The Dawn Patrol – The JPM view and MS earnings monitor. On the fiscal cliff (better news), Europe and other stuff.

Bonjour,

European markets should open up as the meetings between Obama and the members of the GOP went well. Gold is up 0.5% at 1722.61 ans the EURUSD is at 1.2764. Today, we will wath the Italian Industrial orders, the EZ construction output (11:00), the German current account and in the US, the NAHB Housing Market Index (16:00) France is to sell bills.

Hope you enjoyed the WE. Going skiing soon? Better start training now. These simple but tough exercises will make you a better skier.
30 Minute Ski Conditioning Workout – Fitness Blender Strength and Cardio Training – YouTube http://bit.ly/Xr18ya

STOCKS

O2 flotation on the cards as Telefonica tackles debt : http://t.co/nVu82RDV
BP is believed to be planning a share buyback of at least $4bn, using the proceeds from the sale of its half of its Russian joint venture to Rosneft.
Xstrata shareholders are set to gather on Tuesday at meetings in London and Zug in Switzerland to seal a planned $66bn merger with commodity trader Glencore , some 10 months after the board of the miner first recommended a merger.
Fugro says CEO to leave; lowers outlook for FY net
Nomura is said to be in talks to sell its U.K. military housing portfolio for ~$5.6b to Terra Firma
Cisco Systems has agreed to buy Meraki for about $1.2bn
Maersk to switch away from shipping: “Nils Andersen, chief executive, told the Financial Times that the group would no longer invest large amounts in Maersk Line, the world’s biggest operator of container ships with a 16 per cent market share, and would instead focus on its oil, drilling rigs, and ports divisions.” This should not surprise the market, but still a positive point.

Two stocks I like a lot are ARM and SAP. They both gave bullish presentation at the MS TMT conference in Barcelona. SAP is in the sweetspot of spending according to them and ARM sees an increase in royalties. Keep’em.

AB Foods Raised to Buy From Hold at SocGen
Buy IMI, Remains Top UK Engineering Pick, Citi Says
Diageo Raised To Overweight From Equalweight at Barclays
Dufry PT Raised 2% to Chf140 at Exane; Kept at Outperform
Eurasian Natural Resources Raised to Outperform at RBC Capital
G4S Cut to Neutral VS Outperform at Credit Suisse
HSBC PT Raised 7% to 750p at Exane; Kept at Outperform
lloyds Cut To Neutral From Conviction Buy at Goldman
Neste Oil Raised To Buy From Accumulate at Pohjola
Nokian Renkaat PT Cut to Eu31 From Eu38 at HSBC, Stays Neutral
Pirelli PT Raised to EU11.5 vs EU10.8 at Goldman
Randgold Resources Raised to Outperform at RBC Capital
RWE Cut to Sector Perform from Top Pick at RBC Capital
Serco Cut To Neutral VS Outperform at Credit Suisse
Talanx Rated New Neutral At HSBC, PT Eu23
Voestalpine Cut To Neutral From Overweight at HSBC PT Cut to Eu26 VS Eu29

CURRENT STUFF

On Europe
EU makes budget plans without UK: EU officials have begun work on a plan to create a long-term budget without the UK in a move that reflects mounting frustration that Britain’s demand for a spending freeze cannot be reconciled with the rest of the bloc. (Financial Times)

UK town centres have the highest proportion of empty shops ever, according to a survey from the British Retail Consortium published on Monday. The rate of empty shops in high streets and shopping centres reached 11.3% in October. (Reuters)

On the Fiscal Cliff
I told you, this would be a long running title. Apparently the meetings between Obama and Boehner went well as Mr Boehner said it had been a “constructive” meeting at the White House as he proposed a two-step “framework” for a deal. This would include longer-term targets for both revenue increases and spending cuts, to be finalised next year in an overhaul of the tax code and government programmes. There is still no details on the Bush tax expiries though…

To Read

Debt crisis: Greece will need second debt writedown, says Weidmann – Telegraph http://www.telegraph.co.uk/finance/financ

Is Japan heading towards the bad old days of a single, dominant party? http://www.reuters.com/article/2012/11/18/us-japan-election-future-idUSBRE8AH0IS20121118

STRATEGY

JPM (Loeys) The J.P. Morgan View
Asset allocation –– Markets are starting to think in binary terms: Yes or No on cliff deal and US recession, although it is more an issue of how much cliff we face. We think the fall in equities has brought it to just over a 40% probability of cliff caused recession, which is too high for us.
Economics –– Both consensus and our 2013 growth forecast continue to slide down, with our global calendar forecast at 2.4% now showing no rise form 2012. This week, we slash UK 2013 from 1.8% to 1.2% on disappointing data and recognition that BoE could be close to giving up.
Fixed Income –– We continue to overweight US MBS, Euro area peripherals, and EM local bonds.
Equities –– The hype regarding Japanese equities is likely to continue into the Dec 16 general election. Open a tactical OW in Topix vs. S&P500 currency hedged.
Credit –– We keep a preference for European HY.
Currencies –– Delevering of yen-funded trades downside on yen weakening, post Abe comments demanding higher inflation targets for the BoJ .
Commodities –– Stay short agriculture on continued favorable planting conditions in South America.

MS (Carr) European Equity

Earnings Season Summary
Looking at pre-exceptionals earnings, 31% of companies have beaten estimates, while 32% of companies have missed expectations, meaning a net 1% of companies have missed. In a historical context, this would be the 5th worst earnings season since 2003. Ex-financials, we’ve seen a net 4% of companies miss estimates, which would be the; 5th worst earnings season for non-financial companies. On an earnings weighted basis, we’ve seen a weighted aggregate surprise of 2.3% (or 1.1% ex financials). Earning misses driven by Consumer Staples, Materials and Utilities.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s