The Dawn Patrol – 28.09.12 – On RIMM, On Spain. France wants EADS+BAE for herself. Bon Week End.

Aloha,

US stock rallied especially after General Electric raised forecasts for sales growth. Mixed day in Asia with NKY/KOSPI down on disappointing IP data whereas China keep bouncing ahead golden week on speculation of stimulus (but hold your breath on this). EUR trading higher at 1.293 following positive sentiment about the Spanish budget Otherwise, Moody’s downgrades South Africa & Vietnam, Gold reached new record vs Euro €1375. Today, we can already see that German retail sales for July have been revised down and we’ll look at the EZ CPI at 11:00 and Michigan confidence at 15:55.

Please, enjoy your week end, do the things you like, have some fun and get your running shoes on (and try the Vibram fivefingers while you’re at it). (How Exercise Can Help You Master New Skills – NYTimes.com http://nyti.ms/QzQBeQ)

Germany and France may seek to secure a 27% combined share holding in a company formed from a merger of EADS and BAE Systems in what amounts to a potential deal breaker – FTD

Watch Heineken on Europe’s open – after 2 month tussle it gets go-ahead to take control of Tiger Beer brewer Asia Pacific Breweries

Tesco is poised to announce a “generational” profit fall : Profits are expected to fall 12% in the first half, according to analysts’ forecasts, although the retailer is likely to point to some stabilisation in sales from stores open at least a year – FT

Siemens said preferred bidder for Finmeccanica’s Ansaldo Energia

Ups/Downs :

WOS raised to Buy at DB, Danone cut to EW at Barcap, JPM like VOD citing VZW exposure and reiterate UW on AXA, Holcim & HEI cut to U/P at Chevreux, Krones raised to Buy at Berenberg – Linde, Air Liquide and Syngenta raised to Buy at HSBC whereas JMAT, AKZA, BAS and AKE cut to Neutral. BG Added to UBS’s European Key Call List, Removes Renault.

AFTER HOURS

RIMM: +19% post market – Q2 Sales/EPS better at $2.87bn/-27c vs $2.47bn/-47c. There a was a lot of short interest in the stock, some investors are playing RIMM as a takeover target and, yes, the numbers were better. Should you get in? Please don’t. Yes the stock may rally in the short term on these basis, but it’s still a stinking one. Hardware margins continue to suffer and they will continue to fight on price. They sold more handsets than expected thanks to this and maybe because the BBM app is still attracting some clients. But as the best analyst (AA @ BB) in the industry says this is a hope trade, and look at what happened to Nokia recently.

NIKE. The stock slumped 2.4% to $93.69 as the athletic apparel and footwear maker said gross margin in its fiscal first quarter dropped to 43.5% from 44.3%, the seventh consecutive quarterly decline on a year-to-year basis. Higher inputs costs, mostly for materials and labor, offset benefits from higher prices and cost-cutting efforts. Nike’s profit fell 12% to $567 million, or $1.23 a share, while revenue rose 10% to $6.67 billion from $6.08 billion a year ago. Analysts projected earnings of $1.12 a share on $6.43 billion in revenue. Worldwide future orders, a key indicator of company strength, rose 6% from a year ago.

CURRENT STUFF

On the Fed
Jon Hilsenrath: How Bernanke won over the Fed sceptics. (Wall Street Journal)

On Spain
We still need details and see how Spain can execute on all these measures. The new budget plans for a 8.9% govt spending cut and 43 new laws will be passed to stimulate the economy. Budget deficits targets are 6.3% in 2012 and 4.5% in 2013. These will be really tough to achieve, but investors should be happy with the plan and Madrid emphasises that these were beyond reforms recommended by the EC. Now the key question, is… Will the Germans be convinced by this plan???
Also, we’ll check for Oliver Wyman stress tests results today.

Key Spain/Greece events next 2 months :

Friday Sept 28: Spain to provide details of bank stress tests.

Late Sept: Moody’s review on Spain + possible rating actions (downgrade)

Monday Oct 8/9: ESM due to be operational, EU finance ministers meeting on Greek aid tranche. Greece coalition partners have yet to agree on austerity measures while Troika wants even additional austerity to safeguard targets. Hence the strikes.If Parliament doesn’t approve austerity package, Troika won’t release next tranche. Greece may run out of funds late Oct.

Thur Oct 18/19: EU Leaders Summit.

Sunday Oct 21: Spain Galicia/Basque elections. Galicia is located north of Portugal and birthplace of Spain’s PM Rajoy. Rajoy is sure to want to wait till after these elections to request aid.

November 3/4/5: G20 Finance ministers meeting in Mexico.

Sunday Nov 25: Catalonia snap elections, announced yest. Could delay Spain aid request with ESM further as Rajoy tries to postpone formal aid request until after regional elections.

McDonald’s Employee Horror Stories – Business Insider http://read.bi/STXnZv

Starting this book: Gamification by Design: Implementing Game Mechanics in Web and Mobile Apps: Gabe Zichermann,Christopher Cunningham: 9781449397678: Amazon.com: Books http://amzn.to/Qi3iYn

STRATEGY

MS (Carr) EEMEA Strategy
5 reasons to own high and sustainable DY stocks in EEMEA.

