The Dawn Patrol – 13.12.12 – DANONE cuts costs, RENAULT sells some VOLVO, Some FRACKING News. On the Fed new plan, the EU Banking Union. UPS & DOWNS.


European markets indicated slightly down despite some good news on the banking union in Europe. The S&P flat, Nikkei strong (+2%) on a weaker Yen and Shnghai weak (-1%). The Fed surprised the market by giving outcome based targets (ie rates 0 until unemployment is below 6.5%).

Google Maps is back on my iPhone (and my iPads)…


SNB will keep its benchmark rate at zero, according to economists’ estimates

Barclays to cut up to 2,000 jobs in restructuring FT

Volvo. Renault to raise EU1.6 billion by selling Volvo stake. BBG. Also note Nissan up 2.3% as yen carries on weakening.

Google unveiled its mapping application for the iPhone, iPad and other iOS devices, the application is free and available in more than 40 countries. BBG

German parliament votes today on whether to ban oil/gas fracking

FTSE100 OUT: Pennon IN: TUI Ftse 250 IN: Direct Line Pennon, United Drug, Enterprise Inns OUT: TUI, Shanks Group, Ruspetro, Talvivaara Mining

Danone to Trim EU200 Million With Two-Year Europe Savings Plan

U.K. Said to Lift Ban on Fracking in Push to Spur Gas Production

Danone to Trim EU200 Million With Two-Year Europe Savings Plan

SocGen Will Sell Egyptian Unit to Qatar’s QNB for $1.97 Billion

Stora Enso Oyj might move after UBS AG added Europe’s largest paper maker to a least preferred list. Societe Generale SA may be active after agreeing to sell the majority stake in its Egyptian unit NSGB.


On the Fed
GS says it doesn’t change much that the FOMC will now used numerical thresholds to provide forward guidance (ie rates at zero until unemployment is above 6.5%). The market was surprised that the Committee finally adopted the “Evans Rule”. What doesn’t change is the fact that the Fed will continue the purchase of treasuries at $45bn a month and $40bn in MBS. Just the duration of the treasuries has been reduced:

On the Banking Union
Eurozone common bank regulator agreed: Eurozone finance ministers finally agreed a plan to cede power to a common bank supervisor in the early hours of Thursday morning, in the first step towards a banking union. Terms were agreed for the ECB to begin direct supervision of big eurozone lenders from early 2014. Wolfgang Schauble made clear that commonly-backed direct injections into banks would not happen before this date. Banks holding less than €30bn assets – which include most of Germany’s retail banks – would be primarily overseen by national authorities. Non-eurozone countries such as the UK and Sweden won coveted safeguards to check the power of the ECB and maintain some influence over technical standards applying to all EU banks. The package will require approval from the EU parliament and the Bundestag. (Financial Times)


European Metals & Mining (JPM – Fraser Jamieson) Stop digging a hole for yourself
2013 outlook

We are more positive on the sector outlook than we have been for at least six months. Major macro issues are receding, growth is modestly reaccelerating, valuations look unchallenging and investor positioning is negative but the recovery remains vulnerable to political events. Long-term challenges also remain, but managements have begun to grasp the nettle on capital discipline and cost messaging. We believe the challenge for 2013 will be to deliver tangible evidence of change, a dynamic that should favour owning quality over leverage, namely companies able and willing to return capital through the cycle. RIO remains our top pick, coupling quality and valuation support, while ANTO and FRES should benefit despite full valuations; AAL and KAZ remain structurally challenged, in our view.

BARCLAYS PT Raised to 360p VS 300p at Deutsche Bank, Stays Buy
BARRY CALLEBAUT Cut To Hold From Buy at Deutsche Bank
DEUTSCHE TELEKOM Cut To Equalweight From Overweight at Barclays
HEINEKEN Cut To Underweight From Equalweight at Barclays
HOCHTIEF Raised to Buy at Berenberg on Risk Profile, Order Book
HSBC Raised to Buy From Hold at Deutsche Bank
IMAGINATION TECHNOLOGIES PT Cut 7% to 650p at Barclays
KPN PT Cut to Eu8.5 From Eu10 at Barclays, Stays Overweight
LAGARDERE Cut To Neutral From Buy at BofAML
LLOYDS PT Raised to 66p VS 55p at Deutsche Bank, Stays Buy
METSO Cut To Underweight From Neutral at HSBC
METSO PT Cut to Eu26 From Eu34 at HSBC
NESTLE Raised To Overweight From Equalweight at Barclays
REED ELSEVIER Cut To Underperform From Neutral at BofAML
RENAULT PT Raised 4% to Eu47 at Exane; Kept at Outperform
RWE Cut to Equalweight From Overweight at Morgan Stanley
THYSSENKRUPP PT Cut 6% to Eu17 at Exane; Kept at Neutral
WOLTERS Raised To Buy From Neutral at BofAML


UBS 2013 Outlook

UBS economists expect another difficult yr for Europe in 2013, strategists note looming fiscal cliff in US represents significant risk for Europe, UBS says in research report on European outlook 2013.

• Central scenario: vast bulk of US fiscal cliff will be postponed with euro zone basically at zero growth next yr

• Sees reasonable returns for European equities, targets 3% European (DJ Stoxx 600) and 6% UK (FTSE 100) mkt upside

• Sees gradual improvement in global real GDP growth from low point of 2.7% this yr to 3% next yr and 3.4% in 2014

• Says risk assets will continue to perform well; portfolio still “risk on”, albeit to lesser extent than late 3Q/early 4Q; positive on equities

Themes/stocks to watch

• Theme 1: Cyclical Exposure (ABB, Spectris)

Theme 2: US Recovery (Anheuser-Busch InBev, Ashtead, Carnival)

Theme 3: Emerging Market Exposure (Richemont, Holcim, Rio Tinto, Standard Chartered)

• Theme 4: Self-help, management change, restructuring & growth (Air France-KLM, DS Smith, Svenska Cellulosa, AstraZeneca, Shire)

Theme 5: Structural challenges (Sandvik, RWE)

Theme 6: Improving shareholder returns (Baskets: Cyclical Pays, UK Buybacks)

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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