The Dawn Patrol – 28.11.12 – ACCOR, RIMM, ENI, GS on CHina, ML on HFs and More….


European futures down on my screen. Asia weak this morning with the Shanghai comp down again to multi year lows, apparently therre are more than 600 co waiting to IPO. In the US, the S&P was down following the European close despite better durable goods and consumer confidence. The culprit remains the Fiscal Cliff. The 1400 level didn’t hold and volumes were in line with 3MA.
Gold at 1738.55, EUR at 1.2920.
Today, macro eyes on the Spanish retail sales, the EZ M3, German CPI. US: MBA mortgage apps, new home sales and the Beige book.
Germany to sell 5y notes and Italy to sell bills.


ACCOR looks great technically. Expect a short term rebound to 27.20. The Q3 was in line with expectations with a weakening LFL trend. The Q4 should be strong thanks to the Paris motor show and London conventions. As Accor continues to divest its most capital intensive assets to focus on management and franchise contracts, the financial leverage will continue to improve. Net debt should halve compared to end of 2011 and net cash will increase.

RIMM. Down 10.5% yesterday following the sharp rally and the negative call by MS. This remains a a very speculative buy Idea. Feedbacks from geek users, mobile operators and IT officers remain excellent. Will they be able to sell the BB10 new handsets is a very tough call, but as the buzz remains there is still room for upside… But don’t be too greedy.

BAE UK press write up bid speculation and US group Lockheed Martin as a potential suitor. Telegraph, Guardian, Independent. (news was in the market yesterday).

Tesco, Morrison, Sainsbury: UK PM set to announce plans to tackle binge drinking by introducing a minimum price for a unit of alcohol at 45p. BBG

Arcelor. François Hollande demanded on Tuesday that Lakshmi Mittal guarantee the long-term future of workers at a disputed plant in northern France or face the threat of a state takeover of the operations. FT

GLW: +6.87% – Corningrallied after the glass manufacturer said it sees stronger-than-expected fourth-quarter LCD glass volume and full-year sales of its gorilla glass approaching $1 billion, thanks to robust demand for LCD televisions and other consumer electronic devices in North America and China.

Raiffeisen 3Q Net EU141m; Analyst Est. EU148m; CT1 Ratio 10.2%. Net trading income EU54m vs EU37m.- 3Q pretax EU188m vs EU153m. 3Q loan-loss provisions EU224m vs est. EU273m, EU377m Y/y

Swiss Life Sees FY Oper. Profit Ex Items of Chf850m

French Gas Companies Ask Court to Block Government Price Ceiling

Foxconn has a contract to build a new smartphone for Microsoft for launch next year, according to DigiTimes. Negative for NOKIA

French minister says ALCATEL-NSN merger worth weighing – Express (Beware!)


Oil & Gas (MS, Rats) Focus on Defensive Yield; Uncorrelated Growth in 2013
Eni: EW to OW, PT PT €19 to €20.20
Repsol: EW to UW, PT €14.20 to €15.50

Against a backdrop of low economic growth and low interest rates, MS expects outperforming shares in 2013 to be those with high and reliable dividend yields, or growth prospects that are uncorrelated to the economic outlook. The energy sector offers several companies in both categories.

Casino (GS, Walding) Buy: Cash generation still key despite weaker French consumer; CL Buy
GS continues to view Casino as one of the most attractive assets in food retail driven by its high emerging market exposure and exposure to the convenience and online channels in France. They re-iterate their Conviction Buy.

ENI (JPM, Sharma) OW €17.80.
Galp stake sale – further progress simplifying and focusing its portfolio
ENI has made further progress achieving its stated goal of offloading its 28% stake in GALP. The company announced yesterday (after market close) an offering of 49.755m shares which includes the right to tag along by CGD for its 1% stake in Galp. The total number of shares to be sold in this offering will be determined at pricing. ENI also announced an offering of €1.1bn of senior unsecured bonds exchangeable into Galp shares. Both transactions will leave ENI owning 14.5% of Galp. ENI has agreed not to place any further shares in the market for a period beginning today and ending 90 days following the settlement of the transaction.

