(BofA-ML) European Fund Manager Survey - All in on ECB all-in

* Best December Contrarian Trades are...
...both sector trades: long energy, short telecoms; long industrials, short consumer discretionary. Nov contrarian trades: long Eurozone, short Japan worked well; but long energy, short utilities did not work.

* Overweights increased in Banks…
European PMs have a barbell sector approach: they are long Financials, but also long Pharma (see cover chart). Positioning in Banks is raised to a five month high, standing +1SD above its historical average.

* … while Oil & Gas dropped to all-time lows
Underweights are dominant in Retail and commodity sectors. Allocation to European Oil & Gas drops to an all-time low (history since 2003). The sector is considered the most undervalued and its relative performance has dropped to 15yr lows. Contrarians should go long Energy and short Banks

* 2015: Be wise and not greedy
Hopes predicated on ECB QE seem premature, given that the weakening business cycle and plummeting commodities are working against a true earnings recovery. Be wise and stay with high Quality, Secure dividend yield, large cap, defensive stocks. See our 2015 Year Ahead for our outlook, sectors and stock picks

(BofA-ML) Global Fund Manager Survey

* The Christmas Consensus
Investors are long Deflation, Cash & the US dollar, and short Inflation, Risk and Commodities.

* Deflation, Commodity Capitulation & the Crowded US$
Deflation the big 2015 risk according to 69% of FMS and expectations for a steeper yield curve now lowest since Jun'11. December FMS shows record low exposure to Energy & Materials, 36% say oil price "undervalued" (highest since Apr'09) and US$ is the most "crowded trade" (acc to 60%).

* Cash Surges, but ECB tempts Risk-On
Cash levels surge to 5.0%, well above 4.5% threshold for risk "buy signal" (FMS shows highest % OW cash since Jun'12). Risk-off across-the-board bar Eurozone stocks as big rise in ECB QE hopes (63% say QE in Q1) sharply boosts allocation

* Crude Collapse leads to Big Rotation...
...out of commodities, energy & materials into US$, cash, tech & discretionary stocks. Relative to FMS history, investors are most OW discretionary, Japan, real estate, banks, tech (in that order). Deflation mindset revealed by 4-year low in
investors saying “Value” outperforms “Growth”.

* Best December Contrarian Trades are...
...both sector trades: long energy, short telecoms; long industrials, short consumer discretionary. Nov contrarian trades: long Eurozone, short Japan worked well; but long energy, short utilities did not work.

(BFW) Goldman Sees Positive U.S. Flows Into European Equities in 2015

Goldman Sees Positive U.S. Flows Into European Equities in 2015
2014-12-17 08:52:19.710 GMT


By James Ludden
(Bloomberg) -- European equities have attractive yields
compared with corporate bonds; Goldman says in note.
* Also cites better economic growth, further policy action by
ECB
* Recent data from U.S. Treasury shows large swings in
sentiment; U.S. investment flows out of European equities
have been rapid since summer: Goldman

For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
James Ludden in London at +44-20-7673-2645 or
jludden@bloomberg.net
To contact the editor responsible for this story:
Andrew Rummer at +44-20-7073-3722 or
arummer@bloomberg.net

(Exane) E&P : Brent slide exposes the Sector AFR, MAU, PMO, TLW, OPHR,...




* Moving Brent to USD80/bbl long term – stocks pricing USD65/bbl
With OPEC choosing not to cut quotas, the onus now rests on non-OPEC producers to balance the
market unless there is a strong demand response to soak up the oversupply of c.1.7mb/d through
H1 15. The oil price collapse has triggered a number of capex cuts across the industry, with US
onshore leading the way. We model a 25% fall in the US oil rig count through end-2016, by which
point we see oil production being c.1.4mb/d lower vs initial expectations, which should be enough
to rebalance the market by 2017. We cut our 2015/16/17 Brent forecasts from USD100/90/92/bbl to
USD67.5/75/80/bbl. On average we cut NAVs by c.40% – the stocks are pricing USD65/bbl LT.

* All companies with debt could breach covenants at c.USD50/bbl Brent
We test a variety of scenarios from LT Brent of USD90/bbl down to USD50/bbl; we find that at low
oil prices, every company with covenants (AFR, LUPE, MAU, PMO, TLW) is likely to breach them.
However, these companies have some options that could help them weather the storm – Afren
(down to U/P) is most exposed at USD50/bbl over 2015-17. We believe TLW could meet its
covenants at a flat USD50/bbl oil price scenario until 2017 without cutting its dividend. The stocks
most levered to oil prices are PMO & AFR; the least are Seplat, SOCO and Cairn.

