The Dawn Patrol – 19.12.12 – ORCL/SAP. JPM Commodities outlook. CS Equity strat. More…

Bonjour,

European Markets indicated to open flat to slightly up. Asia strong across the board on hopes of a fiscal cliff solution. Japan breaking the 10,000 level.
Gold at 1676.32 (now), EURUSD at 1.32.43!!
Today, all eyes on the German IFO at 10. Expected: 102 vs 101.4 in Nov.

Encore un podium pour Marcel Hirscher… Belle course.

ORCL: I thought it would be another slow quarter… Still I’m not chasing the stock, but things are going better than I expected. Hardware is still a main drag but the management is still pushing ahead. FCF is down year on year (sales recognitions and tax). Guidance for the current quarter is not too demanding and the environment is actually bette than I feared. CEO Safra Catz said it was ‘business as usual’ during the period, despite fiscal cliff fears. Also the company announced an accelerated dividend (expected). Stock up 2% after hours.

SAP: The comments made by Oracle on current business conditions and the fact that clients are still willing to spend on software solutions despite the Fiscal Cliff, the European limpness and the end of the world after tomorrow is definitely a positive for SAP. SAP will publish on the 23rd of Jan. Keep the shares, get some puts…

UBS accepts fines and will pay $1.5bn to settle libor charge

AXA Downgraded by S&P to A- on Investments, European Economy

VIVENDI’S SFR files complaint against Orange (FTE) – Le Figaro

EDF Faces 2 Billion-Euro Shortfall on Renewable Subsidy in 2013

SOCGEN says CFO Bertrand Badre quits to join World Bank. BBG

TUI AG FY Rev. In-Line With Est., Sees FY13 Rev. Rising

Remy Cointreau Agrees to Buy Larsen Cognac Co.

CURRENT STUFF

On Japan
Japan’s exports fell in November and the trade deficit reached a near-record, as exports to China in particular slowed. Total exports were 4.1% lower than in November 2011, less of a fall than the consensus estimates of -5.5%. Imports rose 0.8%, allowing the deficit to reach Y953.4bn, the third-largest in more than 30 years, and the fifth consecutive month of decline. (Bloomberg)(Financial Times)

On the Fiscal Cliff
(from JPM) The negotiations surrounding the fiscal cliff appear to be makingsome progress, with the plan taking shape broadly in line with our original consensus. The cornerstone of any deal was the extension of Bush tax cuts, thus we cannot overemphasise the importance of Boehner and Obama’s recent concessions. We still believe the payroll tax holiday will expire at year end, the largest form of fiscal drag in our forecast. One area that is closer to the ideal of accommodating growth today whilst helping to fix Federal finances is indexing Social Security to the chained CPI, apparently agreed to by the White House.

Other Stuff
– Great paper from Jeremy Siegel (Professor at Wharton School) – His view on Fiscal cliff& says Dow should hit 15000 in 2013 … http://t.co/mv0xoWNE

– Roubini : The EZ’s day of reckoning has been delayed. http://t.co/QS8T9TVV

– Il Sole: Berlusconi calls Germany selfish; blames it 4 Eurocrisis due to austerity and running CA surpluses http://ow.ly/1QjTdH

– Bernanke – the rebel with a cause – FT.com – Columnists on.ft.com/T5eHhv

Also have a look at :
DEUTSCHE BANK: 2013 Outlier Events – Business Insider http://read.bi/V591lg

UPS & DOWNS

AKZO NOBEL Raised To Neutral VS Sell at Citi

BP PT Cut to 525p vs 550p at JPMorgan; Kept at Overweight

CEZ Rated New Underperform at Raymond James; PT CZK579

Enel Green Power PT Raised to EU1.85 vs EU1.84 at Goldman

ENEL PT Raised to Eu3.7 VS Eu3.6 at Goldman; Kept at Neutral

Fresenius SE PT Raised to EU92 vs EU87 at JPMorgan

Meggitt PLC PT Raised to 455p from 445p at RBC Capital

Portugal Telecom PT Cut to EU3.5 vs EU4 at JPMorgan

Snam PT Raised to Eu3.55 VS Eu3.45 at Goldman; Kept at Sell

Telefonica Resumed Neutral at BofAML, PT EU10.50

Terna PT Raised to Eu3.05 VS Eu3 at Goldman; Kept at Sell

TGS NOPEC Raised to Neutral VS Sell at UBS

Thyssenkrupp Raised To Outperform From Neutral at Credit Suisse

Voestalpine PT Raised to EU34 vs EU29 at JPMorgan

STRATEGY

JPM (Fenton) Commodities.
Commodity Markets 2013 Outlook and Strategy
Colin Fenton
Investors are ignoring the strained condition of the social Security Disability Insurance trust fund, which serves nearly 11m Americans, when looking at the fiscal cliff issue. According to trustees, the fund will exhaust its assets by 2016 at the latest; replenishment will require $194bn for a 20% trust fund ratio through 2021. This could be a negative catalyst for commodity returns.
The midcycle slump appears to have ended and global industrial commodity demand is making a slow-if-rickety recovery. Unexpected production losses and capex deferrals have trimmed our supply projections, leading to projected deficits in a number of petroleum and metals
Overall we recommend a neutral allocation to the commodities asset class. Our target prices are: WTI $99, Bent $115, nat gas $4.25, gold $1775, silver $30, copper $8850, corn $7.60.

CS Equity Strategy
Credit Suisse’s Andrew Garthwaite raised to OW EU Financials – says also raises insurance, luxury goods, ad. agencies,beverages to overweight. Tobacco cut to underweight vs benchmark. US cyclicals raised to overweight

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