Compass Group Raised to Hold from Underperform at Jefferies
Debenhams Raised To Overweight From Neutral at HSBC
Delhaize Raised To Outperform From Neutral at Exane, PT Eu32
Dno International Rated New Overweight At HSBC; PT Nok12.3
EDF Reinstated Neutral at BofAML, PT EU15
Elisa Cut To Neutral VS Outperform at Credit Suisse
Enel PT Raised to Eu3.6 VS Eu3.5 at Goldman; Kept at Neutral
ENI Raised to Overweight VS Equalweight at Morgan Stanley
GDF Suez Reinstated Buy at BofAML, PT EU20
Lafarge Cut To Hold From Buy at Berenberg
Luxottica Kept at Buy at Citi, Impact of Salmoiraghi Negligible
LVMH Raised to Buy From Neutral at Nomura, PT Eu165
Remy CointreauPT Raised 14% to Eu81 at Exane; Kept at Neutral
Repsol Cut To Underweight VS Equalweight at Morgan Stanley
Resolution Cut To Neutral VS Buy at UBS
Rio Tinto Sector Pick at Credit Suisse for 1H13
SKF Cut to Underweight from Equalweight at Barclays
Statoil PT Cut to NOK132 vs NOK143 at Morgan Stanley
Swedish Match Raised To Buy at Goldman
TDC Raised to Outperform VS Neutral at Credit Suisse
ThyssenKrupp Reinstated Hold at Deutsche Bank
Total PT Raised to EU41.5 vs EU39.6 at Morgan Stanley
Ultra Electronics Rated New Buy At Citi, PT 1750p
Vodafone Cut To Hold From Buy at Berenberg
Vodafone Rated New Outperform at Baird, PT $30
Ziggo Rated New Underperform at Raymond James; PT EU21.5


On Spain
EU Competition Commissioner Joaquin Almunia to hold a press conference on Spanish bank restructuring plans at 11:30 a.m. We should get news of how the banking bailout will work and more news on bad bank funding and detail on how nationalised banks will be treated.

On the Fiscal Cliff
LCM Living on Edge of Cliff (Rates,XLF/KRE,HOG,TOL)
Congressional Leaders reach “grand bargain” during lame duck session before year end and political bickering could continue until March of next year.
Until deal is reached, large cap financials (XLF) are most likely to underperform as they suffer from rate contraction across the curve and several other bearish (legislative) catalysts towards year-end. Regional banks (KRE) should be less impacted by this legislation.
Specific stocks affected by inevitable tax hikes on rich and other legislation: Harley Davison (HOG) which faces noise polution laws in California starting next year and Toll Brothers (TOL) who may get hit by expiring Mortgage Debt Forgiveness law at year end.
Once deal is agreed upon by Congress and White House, the stock market should rally, with cyclical stocks outperforming (ETF: XLB, DBB).

Have a look at this: Credit Suisse Fiscal Cliff Charts –

Other stuff
Special dividends from US companies have spiked ahead of the fiscal cliff deadline, which could see taxes on dividends rise from 15 to 40%. A record 103 companies have already announced special dividends since the beginning of Q4, compared to an average of 31 for the whole quarter, according to Markit.

Goldman Sachs boosted US’s Q4 GDP expectation from 1.6% to 1.8%; cited strong durable goods reading


ML HF Monitor : Large specs the most short NASDAQ 100 since August 2011
HFs down 0.16% month-to-date as of November 21 The investable hedge fund composite index was down 0.16% for the month, as of November 21, compared to down 1.50% for the S&P 500. Convertible Arbitrage and Merger Arbitrage are the best performers month-to-date, up 0.54% and 0.38%, respectively; CTA Advisors performed the worst and was down 0.69%. For details, refer to the weekly performance of the investable index below and monthly performance data of the Global Diversified Hedge Fund Index on pages 15-18. Examining Hedge Fund positioning by major strategiesOur models indicate that Market Neutral funds held market exposure steady at 3%net long. Equity Long/Short aggressively bought market exposure to 29% from 24% net long, still below the 35-40% benchmark. Macros sold their long positions in the S&P 500, NASDAQ100, commodities and 10-year Treasuries, while partially covering their shorts in the USD, EM and EAFE.
Equities. Large specs sold the S&P 500 and NASDAQ 100, and added to their shorts in the Russell 2000. Readings are neutral; The NASDAQ 100 position reached short levels not seen since Aug’11–bullish for the equity market

GS (Zhu) Portfolio Strategy Research
China in charts 10/12: Better data, weaker policy

Helen Zhu summarises the main macro indicators in 80+ charts from macro to micro. Sept was another month of improvement on sentiment indicators and leading policy but fundamentals lagged. The recovery is progressing and the policy loosening seems to deliver more consistent trends inOctober like electricity generation and housing. Consumption remains lackluster but should pick up.

Key question is what’s next? GS Global ECS Research team expects stable rather than further loosening near-term policy. This is likely to spell a continuous but gradual recovery. Upside risks for China equities are better export demand, more global risk-on sentiment, and faster pace of reforms. Downside risks are a path to recovery that remains bumpier or a slope of recovery flatter than the market expects.

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

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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