The Dawn Patrol – Top 10 Strategists 2013 Outlook by Barron’s. JPM View. Citi on Apple. Oracle. UPS&DOWNS

Bonjour,

Hope you had a nice Week End. European markets flat at the opening. Japan up on the LDP victory and Shanghai continuing its rally. The S&P broke its 50 and 100 DMA on Friday.
Gold at 1689 and the EURUSD at 1.3147.
Today, we’ll monitor the EZ trade Balance, the US Empire manufacturing (14:30). France to sell bills.

Looking for the perfect Christmas Gift?

CURRENT STUFF

On Japan
Supermajority for Japan’s LDP: The opposition party led by Shinzo Abe won 294 of the 480 lower house seats in a landslide victory on Sunday. Together with its coalition partner Komeito, the LDP will be able to override most decisions of the upper house. Gridlock between the two houses stymied some policies of the DPJ government during the past three years. (Bloomberg)(Financial Times)

On The Fiscal Cliff
Fiscal cliff talks advance on Republican tax offer: “John Boehner, the Republican speaker of the House of Representatives, floated raising income tax rates for Americans earning more than $1m a year, a big concession in negotiations with President Barack Obama.” (Financial Times)

On Apple
Citi cuts Apple to ‘neutral’: “Citing research that shows “near-term supply-chain order cuts,” analyst Glen Yeung wrote that the cuts “bring into question the strength of iPhone 5,” as well as drawing attention to what he described as the “risks in the Apple story.” He also cut his price target on the stock to $575 from $675.” (Marketwatch)

On Oracle
Yes what about Oracle? As you may have seen, I like SAP a lot, but recommended to hedge the position by buying puts with March expiries as we may see some sellers around the FY Earnings release. Now I received questions on ORACLE. To be honest I haven’t looked at it for a while, but earnings are this week… GS (buy) expects some inline numbers and strong licence sales in line with the company guidance (5-15%) vs 9% for consensus and reminds us that Macro is the biggest headwind for 2013. MS is quite bullish too with an OW rating, and expects some good traction this Q with the Fusion apps, the Exa system and easier comps. MS has a $36 PT. THIS IS ONE TO KEEP AN EYE ON.

Other Stuff
Some hedge funds dump their bets against France | Reuters http://reut.rs/Wi8M9q
Obélix among the Belgians – FT.com http://on.ft.com/ULpEnV

STRATEGY

BARRON’S
Stocks Could Rise 10% in 2013 – Barrons.com http://on.barrons.com/Wi9O5k

From Barron’s:

MS (Antonucci) European Eco Weekly
Following Italy’s Saga.

Italian politics might again be in the news. We expect the budget to pass, as the chiefs of the main political parties have already pledged support. The President of the Republic might take formal steps to dissolve the current Parliament. The current election law assigns a substantial premium to the winning coalition, which might end up with an absolute majority. In a sense, that favours political stability. We’ll be looking at any further detail post-Greek debt buyback, at whether Spain further clarifies its position in relation to a request for sovereign support, and the upcoming bailout for Cyprus. On the data front, the German Ifo business climate could rise for the second consecutive month, on the back of an improvement in companies’ expectations, leaving us just one more monthly increase away from a trend reversal – according to the Ifo’s own rule of thumb. Yet we still think that Germany has fallen back into recession in 4Q, and should continue to shrink in 1Q.

JPM ( Loeys) The J.P. Morgan View – Asset Allocation
Stay overweight carry, equities, and credit against bonds and cash, with a bearish bias on duration. We monitor the recent inability of HG yields to fall further for signs that investors are moving on to the much better valued equity markets.
Equities: Our main uncertainty is when we should move from big overweights in credit to equities, which as an asset class we think is much better priced. Our model portfolios currently own both. Corporates are already taking advantage of this, issuing debt and buying back equity; we await flow and price action. Tactical calls remain UW US equities, OW home builders and banks within the US, and OW commodity equity sectors. Long term we recommend Topix vs. S&P currency hedged, OW periphery either outright or vs. the DAX, and we continue to like 2013 FTSE 100 dividend futures.
Fixed Income: We remain modestly bearish in DM govies, and positive on the Euro area periphery
Credit: US IG continues to significantly underperform HY. We are long Europe vs. the US in CDS indices, and prefer nonfinancials within Europe. Heading into 2013, review ratios suggest long risk positions in both US and European credit
FX: Stick with trades predicated on a continuation of central banks easing and low volatility. For the next month, the dollar, yen and potentially sterling are the biggest losers
Commodities: We remain neutral on oil for now, with weak global growth and fiscal cliff risks, we also stay long US nat gas.

UPS & DOWNS

Akzo Nobel (AKZO.AS) (GS, Logan ) Sale of N.American deco business positive.
Up to Neutral.

We upgrade Akzo to Neutral (from Sell) following the disposal of its North American Deco Coatings business for $1.05 bn. Akzo moves to an Evolving company on our 2020 Vision framework.

Akzo Nobel PT Raised to Eu52 VS Eu50 at ING, Maintains Hold
Alcatel-Lucent Rated New Overweight at Evercore
Heineken Reinstated At Neutral at JPMorgan; PT Eu48
KPN Cut to ’Underweight’ at HSBC
KPN PT Cut to EU4.7 vs EU5.4 at Nomura; Kept at Neutral
ProSiebenSat.1 Cut to Hold from Buy at Societe Generale
Prosiebensat1 Cut To Equalweight at Morgan Stanley
SAP AG Raised to Market Perform VS Market Underperform at Jmp (strange timing??)
Tele2 PT Cut to Sek141 VS Sek145 at Berenberg; Kept at Buy
Unilever Raised To Neutral VS Underperform at Credit Suisse

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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