The Dawn Patrol – 26.10.12 – China data by JPM and GS. Apple of course. Lots of ups & downs (in alphabetical order).


European markets to skyfall. Futures down 0.8% on Apple and Amazon, S&P downgrade of French GDP and banks and weak US capital goods. Apple wasn’t good and shows the pressure on suppliers (but I buy now). Gold at $1704 and EURUSD at 1.2928. Lots of earnings again today. On the macro side: GFK consumer confidence, French Consumer indicator (just ask me), Italian business confidence, US GDP, personal consumption and U of Michigan. On the auction side: 11.00 Italy to sell 3Bln zero 2014 bonds, and 2021, 2026 inflation linked bonds….

Watch the XLY index, looks like a very negative chart to me (and more importantly, to our technical guru).

The week end is almost here. Relax… Enjoy. Take your kids to see Skyfall or this exhibit in Paris: « Bêtes de sexe, la séduction dans le monde animal »



THALES 9-Mo Rev. Rose 8% to EU9.3b; Confirms FY Target

VINCI 9-Month Rev. EU28.2b; Sees Tax Impact on FY Net

BELGACOM 3Q Ebitda Falls 2.7% to EU460 Mln ; Belgacom Sees FY Ebitda Down 4%-5%, Sales Rising Up to 1% ; Belgacom Increases Payout With 31c/Shr Special Dividend ; Net Income 184 vs estimated net income 166.7 ; EPS 0.58 vs estimated EPS 0.54 ; Sales EU1,611 vs estimated sales EU1,591.9

ERICSSON 3Q Net Sk2.18b; Est. Sk1.95b ; Ericsson 3Q Sales In Line, Net Beats Ests.

EUTELSAT 1Q Rev. Beats Estimate; Confirms Organic Growth Targets
PUBLICIS 3Q Rev EU1.627B; Analyst Est EU1.68B.


AIR LIQUIDE PT Cut 2% to Eu96 at Exane; Kept at Neutral

ATLANTIA PT Raised to EU19 vs EU17 at Credit Suisse

CAMPARI Cut to Underperform from Buy at BofAML

CARREFOUR upgraded at MS with 29% upside on their PT as Plassat demonstrates that he may be the man Carrefour needs.

CREDIT SUISSE Raised To Buy VS Neutral at Rochdale ; CREDIT SUISSE PT Raised 10% to Chf23 at Exane; Kept at Neutral

DASSAULT SYSTEMES PT Raised 9% to EU95 at Exane

FRANCE TELECOM Cut To Neutral From Buy at Nomura

FRANCE TELECOM remains an UW at MS. I understand why… A real value trap? I don’t think so…

FRESENIUS Cut to Hold VS Buy at Deutsche Bank

GAS NATURAL Rated New Neutral At Credit Suisse

GDF SUEZ Added to Most Preferred Utilities at UBS

H&M Rated New Underperform at Credit Suisse

IBERDROLA downgraded to N at GS following the good performance and given the lower growth outlook.

ITV Cut to Equalweight VS Overweight at Morgan Stanley

KPN Cut to Sell VS Neutral at Goldman

PERNOD RICARD Cut To Neutral From Buy at Nomura (I don’t think it’s the good call)

RANDSTADT downgraded at GS on more challenging conditions in Europe.

RECKITT BENCKISER downgraded to EW at MS with a PT of 3800 as growth acceleration is unlikely in another transition year.

RWE Added to Least Preferred Utilities at UBS

SANOFI PT Raised 1% to Eu76 at Exane; Kept at Outperform

SAP Raised to Buy VS Neutral at BofAML

SCHNEIDER PT Raised 4% to Eu57 at Exane; Kept at Outperform

SEB AB PT Raised 4% to Sek55 at Exane; Kept at Neutral

TECHNIP PT Cut 2% to Eu82 at Exane; Kept at Neutral

UNILEVER remains a BUY at GS as the growth story continues.


AMZN. Q3 Sales/EPS came in at $13.81bn/-60c (-27c adjusted) vs estimates of $13.9bn/-7c. Shares of Amazon were off 0.9% at $221, but they had been down 7% after the company’s fourth-quarter sales forecast came in between $20.25 billion and $22.75 billion versus estimates of $22.8 billion.
CA reports earnings – top line light; EPS inline; cash flow miss; guidance cut. -5% after hours
AMCC: Applied Micro Circuits (AMCC) revs came in $46.3MM (touch ahead of St $45.3MM). EPS came in (0.16), right inline with consensus. “We are slightly ahead of plan and are progressing towards our commitment of achieving cash break even in the upcoming March quarter”
EXPE: Online travel-services provider Expedia Inc reported better-than-anticipated results for the third quarter, sending its shares up 12% at $57.43.

That was an intense moment… Q4 Sales/EPS came in at $36bn/8.67c vs expectations of $35.8bn/8.75c. The Q1 guidance came in below estimates with sales/ EPS of $52bn/$11.75 vs ests of $55bn/$15.49 and the stock dived. But then it came back up.
Positives: demand for the iPhone 5 exceeds supply, sales of iPhones were higher than expected and supply concerns should alleviate. Apple always guides cautiously.
Negatives: The margin guidance for Q1, but with the launch of new products, it should be expected and there is plenty of room to surprise positively.
What do we do? This is an opportunity to get in, to play the Christmas effect, the end of the supply constraints and the launch of the iPhone 5 in China. What worries me?? I thought the stock would price below $600 and become a better entry level. The upside on the stock may be limited in the very short term though… The price of theiPad mini won’t come down in the near future… Gross margin preservation.
Impact on European names: I think it’s still positive for ARM as the number of iDevices is still strong and should continue to grow. Since margin preservation is now the name of the game, the pressure on DIALOG will continue to increase. I still believe in the Tablet Wars theme, I still like GOOG, AMZN, AAPL, DLG and ARM. But it may get bloody.

(chart from MarketWatch).


On the FRench banks downgrade by S&P
S&P cuts the French GDP growth forecasts for 2013 and 2014 to… zero (bullish?). It also downgrades French banks. BNP from AA- to A+. SocGen, CredAg and other non listed names are now under negative watch too. Another interesting point is no the rea estate as S&P expects house prices to fall between 10 and 15%. This should come as no surprise as credit for buyers are drying and the number of house sold is falling.


JPM (Ulrich) Hands-on China Series
China’s Luxury Goods Market: Weathering a Cooler

The Chinese luxury market, until recently considered a one-directional bet for global brands, appears to have entered a period of uncertainty following the release of disappointing results by some luxury groups, but also upbeat guidance from others. The most concrete evidence of a broad slowdown in Chinese consumption of luxury goods came at the conclusion of the October Golden Week holiday. Various commentators have suggested that slowing luxury purchases may be attributed to i) a temporary avoidance of conspicuous consumption ii) a lull in gift-giving in the run-up to China’s political transition, iii) a shift in consumer preferences away from highly visible status brands, iv) a higher prevalence of purchases made in Europe due to outbound tourism trends and the weaker Euro. In this report we examine trends in Chinese luxury consumption and the underlying drivers.

EconomyGS (Zhu) Portfolio Strategy Research
China in Charts 9/12: Sentiment leads, Data lags.

This paper comprises 80 charts on almost every data you may want to find in China. There are some positive news in there with the pick up in Exports and IP. More importantly, sentiment seems to have improved.
GS expects the recovery to be more gradual than what the market currently thinks and there is less room for positive surprises.
This is the third report telling me that it may be time to get exposure to China (after RCUBE and MS).

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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