The Dawn Patrol – 29.11.12 – GS Top ten themes for 2013, SG 2013 Outlook, MS on Autos, Stuff that matters. ENI is a buy.

Bonjour,

Markets to open up. Obama asked Americans to inundate the Congress with demands to reach a deal on the Fiscal cliff and Boehner said he was open for a deal with the President. Japan up and China down. Gold at 1,719.36 and the Eur at 1.2946.
Today, macro eyes on: Europe: German Unemployment, Italian Business Confidence, Eurozone Consumer Confidence and US: GDP, Initial Jobless Claims, Pending Home Sales.
Italy sells bonds.

Bored? Not enough energy to go running, cycling or swimming? Play Ruzzle! http://www.ruzzle-game.com/

VIVENDI is examining four non-binding offers above 6 billion euros ($7.75 billion) for its Brazilian broadband company GVT SA, according to a source familiar with the situation. (Reuters) and Direct TV + America Movil make bids for VIV’s GVT acc to Reuters.

RIO TINTO plans to make more than $7bn in spending cuts and savings in two years, comprising $1bn from planned exploration and new projects beyond 2013; $1bn in sustaining capital investment in 2013, and $5bn in operating and support cost cuts by the end of 2014. (Wall Street Journal)

SIEMENS CEO Enlists Invensys to Overcome Botched Deals

VOLKSWAGEN Agrees to Extend Joint Venture With China’s FAW

EADS FAZ article reports several variations of restructuring ownership have been dropped in the negotiationsaround EADS because Daimler needs to get rid of a 7.5% stake by year end. KfW won’t be able to acquire the complete Daimler-owned EADS stake on behalf of Germany, KfW also won’t buy 3% currently held by French government. Germany and France still plan to hold 12% each in the end; KfW to buy 4.5% currently held by banks.

Laurent-Perrier Says 1H Sales Rise 3.9% to EU95.5m

CURRENT STUFF

On Greece
Greece’s debt burden remains unsustainable even after a decision by international creditors last week to disperse 43.7 billion euros of aid to the nation, Moody’s Investors Service said.

On Europe
EU President Barroso unveiled a road map on Wednesday of an attempt to create an embryonic budget for the eurozone almost immediately. It calls for a fund to be set up within the next 18 months that could provide incentives to struggling countries attempting to overhaul their economies. The eurozone should gradually acquire the powers of a national government with a single treasury and the right to tax or issue commonly backed bonds under a Brussels blueprint (FT).

On the Fed
(Alphaville) The Fed is likely to keep buying Treasuries in 2013, despite end of Operation Twist. “Though critics say this could be especially inflationary, many Fed officials believe they can manage the reserves without risking inflation.” (Wall Street Journal). THIS IS AN ARTICLE BY JON HILSENRATH. Call if needed.

On the Fiscal cliff
(Alphaville)
Republican representative Tom Cole said Republicans should approve a deal ensuring 98% of Americans do not suffer a tax increase that endangers the economic recovery. (Reuters) Democrats are digging in over Republican proposals for more aggressive means-testing of the Medicare and Social Security. (Financial Times) Tim Geithner has been deployed for a series of meetings with leaders from both parties today, as the Fed warns fears about the fiscal cliff are growing among US companies. (Financial Times)
Politico.com says that Business executives and others who’ve met with President Barack Obama in recent days describe a president who’s supremely confident that he’ll come out on top of a fiscal cliff deal — with Republicans bending to his will on tax increases for the wealthy and Democrats sucking up deep spending cuts. http://www.politico.com/news/stories/1112/84333.html#ixzz2DaWmcVt1

On Japan
Japan’s retail sales fell in October by the most in 11 months. Consumer sales were 1.2% lower than in 2011, compared to a 0.4% rise in September and a median estimate of an 0.8% decline among economists surveyed. Month-on-month sales were 0.7% higher. (Bloomberg)

Other Stuff
Iran showcases new warships, submarines near strategic waters http://wapo.st/SsYIsU

UPS & DOWNS

ENI (GS, della Vigna) Buy: Time to buyback; reiterate Conviction Buy
GS believes ENI has a superior pipeline of projects, higher production and cash flow growth and an under-leveraged balance sheet. This should provide it with superior returns and give management confidence to start a new buy-back programme in 2013. CL Buy.