By now you should all know that high DY stocks are the ones to own, because there is no yield elsewhere. And the same apllies for EEMEA. I have the list of names, in case you’re interested.
1) Dividends’ share of total equity returns is at record levels, and
2) tends to increase in range-bound markets.
3) DYs are attractive versus bond yields.
4) EEMEA DY,payout ratio and DPS growth are superior to other regions.
5) High yielding stocks are outperforming.

EUROPEAN EQUITIES

FINANCIALS

NEWS

Deutsche Bank Cuts 2013 World Growth Forecast to 3.2% vs 3.5%

Barclays Sees Stronger EUR, Weaker JPY vs USD in 3 Months

Commerzbank Keppel Land in Property Deal With Commerzbank

Barclays Prefers Swiss SMI Index to CAC 40

Reco

AXA PT Raised to Eu12 VS Eu10 at JPMorgan; Kept at Underweight

DNB PT Raised to Nok76 From Nok75 at Nomura; Kept at Buy

Aegon Cut to Underperform from Neutral at Exane

INDUSTRIAL/MINERS/SERVICES

NEWS

BAE Risks Breakup or U.S. Co. Bid if EADS Fails

Airbus’ Says Oct. 10 Deadline Must Be Kept; Germany Considers Buying EADS Shares to Keep Power Balance.

Schneider Software Unit for Utilities Has Breach

Reco

SKF Assumed Overweight at Morgan Stanley

Atlas Copco Assumed Equalweight at Morgan Stanley

Sandvik Assumed Underweight at Morgan Stanley

Holcim PT Raised to Chf68 VS Chf58 at Berenberg; Kept at Buy

Holcim Cut To Underperform at Cheuvreux

HeidelbergCement Cut to Underperform at Chevureux

Wolseley Raised to Buy from Hold at Deutsche Bank

UTILITIES/OIL/HEALTHCARE/CHEMICALS

News

Novo Nordisk Receives First Approval of Tresiba From Japan

BG Added to UBS’s European Key Call List, Removes Renault

RECO

Red Electrica De Espana Cut To Sell VS Neutral at UBS; Added to UBS’s Least Preferred List

Air Liquide Raised to Overweight From Neutral at HSBC; PT Raised to Eu114 VS Eu98 at HSBC

Linde Raised To Overweight From Neutral at HSBC; PT Raised to Eu154 From Eu141 at HSBC

Syngenta Raised To Overweight From Neutral at HSBC; PT Raised to Chf400 From Chf340 at HSBC

Clariant PT Raised to Chf12.10 From Chf11.50 at HSBC

Givaudan Raised To Neutral From Underweight at HSBC; PT Raised to Chf930 VS Chf880 at HSBC

Croda PT Raised to 2,500p VS 2,375p at HSBC, Stays Neutral

Umicore PT Raised to Eu43 VS Eu39 at HSBC, Stays Neutral

Arkema Cut To Neutral From Overweight at HSBC

Akzo Nobel Cut To Neutral From Overweight at HSBC; PT Raised to Eu50 From Eu47 at HSBC

BASF Cut to Neutral From Overweight at HSBC; PT Raised to Eu71 VS Eu68 at HSBC

Johnson Matthey Cut To Neutral From Overweight at HSBC

TMT

News

Bollore Sells Channels to Vivendi for 22.4m Vivendi Shares

Kabel Deutschland Sees Tele Columbus Antitrust Ruling by January

Reed Elsevier Plc Buys Back 650k Shrs at GBp597.7972

Vodafone’s Reported Growth May Rise Over 150bps: Morgan Stanley

Reco

Telecom Italia PT Raised to EU0.82 at Goldman; Kept at Neutral

RETAIL/CONSUMER/LUXURY

News

BMW to Hire 1,050 New Employees for Leipzig

Daimler’s Mercedes Brand Won’t Expand Below Compact Segment

Renault Aims for 8% of Brazil, Russian Markets by 2013-2014. To ‘Refocus’ Operations in France, COO Tavares Says

Reco

Swatch’s Longines Revenue to Exceed CHF1 Billion

Danone Cut to Equalweight from Overweight at Barclays

Air France Raised to Buy VS Neutral at UBS

H&M PT Cut 2% to Sek195 at Exane; Kept at Underperform

Tesco PT Raised to 390p VS 360p at HSBC, Stays Overweight

Adidas PT Raised 7% to Eu80 at Exane; Kept at Outperform

SMALL/MIDCAPS

NEWS

Econocom Agrees to Buy Spanish Virtualization Company Ermestel

Rezidor Hotel Group Confident in Route 2015 Strategy Plan: CEO

D’Ieteren Spends EU1.09m on Stock Buybacks

Aer Lingus, Dublin Airport SIPTU Union Members Defer Protest

Banco de Valencia to Shed Up to 485 Jobs to ‘Guarantee Future

Intercell Gets U.S. FDA Orphan Status for Vaccine in Children

Phoenix IT Group Merger Talk in U.K. Newspapers

Evotec, Aspireo in Advisory Agreement to Develop Somatoprim

Telekom Austria May Replace CFO Tschuden With Mayerhofer

DIASORIN Deputy Chairman Boniolo Sold Diasorin Shrs for EU8.2m

FCC to Invest at Least $90 Million in Cementos

Reco

Tarsus Rated New Add At Numis, PT 202p

Vossloh PT Raised to Eu71 VS Eu62 at Berenberg; Kept at Hold

Krones Raised To Buy From Hold at Berenberg

Shaftesbury Rated New Buy at Deutsche Bank; PT 652p

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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