The Dawn Patrol -24.10.12 – REsults, Ups & Downs (GS likes champagne). On China, on Apple and MS wants you to play the Chinese rebound.


Sorry I’m late… European futures indicated up, and Shanghai rose on the better Chinese PMI (see below). Apple down on the iPad Mini, hold on your horses. Gold up to 1708 and EUR/USD at 1.2984. Today, we’ll be swamp in resutls again… On the Macro side, German IFO, US and EU PMIs, US MBA mortgage applications and the FOMC rate decision. Germany to sell bonds.


German IFO business confidence improves for the first time since March, a survey shows while PMIs show the pace of contraction slowed in the euro-zone in October as German services stopped shrinking, according to separate surveys.

EADS Airbus CEO Repeats 2012 Goal of 30 A380 Deliveries, Figaro Says


VOLVO: very weak numbers and cautious guidance. The EBIT came in at SEK4bn vs SEK4.3bn estimates and the guidance indicates no growth in 2013 and the CE uotlook in China is lowered again..

STM: It’s always the same. They must have some good things in the product line, but they disappoint on the guidance this time and more importantly on the margins. Given the recent ride following the announcement of a split, the company will have to continue on this path but I won’t like the 2 STMs More.

SAP: Some good numbers with strong licenses and good performance of HANA. The company raises guidance as well on ARIBA sales. The EPS is slightly below estimates, but it comes from FX apparently. Anyway, SAP is always about Q4…

BIC 3Q Rev. Misses Est., Confirms 2012 Margin Outlook
Groupe SEB Sales Fall in Sept.; Sees FY Oper. Result Shortfall
BIOMERIEUX 3Q Sales Rise to EU382.6m vs EU347.3 Y/y
WACKER CHEMIE 3Q Net Income Eu26.9 Mln; Analyst Est. Eu34.3 Mln ; Wacker Chemie 3Q Misses Est., Sees 2012 Ebitda Below Est.
COMDIRECT 3Q Profit Declines, Sticks to Forecast
NORDEA 3Q Net Misses Est.; Says Nordic Area Outperforming Europe


AB INBEV Cut to Sell VS Neutral at Goldman
AGGREKO Cut to Outperform from Top Pick at RBC Capital
ALFA LAVAL Raised To Equalweight From Underweight at Barclays
ALSTOM Raised To Buy From Hold at SocGen
BAE SYSTEMS Resumed Equalweight at Morgan Stanley
C&C GROUP Raised to Buy From Neutral at Nomura
DANONE Added Conviction Buy List At Goldman
ENI Raised to Overweight from Equalweight at Barclays
EUROTUNNEL PT Raised 1% to Eu7.5 at Exane; Kept at Outperform
FABEGE Cut To Neutral VS Buy at UBS
FERROVIAL Rated New Buy At Citigroup; PT Eu12.7
G4S Raised to Outperform From Sector Perform at RBC Capital
IMPERIAL TOBACCO Raised To Neutral VS Sell at Goldman
JCDECAUX Cut to Underperform From Neutral at Exane
LAURENTPERRIER Rated New Buy At Goldman, PT Eu96
MTU AERO ENGINES PT Raised 2% to Eu61 at Exane; Kept at Neutral
PORTUGAL TELECOM Reinstated Neutral at BofAML
SALVATORE FERRAGAMO Rated New Underweight At Morgan Stanley
SEB PT Cut 7% to Eu63 at Exane; Kept at Outperform
SKF Rated New Buy at Nomura
STATOIL Cut To Equalweight From Overweight at Barclays
TELENOR Raised To Strong Buy VS Buy at Nordea
VRANKEN-POMMERY Monopole Rated New Neutral At Goldman
WPP Cut to Neutral VS Buy at UBS
WOLSELEY Recent Trading Unchanged From 4Q Trends, Citi Says




DOW: Dow Chemical 3Q decent beat after hours, co also announces re-structuring
FB: Facebook 3Q beat and encouraging signs from mobile advertising, +10% after hours
ALTR: Altera 3Q beat but guide small lower
BRCM: Broadcom eps bit again 4Q guided small lower
JNPR: Juniper 3Q revenue bear as did eps again guide 4Q small lower +2.6% after hours
NFLX: Netflix 3Q in line but 4Q guidance lower -16.7% after hours
VMW: VMWare 3Q book to bill light but 4Q guidance in line, eps beat +1.9% after hours


On China
The HSBC/Markit Flash PMI came in at 49.1 for October vs 47.9 in September, this is a big improvement and a 3 months high. According to HSBC: “October’s flash PMI reading continues to recover … thanks in part to a gradual improvement in the new orders index which picked up to a six-month high (albeit marginally below 50). This is helped by the filtering-through of the earlier easing measures.” This really looks like some positive improvement across the board and particularly on new orders and exports.

On Apple
I just had to say something too… Another round of fantastic products with a beautiful iMac, an amazing 13″ MacBook Retina a really powerful new iPad 4 and of course the iPad Mini. I really liked this iPad mini. I just wished it came with a no glare screen and a lower price tag… And this is were people get really nervous. Is Apple becoming a follower? Isn’t this way overpriced? How can I justify to keep buying AAPL shares at this level…
Yes, the iPad Mini is overpriced and the Kindle or the Nexus are great alternative… Strategically, it looks like a defensive move from Apple. Now you have another (pricier) alternative to the Amazon and Google’s tablets and for $100 more, I think people will hesitate. So not a clear winner, but not a losing strategy, Apple will keep market share on the smaller tablets. Priced at $250 it would have killed the others and I would have bought one too…
What do we do with the shares? It already came back big time from $700 and the pressure is mounting. It seems like it’s no longer the one to have in all portfolios, people are hesitating. If you took some profits, well done. I didn’t. I still like the company and its products too much. The cycle is still in favor of Apple. So I’m inclined to keep the shares ahead of tomorrrow’s earnings as people anticipate some rather bad news. If you’re not in AAPL, this will be the occasion to step in. I like AAPL and I like AMZN (way overpriced) and GOOG too.


MS (Secker and al.) Global Eqity Strategy
The best global opportunities to position for China recovery
MS believes the Chinese economy is about to rebound. It still is uncertain, but the outlook is now brighter than a few months ago and is improving. In this paper, MS’ strategists are looking at the best positions to have ahead of the economic (and equities) recovery.
Asia/EM – Prefer HSCEI to HSI and A-Share over H- Share. Banks, Energy, Real Estate and IT are our preferred sectors to play a China recovery.
Europe – Materials and Energy are preferred sectors; MSSTINCH is a basket of stocks with exposure to China investment trends. The list includes: industrials, materials and consumer discretionary names (VEDANTA, RIO, WACKER, AFREN, BHP, NORSK HYDRO, LVMH, RICHEMONT, SCHNEIDER, DAIMLER….)
– Industrials, Materials and select stocks in Technology and Consumer Discretionary (GOOG, DIS, MMM, RL, DOW, BMY….)
– Trading and Machinery sectors have greatest upside potential if rebound is led by DM recovery and domestic investment. Autos and Electric Appliances performance linked to consumer sentiment within China.

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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