LCM Dawn Patrol – 22.11.13 – Week End, GS top themes for 2014 and US outlook, 50 best restaurants in Paris and more…

Hola!

US equities finished higher on Thursday, snapping a three-day losing streak. There was nothing specific behind the move, which seemed to fit with the broader market melt-up in recent weeks following the fairly benign consolidation over the last few days. There was some attention on thoughts that yesterday’s pullback following the release of the October FOMC minutes was overdone. Economist and strategist commentary continued to highlight the Fed’s heightened emphasis on forward guidance to distinguish between a near-term tapering move and a protracted policy normalization process. This dynamic, which has been partly evidenced by the steeper yield curve, seemed to underpin a number of the deeper cyclical pockets of the market. The recent pickup in bubble talk may have also provided some contrarian support for stocks today. Takeaways from a busy day on the economic calendar were somewhat mixed, while retail continued to dominate the corporate calendar. However, more worries about sluggish consumer trends heading into what is expected to be a highly promotional holiday season failed to trip up the broader market.
Asian equity markets traded broadly higher to end the week. Regional markets fed off overnight momentum from the US following the Dow Jones closing over 16,000 for the first time. Japanese markets received additional support after the yen weakened by almost 1% overnight against the dollar to send the $-¥ above 101
European equities will open slightly higher today rebounding from yesterday"s losses.

Today, we’ll monitor the German GDP and IFO and in the US, we’ll get the JOLTs job indicators and the Kansas Fed manufacturing.. German IFO business confidence index may rebound to September’s 16-month high, according to economists. German 3Q GDP details could confirm capital investment lead growth, survey shows.

EUR/USD -0.12% at 1.3465; Treasury 10-year yield down 1 bp at 2.775%

WEEK END


RESTO
: Le bar à burgers (Parisians invented the French fries and the hamburgers). http://bit.ly/1g0YhBG
FILMO: Les garçons et Guillaume à table. This is what I’m going to watch this Week End. Not my typical car chases/action/thriller movies… But sometimes you have to listen to your wife…
RESTO: The 50 best restaurants in Paris (Time Out). http://www.timeout.com/paris/en/best-restaurants-paris
PHOTO: Anders Petersen at BNF (5 rue Vivienne Paris 2).
SONO: The Bartok cycle at Musée d’Orsay. http://bit.ly/17O7RYo
SONO: Pharrell Williams a 24 hour music Video. http://24hoursofhappy.com/

NEWS

European Banks’ Legal Tab Exceeds $77b as Probes Escalate
Banks Ban Traders’ Use of Group Chat Rooms, FT Says
SNB’s Zurbruegg Says Franc Cap Necessary for Foreseeable Future

AB Science Says CHMP Adopts First Negative Opinion for Masitinib
Monteray Completes Sale of TUI Travel Shrs at GBP3.66/shr
Mory Ducros May Cut Up to 3,000 Jobs, Les Echos Reports
Numericable CFO Lemaitre Says SFR Merger Makes Strategic Sense
Resolution Confirms in Talks to Sell Lombard Division
Rhoen-Klinikum Says Braun Sues to Block Sale of Clinics
Solarworld to Announce Bosch Solar Takeover Next Wk, WSJ Says
Telefonica Braces for Further Currency Swings in Latin America
Third Point’s Loeb Said to Reveal $1 Billion SoftBank Stake
UBS Gets EU Immunity From Further Fines in Libor Case, WSJ Says
Vivendi Takes M&A Pause to Decide How to Spend $14 Billion Cash

CURRENT STUFF

Spotify has raised about $250m in new financing from an early backer of Netflix, in a deal valuing the Swedish digital music service at more than $4bn. Technology Crossover Ventures led Spotify’s latest financing, which follows a $100m investment led by Goldman Sachs at a $3bn valuation a year ago. (Financial Times)

“Nokia is seeking to remove a potential obstacle to the $7 billion sale of its handset business to Microsoft Corp. by asking an Indian court to unfreeze several assets, including one of its biggest factories, amid a lengthy tax feud.” (WSJ)

Robin Hood Wrap :
Below is a recap of long, short ideas given on 1st day of Robin Hood conf in NYC.
Greenlight’s Einhorn – long Micron (MU)
Third Point’s Loeb – long Softbank (9984 JT)- owns $1b position
Eagle’s Witmer – long Wyndham (WYN)
Chilton’s Chilton – long WR Grace (GRA)
Lakewood’s Bozza – short Opko Health (OPK)
Pine River’s Kuhn – short Progressive (PGR)
North Tide’s Laughlin – long Amedisys (AMED)
Axel’s Nikolayevsky – long SolarCity (SCTY)
HG Vora’s Vora – long Pinnacle (PNK)
Maverick’s Ainslie – short Great Wall Motor (2333 HK)

