The Dawn Patrol – 13.11.12 – MS very quick summary on European markets. Greece given two more years, Campari slashed, E.On cautious.


European futures heading down today as we experienced a quiet session yesterday with volumes in the US 25% below average. Asia is sharply down overnight with Shanghai down 1.65%. The S&P failed to stay above its 200 DMA. Gold is at 1,721 and the EURUSD at 1.2692. Today, macro eyes on French NFPs, Italian CPI, German Zew, UK CPI and PPI. In the Us, we’ll look at the NFIB small Business Optimism. On the debt side, Greece, Italy and Belgium will sell bills.

Europe Gives Greece Two More Years to Cut Deficit to Keep Country in Euro

It’s so good, we should continue for two more years.

SCOR SE 3Q Net EU318m; Reaffirms Targets in Strategic Plan. Gross written premiums up 13% on pro forma basis to EU7.21b.
K+S Sees 2012 Profit, Rev. at Bottom of Range; 3Q Ebit Misses; 2013 Profit May Rise

SONOVA HOLDING AG 1H Net, Rev. Beat Ests; Confirms FY Forecast, Still Expects Ebita Margin in Mid-20% Range in 5 Years

E.ON AG 9-Mo. Ebitda Beats Est.; Generation Faces ‘Huge’ Challenges

KABEL DEUTSCHLAND HOLDING AG 2Q Rev, Ebitda Beat Ests.; Reiterates Forecast

PUBLICIS Begins Public Cash Offer for All LBi Share

VODAFONE, Verizon Communications Get $8.5 Billion From Venture

Spain Sees Room for a Deal Between REPSOL, Argentina on YPF


-PT Cut to EU6.4 vs EU6.7 at JPMorgan
-Cut To Sell From Hold at SocGen
-PT Cut to EU6.5 vs EU7 at Nomura, Kept at Buy
-Cut to Underweight from Equal weight at Barclays

GS removes UNILEVER from its conviction buy list (still a buy) as upside is limited; they also reiterate their Buy on FRESENIUS MEDICAL CARE following the recent underperformance (I’ll have a look).

DEUTSCHE POST Cut To Neutral From Overweight at HSBC

E.ON Cut to Underweight From Neutral at HSBC

ENRC PT Cut to 275p From 375p at Nomura, Stays Reduce

EVRAZ Cut To Sell From Hold at SocGen, PT Cut to 190p From 253p

FAURECIA PT Cut to Eu16 From Eu18 at HSBC, Stays Overweight

LEGAL & GENERAL PT Raised to 165p VS 155p at Bernstein

IAG Cut to Neutral VS Buy at UBS

PERNOD RICARD Raised to Outperform at RBC Capital

PIRELLI PT Cut to Eu14 VS Eu15 at HSBC; Kept at Overweight

TELEPERFORMANCE Raised To Overweight From Neutral at HSBC

Assystem PT Cut to Eu18 From Eu20 at Natixis, Stays Buy

Symrise PT Cut 2% to Eu28.5 at Exane; Kept at Outperform

Telefonica PT Raised 2% to EU10.4 at Exane


On Greece (from Alphaville)
Lagarde and Juncker are fighting over the time table. The IMF and the EU creditors of Greece have openly sparred over debt targets, delaying its next bailout payment even further. Jean-Claude Juncker, chair of the Eurogroup, told an evening press conference that Greece’s debt should fall to 120 per cent of GDP by 2022, two years beyond the target long set by the IMF. Christine Lagarde, the fund’s director, used the same press conference to insist the original timeline must stay. “In our view, the appropriate timetable is 120 per cent by 2020,” Lagarde said. “We clearly have different views.” The European Commission sees the IMF’s view of the Greek bailout, which favours relief on Greece’s debts to official Eurozone creditors, as too pessimistic compared to economic growth projections. A November 20 meeting will aim to bridge the differences. (Financial Times, Bloomberg).

On the Fiscal Cliff



MS (Secker) European Equity Strategy
Weekly Update

The recent market performance is a function of a reduction in perceived tail risk and economic data that was less bad than anticipated. These factors are now behind us as European macro data is now worsening and the EU policy progress seems to have stalled. MS’ ‘Surprise Gap Index’ and the Eurozone economic surprise index indicate further earnings downgrades in the short term.
Graham Secker and team find it hard to justify such current valuation with these increased risks and earnings weaknesses. He would become more positive if his MTI indices (I can explain) turned more positive, if he saw a real decline in investors sentiment (AAII, put/call ratio…), if he saw a trough in the earnings revision ratios or if there was a policy breakthrough in Europe or the US.

I would definitely tend to agree with this view.. We’re back in this no confidence zone where visibility is low and we feel kind of lucky that the markets carried us so far this year. I stick to the restructuring stories, the high quality names with strong cash flow and dividends, the picks and shovels of the tablets war. That’s not too many names…

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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