The Dawn Patrol – 21.12.12 – GS, JPM and CS Strategy. JPM on Infineon. RIMM down. Fiscal Cliff plan postponed.


It might not be the last day of humanity today, but this is the last dawn patrol of the year. Again, I would really appreciate your comments and feedbacks. With my colleagues at LCM we’ll be launching some new products very soon, including a portfolio to track the good and the bad ideas.

So, in the meantime, I’d to wish you all a merry christmas and a very happy new year. As always, try not to overdo it, take some time to rest and exercise. 2013 will come and it’s going to be a great year.

European markets indicated down at the oening. Asia low as the vote for the plan B has been cancelled…
Gold at 1646 and the EURUSD at 1.32.06.
Today we’ll monitor the French Business confidence indicator (8:00) as the German came out weak this morning (-29 vs -25e).In the US, will watch the durable goods orders. It’s options expiry day…


Ferrovial’s unit Agroman in consortium with American Infrastructure win $1.4b contract to design, build U.S. Route 460 highway in Virginia. BBG

Publicis acquires Rokkan Media for undisclosed price. BBG

Technip, Samsung Consortium Wins $1.25B Contract in Norway

EU Wants to Examine Bailout of Peugeot Citroen Bank, Echos Says

NKE: Nike shares picked up 5% to $104 with the athletic-shoe and apparel maker’s net income from continuing operations rising 9% to $521 million, or $1.14 a share, from a year ago. Revenue rose 7% to $5.96 billion. Analysts expected Nike to earn $1 a share on $6.01 billion in revenue. The company also said worldwide futures orders, a key indicator of company strength, were up 6%.

S&P cut Cyprus’ long-term debt rating for the third time in five months, citing rising risk of default as government’s short-term financing is “increasingly vulnerable”.

RIMM numbers came in. Numbes were better than consensus with Sales/EPS of $2.73bn/-22c vs $2.65bn/-35c expected. The shares dropped 11% after hours as investors are concerned about the investments costs leading to the launch of the new BB10 and on the future margins of the service business. Buying RIMM was never about these results but about the expectations building into the launch of the new BB10 OS and the new handsets. It’s a very speculative call.




‘Plan B’ collapse draws fiscal cliff nearer: Republican House leaders failed to get a vote held on a ‘Plan B’. The failure has led to increased pessimism over whether a deal can be struck, and “marks a serious miscalculation on the part of Mr Boehner, who hoped the measure’s passage would increase his leverage in talks with Barack Obama”. It was unclear how efforts to reach agreement would proceed, with the House adjourned until December 27 and the Senate, apart from meeting for a few hours this afternoon, effectively doing the same. (Financial Times)(Washington Post).

ICE to buy NYSE Euronext: IntercontinentalExchange has agreed to buy NYSE Euronext in an $8.2bn deal that will make the energy and commodities bourse one of the world’s largest derivatives markets operators. ICE will keep the NYSE building on Wall Street but wants to hive-off Euronext’s cash equities businesses, which include the stock exchanges of Paris, Amsterdam, Brussels and Lisbon. It said it was exploring a listing of Euronext. (Financial Times)

To read:
– The Most Important Charts of 2012, Business Insider
– The FT on the Japanese bond market
– Cyprus ‘Much worse than Greece’. Spiegel



GS: Top of Mind
2012 Update and a peek at 2013

A very good piece by GS with great charts on EUrope, the Fiscal cliff etc…
Issue 1: Euro Area Sovereign Crisis: Euro Area – What’s Next?
Issue 2: Fiscal Cliff: Staring Down the Fiscal Cliff
Issue 3: Oil: Iran, Shale and Regulation: Oil on the Boil – Again?
Issue 4: (Unconventional) Monetary Easing: The Big Ease
Issue 5: US Election: US Election Inspection
Issue 6: China Leadership Handover: Demystifying the China Handover
Issue 7: Natural Disasters and Climate Change: Catastrophes and Climate

JPM (Lee) US Equity Strategy FLASH
Tom raises his 2012 year-end forecast for the S&P from 1440 to 1450, in his last weekly of the year. He cites optimism over the cliff, optimism on 2013, December seasonals and a beta chase as the main reasons for this upgrade.

GS (Fiotakis) Global Markets Daily
There May be More Upside to Greek Assets, Although Macro Risks Remain Print Friendly

Since July, Greek assets have rallied hard but we could still see further upside.
This is because the recent Eurogroup decisions have reduced medium-term financing risks for Greece.
The debt stock and interest rate reductions, combined with the NPV transfers, improve the debt sustainability picture for Greece…
…although further official sector debt restructuring is not unthinkable, should economic conditions demand it.
The interest payment bill is likely manageable compared with the primary surpluses stemming from the budget measures already approved.
Also, there is little sector debt maturing until 2020, and most of this is held by the ‘Troika’ or by the local financial sector.
In essence, the continuation of Greek funding becomes a political issue.
Private-sector investors are currently benefiting from a risk and seniority transfer from the official sector (although these things can change).

13 Big Stories Will Move The Markets In 2013 – CS
“As we stand on the cusp of 2013, we offer 13 themes to help direct your investment decisions through the year,” write Credit Suisse’s U.S. equity research team in a massive 97-page report.
Here’s their summary:
– Margin Vulnerability: margins are more sustainable than you might think
– Big, Fast Data: learning from the best across software and e-commerce; assessing the potential impact on the retail sector
– Genomics & Genetics: how the science is impacting today’s decisions on medical care deliver
– Healthcare Reform: uncertainty to remain significant in ‘13 as the sector focuses on implementation
– Financial Regulation: a forest of regulation will surround the sector in ‘13
– US Housing: how to benefit from continued recovery in ‘13
– The Return of Emerging Markets: how industrial companies will capitalize on strength and growth in emerging economies
– International Trade: we expect strength in internationally-exposed small and mid-cap stocks
– Diverging Growth Paths in IT Services: focus on companies with deep domain expertise and strong consulting relationships
– Energy Divergence: stock and sub-sector performance will be more divergent than in the upcycle
– Shale Revolution: the impact of the shale revolution on the highly interrelated global energy system
– Nat Gas Vehicles: the shift to NGVs is creating opportunities for engine technology providers and companies in the fuel supply chain
– Automation: industrial automation continues to outpace industrial production, creating a set of new opportunities




Infineon Technologies (JPM, Deshpande) N to OW, PT: €9.
With worst cuts to estimates behind us, no reason to sit on sidelines

With the semi cycle bottoming, we believe the worst cuts to Infineon’s estimates are behind us. With considerable earnings leverage to the next peak (as much as 4x+) & with the company having strengthened position in core autos & industrial markets, we upgrade stock to OW, adjusting our Dec. ’13 TP to €9, which is equivalent to 15x EPS which is a mid-cycle P/E for co.

LUNDBECK Cut To Neutral VS Buy at UBS

INFINEON Raised To Overweight VS Neutral at JPMorgan

ACCENTURE Cut To Hold From Buy at Berenberg

NEW WORLD RESOURCES Cut To Sell VS Neutral at Goldman


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