STRATEGY

GS (Kostin) 2014 US Equity Outlook: Momentum vs Fundamentals
Target: S&P 500 will rise 6% and reach 1900 at year-end 2014
Our forecast return reflects 8% growth in EPS to $116 coupled with an essentially flat forward P/E multiple near 15x. Looking further ahead, extended growth in sales, earnings, and the economy will lift the P/E to 16x and S&P 500 will reach 2100 by year-end 2015 and 2200 by year-end 2016.
Path: Drawdown risk rising after 40% rally with no correction
S&P 500 has soared 26% YTD. The median expected drawdown equals 6% in the next three months and 11% during the next 12 months. Drawdowns of these magnitudes from the current level would equate to 1700 and 1600. We estimate a 67% probability of a 10% drawdown at some point in 2014.
Fundamentals: Improving US economy and rising earnings
US GDP growth will accelerate to 3% in 2014. Fed taper will start in March. Buybacks and dividends will grow by 25% to $960 billion and account for 45% of cash usage by S&P 500 firms in 2014, the highest share since 2007.
Four strategies for a stock market trading at fair value
(1) Russell 1000 Growth will outperform Russell 1000 Value as earnings growth decelerates; (2) Firms with low recent capex but high ROIC that will grow investment spending in 2014 are positioned for sustainable growth; (3) Firms with high buyback yields will benefit as cash returns to investors; (4) Firms with high degree of operatingleverage will benefit most from

GS Top Ten Market Themes for 2014
1. Showtime for the US/DM Recovery
2. Forward guidance harder in an above-trend world
3. Earn the DM equity risk premium, hedge the risk
4. Good carry, bad carry
5. The race to the exit kicks off
6. Decision time for the ‘high-flyers’
7. Still not your older brother’s EM…
8. …but EM differentiation to continue
9. Commodity downside risks grow
10. Stable China may be good enough

acceleration in sales growth.UPS&DOWNS

Siemens (MS, Uglow) Revisiting Our OW Thesis – Looking to the Next Chapter
Given the recent run, there is a natural temptation to simply ‘lock in gains’. Certainly, the valuation case is less compelling. However, on balance, we think there is more to play for in terms of portfolio, capacity adjustment and expectations. Stay OW.

Alstom (MS, Uglow) Strategic Decisions Sound – but Fundamental Challenges Remain
If Alstom achieves €1.5bn of its €1-2bn targeted disposal proceeds, then the shares should rerate to our €30 price target. However, beyond this ‘one-off’ positive, power market fundamentals are not improving – and structural headwinds remain. Risk-reward not tempting enough – stay EW.

Zodiac Aerospace SA (MS, Vig) OE exposure offers much to commend, but valuation fair
Initiate at EW, PT €130

Zodiac has significantly increased its share on new programs (A350, B787) and in Business and First Class seating where revenue potential is higher. However, valuation looks full with Zodiac on a premium to both its own history and EU peers. We initiate at Equal-weight with a €130 price target.

Mediaset (GS, Yang) Buy: Self-help & structural pressure declining, not just ad recovery; CL-Buy
We reiterate our CL-Buy as we see significant upside from 1) the ad recovery, 2) self-help initiatives, 3) an improving competitive and structural outlook and 4) overstated political risks. The strong FCF generation and the SOTP provide valuation support.

AHOLD REINSTATED BUY AT BOFAML, PT EU15
BANK LEUMI RAISED TO NEUTRAL VS SELL AT CITI
CARREFOUR REINSTATED BUY AT BOFAML, PT EU32
CASINO GUICHARD REINSTATED BUY AT BOFAML, PT EU95
DAILY MAIL RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS
DELHAIZE REINSTATED UNDERPERFORM AT BOFAML, PT EU39
FLUGHAFEN ZUERICH CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SU…
JERONIMO MARTINS REINSTATED UNDERPERFORM AT BOFAML, PT EU13
KUEHNE & NAGEL RAISED TO BUY VS NEUTRAL AT GOLDMAN
MORRISON REINSTATED BUY AT BOFAML, PT 325P
QIWI RATED NEW BUY AT GOLDMAN, PT $70
ROYAL MAIL RATED NEW NEUTRAL AT NOMURA; PT 400P
SAPPI CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
SERCO RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
WHITBREAD RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
WILLIAM HILL RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS

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One comment

  1. Sylvain · · Reply

    Je t ai reconnu !!!!

    Envoyé de mon iPhone

    >

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