OW (HSBC downgrades) on L’Oreal expecting more rewards towards shareholders – DB1 added to the most preferred div. financials at UBS whereas LSE to the Least, Volvo raised to Buy at Socgen, MS reiterates UW on SYNN, HMB and Inchcape cut to Neutral at Citi, JPM likes Standard Life and keeps UW on Nokia. Kingfisher raised to Buy at Citi. Ericsson cut to UW at CS. Anglo American Off JPMorgan European Analyst Focus List.

RCUBE

Short the US Consumer Discretionary Sector on a Relative Basis

RCUBE has been short the US disctretionary sector for a wahile now via puts on XLY and XRT ETF vs long SPY. This has not worked so far and the delta has now collapsed. But this is still a valid call. The coming fiscal tightening will impact the the consumer. There is also a strong divergence between the evolution of the sector index and the US consumer sentiment and the bears seem to have capitulated as the short interest has halved since May 2011.

Sell XLY

CURRENT THEMES

On the US
Mixed feedback from the Beige Book. Activity continues to expand gradually in July and early August according to the regional Federal Reserve banks. The manufacturing side continues to decliene though as demand for manufactured goods continues to fall. Consumer spending is more resilient including in the auto sector. Real estate as well.

Also Bill Gross says QE3 likely even if Bernanke doesn’t give hint.

On Spain
Rajoy seeks support for Spanish debt as regions need aid. And there is an article in the WSJ claiming that the the Spanish debt rating will drop to junk at Moody’s. “Moody’s Investors Service in June put Spain on negative review, with the ratings firm giving itself three months to make a decision whether or not to cut a rating that already stands just one notch into investment-grade territory. For more than a decade these assessments have almost always concluded with a rating cut, and market participants widely expect this September won’t be any different, although the timing isn’t exact.”

On Japan
Japanese retail sales fell 1.5% this morning showing a worsening of the trend…

OTHER STUFF

Japan July Retail Sales – Business Insider http://read.bi/TxCaFT

Morgan Stanley Lays Out Mario Draghi And The ECB’s 15 Policy Options In One Huge Slide – Business Insider http://read.bi/Ox6Ox3

EUROPEAN EQUITIES

FINANCIALS

News

Bankia may report a 1H loss of nearly EU4.3b as it continues to clean up its balance sheet, Expansion reports

Barclays faces a criminal probe into fees it paid in 2008 to Qatar’s sovereign wealth fund as the bank sought to raise money to avoid a government bailout

ING’s Canadian unit to be bought by Scotiabank for C$3.13b

Standard Chartered is a viable target for Australia Bank, Nomura Says

Reco

Commerzbank PT Cut to Eu1.3 From Eu1.7 at Citi, Stays Neutral

Deutsche Boerse In Most Preferred Diversified Financials at UBS

Old Mutual Cut To Underperform From Neutral at Credit Suisse

Standard Life Among Best Capitalized Insurance Cos: JPMorgan

UBS PT Cut to Sf14 VS Sf15.50 at Citi, Stays Buy

INDUSTRIAL/MINERS/SERVICES

News

– China and Germany signed a series of cooperation agreements today, including a procurement deal for 50 Airbus planes of about $3.5bn, Bloomberg reports

Lufthansa’s main cabin crew union announces strike for Friday

Volkswagen signed a pact to build a auto parts factory in China’s Tianjin, the Wall Street Journal reported

Reco

Anglo American Off JPMorgan European Analyst Focus List

Antofagasta PT Cut 3% to 1,400p at Exane; Kept at Outperform

DSM Rated New Underperform at Credit Suisse; PT Eu39

G4S Cut to Neutral From Overweight at HSBC

Volvo Raised To Buy From Hold at SocGen

UTILITIES/OIL/HEALTHCARE/CHEMICALS

RESULTS

BW Offshore 2Q opg rev $222.5m; 2Q Net Loss $49.7M vs Profit of $6.5M Year Earlier; Declares dividend of $0.01/shr for quarter; Co. pursuing ‘several’ projects incl. contract extensions for existing units, deals for new FPSO projects

News

Fortum’s Loviisa 2 nuclear power plant unit are back in production

Galenica PT Cut to Chf500 VS Chf520 at Berenberg; Kept at Sell

Novartis wins the FDA approval for the 1st drug formulated for kids with rare brain tumor, Afinitor Disperz ; The Co. says that the Lung Drug Phase 3 study meets primary endpoint

ROYAL DUTCH SHELL plans to deploy staff to the Eastern Gulf starting OPS on Aug. 31st

Statoil leases rail cars to ship North Dakota oil, says the WSJ

TMT

RESULTS

Gemalto 1H Rev. Matches Est., Profit From Ops Beats Est.; 1H sales EU1.02b, matching est.; 1H profit from ops EU115m vs est. EU101.3m; Sees 2012 profit from ops close to 2013 target of EU300m

News

Nokia Siemens said to be close to selling business-support unit

ProSieben evaluates interest in Nordic assets after approaches

Samsung shows ATIV S smartphone with Microsoft’s Windows Phone 8 software at IFA consumer electronics show in Berlin

