The Dawn Patrol – 18.12.12 – Barclays top ’13 picks, MS on the Jan Effect. On the Fiscal Cliff (+), on Apple (+), Ups & Downs.


European markets to open up after a strong US market as an outline of a US fiscal deal emerges (Financial Times). Asia strong too.
Gold at 1702.60 and the EUR at 1.3166.
Today, macro eyes on the UK CPI, the US NAHB Survey for December and the Current Account Balance.
Spain, Greece, Switzerland sell bills.

HEADLINES: Fiscal cliff deal advances, GE Warns on Q4, I like Apple at these levels (and higher or lower too actually), Oracle to publish tonight.

You liked the Burgers recipe book of yesterday? Well then you’ll love this one recommended by a burgerophile (click):


GE’s Jeff Immelt: “We’ve Definitely Seen A Slowdown In The Fourth Quarter” … warned during GE’s annual outlook meeting held earlier in Manhattan that the “economic uncertainty” in the current quarter has resulted in an investment “pause” that has resulted in a slowdown of corporate sales. Put into numbers, GE is now calling for about 8% growth this year, from a 10% forecast barely two months ago.
sees 2013 Ebitda at $940m to $980m; Below $800m in 2012
Google Maps for iPhone hits 10 million downloads less than 48 hours after its release.

Tesco COO is frontrunner for UK chief

Sharp’s shares surged 24%, reaching their highest price since mid-July. An agreement to sell up to 9.9bn yen worth of shares to US-based Qualcomm and reports of a new creditor joining in offering Sharp a loan facility raised confidence that the heavily-indebted company will meet its repayments.
Roche’s Avastin fails to win NICE backing for Ovarian cancer use whereas
Glaxo’s Revolade wins U.K. Cost Agency’s Backing after discount

Santander agrees to absorb Banesto. Move will mark the end of one of Spain’s oldest lenders as a standalone brand, with 700 of the retail bank’s branches to be closed

LVMH Chateau d’Yquem to Skip 2012 Vintage on Rain

Morgan Stanley Fined Over Facebook IPO. Massachusetts’ securities regulator fined Morgan Stanley $5 million over its handling of Facebook’s IPO, saying investment bankers had “improper influence” over the research analysts covering Facebook.

Apple in Talks With Foursquare. Apple is in early discussions to integrate local data from Foursquare into its mapping application, as the company continues to build an arsenal of local data to try to take on Google.


On the Fiscal Cliff
BULLISH: Fiscal cliff talks advance: President Obama made a counter offer to John Boehner’s tax cuts proposal, according to a source close to the talks. The White House proposed letting tax cuts expire for those earning $400,000 and above, a concession from the previously-demanded level of $250,000, but short of the Boehner proposal for only those on $1m to miss out on an extension to the tax cuts. The agreement may consist of $1tn in new taxes and up to $1tn in fresh spending cuts. (Reuters)(Financial Times).

On Strategy

Yesterday’s Dawn Patrol, because I liked that TOP 10 strategists from Barrons so much:
The Dawn Patrol

On Apple
After Citi downgrade, you know that MS published a rather positive note. I agree with that view. It’s cheap, its market share may be eroding slightly because of Samsung and Google, but its ecosystem is still really strong and the iPad Mini is going to make a killing. The size of the iOs market almost doubled in one year… There might be some pressure short term (technicals, end of year window dressing…) but you need this stock in 1Q13.

Other stuff
Bill Gross: Corporate credit is the CPDO of risk. (Financial Times)


Autos & Auto Parts (MS, PSina) Beware the New Year ‘Inventory Hangover’
As inventory builds globally, we flag risks of a new year hangover to OE production schedules. 1Q13 will likely be the first down quarter for global production since 2Q11, likely keeping suppliers cautious in tone at January’s Detroit show. We remain cautious on mass OE sensitive stocks.

Imagination Technologies (JPM, Sandeep Deshpande) Likely closed deal to buy MIPS. Deal unlikely to be stock driver for few years unless MIPS-related costs are not managed

Acciona Cut To Sell VS Buy at UBS
Aggreko PT Cut to 2,100p from 2,500p at RBC Capital
Bilfinger Cut To Underweight From Neutral at HSBC
Direct Line Group Rated New Sell at Berenberg; PT 174p
DNB Cut to Neutral VS Outperform at Macquarie
DSV A/S PT Raised to DKK160 from DKK145 at RBC Capital
Glencore International Raised to Outperform at RBC Capital
Heineken Cut to Neutral from Buy at BofAML
Oriflame Cosmetics PT Cut to SEK369 vs SEK373 at Berenberg
Remy Cointreau Rated New Neutral At Citigroup; PT Eu96
Renault Cut to Market Perform from Outperform at Bernstein ; Renault Confirms to Sign Accord With Algeria to Build Factory
Soco Cut To Underperform VS Neutral at Macquarie


MS (Secker) European Equity Strategy
Examining the ‘January effect’ in European equities

The momentum reversal trade has worked in January every year since 2010
Over the last 3 years a trend has developed whereby the best performing sectors of the prior year have been the biggest laggards in January and vice versa. At a stock level, data from our quants team confirms that the best performing stocks of the prior year have underperformed the worst performers in January every year since 2010.
Materials is the only cyclical sector to have underperformed in 2012
Over the long and short-term, Cyclicals generally outperform Defensives during the early months of a new year. Materials is the only cyclical sector to have underperformed so far in 2012 and hence could be a key beneficiary of the ‘January’ effect in 2013. We are overweight Materials, with a preference for Mining.

Barclays top picks for 2013
Barclays fundamental analysts offer benchmark-beating ideas for 2013; European equity mkts likely to rally in 2013 on a policy-induced contraction in cross-asset yields. Top picks:
Basic industries: AngloGold Ashanti, DSM, Vedanta Resources, Norilsk Nickel
Consumer: Pernod-Ricard, Ahold, Unilever NV
Energy: Rosneft, Repsol, Afren, Subsea
Financial Services: Sberbank, HSBC, LSE Group, Allianz, Capital & Counties Properties, Nedbank Group
Healthcare: Essilor, Roche
Industrials: Volkswagen AG-PFD Preferred, Wolseley, ABB, International Consolidated Airlines Group, Arcelik, Melrose Industries, Ashtead Group
Internet/Media: UBM Plc
Power/Utilities: Veolia Environnement
Retail: ASOS, Intercontinental Hotels, Richemont, Magnit, Foschini Group, Mitchells & Butlers
Tech: Temenos, ARM Holdings
Telecom: MTN Group, Telenor, Bezeq

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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