The Dawn Patrol – 19.10.12 – On the European Summit. JPM on US GDP growth, Lots of up/dngrades. A chart on Gold.


Markets expected to opend slightly down today. US finished down on the GOOG mess up (someone will get fired at RRD). Today we’ll watch US exisiting home sales, EU current account, and a bunch of EU earnings. The EU summit continues.

This Week End, if you’re not going to surf, go and see the Hopper exhibit at the Grand Palais, or Raphael at the Louvre. You could also try la FIAC, but it’s going to be crowded. Otherwise, there are nice photo exhibits at the Maison Europeene de la Photographie. If you’re in Geneva or London, come over and see Slash (ex Guns & Roses) concert.


Valeo 3Q12 sales 2% ahead; confirms guidance despite expected 12% y/y decline in 4Q12 European production, TNET EBITDA beat, strong mobile performance, ZIGGO inline with est but and cut Capex forecasts.
BMW Sees Op Margin of 8%-10% in 2012, La Tribune Says
ArcelorMittal is exploring the sale of a stake in its $10bn Canadian iron ore business, (Financial Times)
Alcatel-Lucent to slash 5,490 jobs worldwide, including 1,430 in France
Trading in Google shares was halted for a time after the stock plunged more than 9% to $687.30 following the release of results that were expected after Thursday’s closing bell.
The stock ended the session down 8% closing at $695. Google’s market capitalization fell by $20 billion. The stocked edged up fractionally in after-hours trading.
Chipmaker AMD will cut 15% of its workforce as it struggles to cope with falling demand for PCs, a tougher economy and the growth of tablet devices. (Financial Times)
BP said Macondo well in the Gulf of Mexico isn’t leaking and oil found near the site is coming from equipment left on the sea floor during attempts to stop its flow 2 yrs ago
Carrefour Sells Business in Colombia to Chilean Group Cencosud for $2.5bn. This is positive for CArrefour. Expect more of the same. It’s a dog, but it has new management, a lot of pressure and some upside…

Ups & Downs
Remy Cointreau Cut To Sell From Hold at SocGen.
France Telecom And TDC Removed From Ubs’s Least Preferred List while KPN and Belgacom Added to Ubs’s Least Preferred List
Prosiebensat.1 Cut To Hold From Buy at Jefferies
Fresenius Medical Care Cut to Hold From Buy at Berenber
Morrison Cut To Underweight From Equalweight at Barclays
Banco Popular Espanol Raised To Neutral VS Sell at Goldman
Lloyds Banking Group Cut to Underweight at JPMorgan
KBC Cut to Underperform VS Neutral at BofAML
Alstom Rated New Reduce at Nomura; PT EU25
Pernod Ricard: GS is now more cautious and reduces forecasts by 3t o 8%.
Delhaize Raised To Equalweight VS Underweight at Morgan Stanley
MS on Software & IT Services : Prefer DSY, Atos, Cap; Avoid Indra


CMG (Chipotle, the upscale burrito chain!) down 10% as LFL sales increased 4.8% vs 4.9% est. EPS of $2.27 missed ests by 2c .

MSFT fell 1.3% after publishing Q1 Sales/EPS of $16bn/53c vs ests of $16.5bn/56c. Apparently clients delaying purchases waiting for the release of Windows 8.

SNDK +4.5% after hours. EPS 48c vs. 34c exp/ Sales/EPS of $1.27bn/48c vs $1.22bn/34c expected. Sees strong sequential growth in Q4, sees solid recovery in mobile embedded business


On the European Summit
A deal is struck! Yoohoo! Well not exactily, Barroso and Van Rompuy hope they can have a legal frameword for Jan 2013. According to the FT, a timetable has been agreed for the bankink union ruled by the ECB by the end of 2013. Now, here is the thing, it will take another 6-12 months for the supervision to be in place and Berlin said they want this before the ESM can inject cash into banks. So it seems that Germany is delaying things again and that behind the positive announcement, there is mounting disagreements between our great national leader and Mrs Merkel.

Other Stuff
It’s the 25th anniversary of Black Monday – and the timing is ironic… (Bloomberg)


Bulk of Consolidation in Equities Complete, Credit Suisse Says (bloomberg)

Factors that caused concern now look better, strategist Andrew Garthwaite says.

• Mentions mkt no longer as overbought, depressed equity sector risk appetite in US and Europe, less bullish sentiment, improved US earnings guidance among factors

• Highlights insider selling has fallen a lot from recent peaks

• Says equities cheap vs bonds, earnings revisions have troughed

• Stays overweight equities, keeps yr-end 2012 target of 1,500 on S&P 500

JPM (Feroli) US Economy
JPM cuts US GDP estimates in 1H, JPM now expects annualized real GDP growth to be 1.0% in 1Q (down from 1.5%) and 1.5% in 2Q (down from 2.25%) on changing assumptions for the US fiscal cliff as JPM now no longer thinks the payroll tax holiday will be extended. This change alone is worth over half a percent of GDP growth next year. Note that they are also raising 3Q ’12 GDP from 1.4% to 1.8%.


How Gold Moves With The Global Financial Markets. One reason why investment advisors will recommend buying gold is due to the diversification benefits it offers. In other words, gold tends to have low correlation with other asset classes and therefore reduces portfolio volatility. However, those correlations have been volatile as of late.

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


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