Vodafone non-executive Chairman Analjit Singh has been summoned by the Enforcement Directorate

Reco

Bouygues Shr Price Drop Reflects Low Telco Visibility: Nomura

Ericsson Cut To Underperform From Neutral at Credit Suisse

Nokia stock has almost doubled since 2Q results with no visible fundamental improvements; time to initiate short position, or add to existing ones ahead of Nokia World next week, risk of warning in Sept, Bernstein analyst Pierre Ferragu writes

– Credit Suisse Sees 4 Reasons to Switch from Tele2 Into Telia

RETAIL/CONSUMER/LUXURY

RESULTS

Carrefour 1H Current Op. Income Beats Est.; Reported 1H sales +9% on July 12; 1H current oper. income EU769m, median of 10 ests. EU705m; Debt EU9.63b June 30, -9.% Y/y; New CEO Georges Plassat said June 18 he needs at least 3 yrs to “relaunch” Carrefour

Pernod RICARD FY organic sales up 8%, est. 7.2%; FY rev. EU8.21b vs est. EU8.20b ; FY Ebit ex-items EU2.1b vs est. EU2.1b ; FY organic profit from recurring operations up +9% vs est. 9.6%.; Net debt EU9.36m at 30 June 2012; “Confident” in capacity to continue to grow, plans to give earnings guidance for current financial year at 1Q sales Oct. 25; FY div. EU1.58-shr, implies final div. EU0.86 vs BDVD forecast EU0.86

News

– The German Finance Ministry is working on a plan to streamline rules for value added tax for food products

Carrefour is to Cut 500 to 600 Jobs in France, Bloomberg reports

Metro said to be in talks to sell non-German ops of real grocery chain

Ferragamo says that its Aug. sales were ‘surprisingly positve’ in U.S. and in Europe

Pernod RICARD: Alexandre Ricard to be Chairman, CEO From End Jan 2015

Reco

Adidas PT Raised to Eu74 From Eu68.5 at Citi, Stays Buy

X5 Retail Cut To Neutral From Overweight at HSBC

H&M Cut to Neutral From Buy at Citi

Kingfisher Raised To Buy From Neutral at Citi

SMALL/MIDCAPS

RESULTS

Baloise 1H Net Income Beats Estimates; 1H net income profit CHF218.9m, est. CHF192.9m.; Total business volume CHF5.19b vs CHF5.18b yr ago; Gross premiums written CHF4.44b; Says should be able to pay attractive div.; Sticks to Targets

Cimpor 2Q rev. EU565.7m vs EU601.8m Y/y; Spanish rev. falls 29% ; 2Q Ebitda EU139.4m vs EU173.1m Y/y ; 2Q net w/o impairments EU35.8m vs EU74.3m Y/y ; 2Q Net Loss EU253.8m vs Net Inc. EU74.3m Y/y; Net debt at end-June EU1.54b vs EU1.62b end-2011 ; Loss caused by impairments in Spain, result of consumption decline, lack of visibility on country’s economic recovery, Cimpor says

Fluxys Belgium 1H Net Drops 22% on Belgian Bond Yields, Payout; 1H net EU46.1m; 1H capital spending EU50m; Fluxys Belgium says parameters for earnings & dividend include invested equity, financial structure, Belgian bond yields.

Wendel says 1H sales +12.9% to EU3.26b, organic growth +5.1%; 1H group share of net income +60.2% to EU724.8m; NAV at Aug. 21 EU4.6b or EU90.7 p/s, +20.9% Y/y; Says won’t hesitate to pursue, expand share buyback program in months to come, when market conditions permit

NEWS

Altran says remains attentive to general economic trends, still confident can deliver profitable growth in 2012 in line with 2015 strategic plan targets.

Duro Felguera says that it will pay the 10-euro-cent gross dividend a share on Sept. 17.

Eurofins brings forward its 2013 sales goal by one year, leaves unchanged 2013 adj. Ebitda goal of EU210m.

Helvetia bought 7.69% stake in Nationale Suisse

Nationale Suisse says that Mobiliar becomes main shareholder

Mobimo to be added to Stoxx 600 Index as of Sept. 24

Unipol interested in buying unexercised rights in Fondiaria’s capital increase to give it a stake of as much as 4.9%, Unipol says

Reco

Bourbon PT Cut 6% to Eu15 at Exane; Kept at Underperform

Brunello Cucinelli PT Raised to EU15 vs EU13.2 at BofA

Debenhams PT Raised to 106p VS 95p at Citi, Stays Buy

Eiffage PT Cut to Eu29 VS Eu34 at JPMorgan, Stays Neutral

Kinepolis PT Raised to Eu82 VS Eu74 at ING, Stays Buy

Inchcape Cut To Neutral From Buy at Citi

LSE Added to Least Preferred Diversified Financials at UBS

Telekom Austria Raised to Neutral from Sell at UBS, PT trimmed to EU6 vs EU6.6

Valora Cut To Neutral From Outperform at Credit Suisse

WH Smith PT Raised to 660p VS 600p at Citi, Stays Buy

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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