MS (Pearson) Autos & Auto Parts
2013: Staying Selective in Car-Less recovery.
MICHELIN
: UW to EW, PT €62 to €76
DAIMLER: EW to UW, PT €40 to €39
PSA: EW to UW, PT €8 to €3
NOKIAN: EW to UW, PT €34 to €32
VALEO: OW to EW, PT €46 to €37
With relative earnings momentum turning, and value signals flashing green, EU autos should attract further inflows in ’13. However, we believe Europe may face a ‘car-less’ recovery in the next
decade, so we stay selective. VW, Pirelli, Conti, Volvo are our top picks. We downgrade DAI & PSA.

Aeroports De Paris Cut From Equalweight At Morgan Stanley
Banco Popolare Raised to Outperform from Neutral at Exane
Continental PT Cut to EU96 from EU98 at Morgan Stanley
Ford Otosan Raised To Buy VS Neutral at BofAML
GDF Suez Raised to Neutral VS Underperform at Credit Suisse
Invensys PT Raised to 295p VS 230p at Deutsche Bank
Invensys Raised To Overweight From Equalweight at Barclays
Raiffeisen Bank PT Raised to Eu35 VS Eu27 at SocGen
Software AG Cut to Neutral VS Buy at UBS
Telecom Egypt Raised To Buy From Hold at Deutsche Bank

STRATEGY

GS (Wilson) Global Viewpoint
Top Ten Themes for 2013

Today’s Global Economics Weekly “Moving over the hump” describes the main elements of our economic forecasts for 2013 and beyond. Here, we lay out our Top Ten Market Themes, which represent a broad list of macro themes from our economic outlook that we think will dominate markets in 2013.
1. Global growth: A ‘hump’ to get over, then a clear road ahead
2. More unconventional easing in the G4
3. Termites eat away at the foundations of the ‘search for yield’
4. Housing stabilisation and private-sector healing in the US
5. Euro area a smaller driver of global risk, but still a source of tails
6. Continued divergence between core and periphery in the Euro area
7. EM growth pick-up revisits capacity constraints
8. EM differentiation continues
9. Commodity constraint to loosen in the medium term
10. Stable China growth, but not like the old days

GS (Oppenheimer) Euro Vision: finding growth in stagnation
For 2013, we forecast the STOXX Europe 600 to reach 310 by year end
, implying a total return of 18%. For the Eurostoxx 50, we forecast 3000. We expect earnings growth of 9% for STOXX Europe 600 in 2013 (7% ex-Financials).
Valuations remain structurally attractive in our view but, in the short term, we see modest upside to fair value. Our central forecast implies 5% multiple expansion over the next 12 months.
Our thematic views are unchanged from 2012 and 2011. These are driven by a view that investors will reward scarcity, particularly in income and growth. We focus on high-yield companies with the capacity to grow dividends, well-positioned international companies relative to those with pure domestic exposure, and companies with stable top-line growth. We introduce long recommendations on two new baskets: International exposure (GSSTINTL) and EM consumer (GSSTBRCC).

SocGen’s global investment outlook for 2013
The title of the presentation – 2013: European Assets Strike Back – just about says it all. While Bokobza warns of turbulence ahead in U.S. markets as the “fiscal cliff” investors face remains unresolved, he also highlights a few developments that may make investing in Europe becomemore attractive in 2013.
However, Bokobza says Germany’s status as a safe haven may be at risk, and France, the other major “core” nation in the eurozone, has some major challenges ahead.
The SocGen team says it is upping its exposure to equities and decreasing its exposure to credit and alternative investments as we approach the new year

CHART OF THE DAY

Despite the effects of the global financial crisis, remittances to the world’s 48 least developed countries have continued rising, reaching $27 billion in 2011, according to the United Nations Conference on Trade and Development http://econ.st/115JCNW

 

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
I http://www.louiscapital.com

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