* Bream, Sea Lion don’t make sense at c.USD60/bbl
We believe that Premier should not sanction Bream (USD83/bbl breakeven), and Sea Lion should
again be revisited in 2016 given that the carry arrangement pushes the breakeven to c.USD63/bbl
long term. On this basis we downgrade PMO (=), RKH (-). We believe that operator BG is likely to
slow Ophir’s Tanzania LNG project at current prices. On the flipside, we believe that Sverdrup
(LUPE), Kenya (AOI, TLW) and Uganda (TLW, government permitting) should all be sanctioned.

* Positioned with CF/safety – O/P TLW, CNE, MAU
In a falling oil price environment, the sector should remain under pressure. We position ourselves
in companies with near term cash flow growth, stronger balance sheets: Tullow, Maurel, Cairn.

(Les Echos) The secret agreement between the government and dealers to increase

The secret agreement between the government and dealers to increase tolls

The state agreed in 2013 with the motorway companies increased 1.5% tolls to offset the increase in government fees.

This is an agreement that the state keeps secret for over a year, and for good reason: it's a political bomb. While the Minister of Ecology Segolene Royal said claim a rate freeze for 2015, a protocol initialed there a year expected to increase 1.5% tolls, spread over the period 2015-2018, which would be added conventional annual increases ...
Everything starts from the government's decision in late 2012 to impose motorway concessionaires an increase of 50% of the State fee, a tax that the companies perform in return for the use of public property. The annual yield of this tax is increased from 200 to 300 million euros.
But in late 2012, dealers will not let it happen. They argue, in support contracts, that tax increases must be offset. There followed several months of tense discussions, in parallel with negotiations on the motorway stimulus. Both subjects eventually be a global deal in 2013.
A memorandum of understanding was then signed between the dealers and the state, with two components: the impact on tolls to the increase of the State fee, and the motorway stimulus plan, 3.2 billion euros of work borne by dealers in exchange for an extension of three years on average concessions.
The recovery plan required the Brussels green light for the protocol to be officially signed. Got a green light last October. Therefore, nothing prevents an official signature. Especially since the dealers have already disbursed this year for the first time, a fee plus 50%. So they expect the promised compensation. According to the protocol, it must take the form of a rate increase over the period 2015-2018 smoothed, a 0.5% increase in February, 2015.
Not reverse
The problem for the government is that since the agreement remained secret but approved by the State Council, he himself has stirred controversy on the level of tolls and profits of the dealers, which makes it all now rising politically disastrous tolls. He must break this deadlock by renegotiating the protocol, as part of a global agreement on the profits of dealers (see above). And we must do this quickly because tolls are reviewed annually on February 1.
The state can unilaterally renege on the agreement, dealers attack litigation. They do not have a choice: give up the compensation clauses in the contracts would undermine the social interest of the company, with the risk of lawsuits from shareholders.
Meanwhile, the political posturing multiply. There are some days, the traditional mail notifying administration each year the Users' Committee the annual increase in tolls calculated by him was presented by Ségolène Royal as a proposal dealers against which it rebelled. Even as the dealers had not even been notified of the mail, they bitterly pointed out, and the formula is contractual ...

(Les Echos) L'accord secret du gouvernement avec les concessionnaires pour une h

L'Etat a convenu en 2013 avec les sociétés d'autoroutes une hausse des péages de 1,5 % pour compenser l'augmentation de la redevance domaniale.

Voilà un accord que l'Etat garde secret depuis plus d'un an, et pour cause : c'est une bombe politique. Alors que la ministre de l'Ecologie Ségolène Royal dit réclamer un gel des tarifs pour 2015, un protocole paraphé il y a un an prévoit une hausse des péages de 1,5 %, étalée sur la période 2015-2018, qui s'ajouterait aux hausses annuelles classiques…
Tout part de la décision du gouvernement, fin 2012, d'imposer aux concessionnaires autoroutiers une augmentation de 50 % de la redevance domaniale, une taxe dont les sociétés concernées s'acquittent en contrepartie de l'occupation du domaine public. Le rendement annuel de cette taxe est porté de 200 à 300 millions d'euros.
Mais, fin 2012, les concessionnaires ne se laissent pas faire. Ils font valoir, contrats à l'appui, que cette augmentation de la fiscalité doit être compensée. S'ensuivent plusieurs mois de discussions tendues, parallèlement aux négociations sur le plan de relance autoroutier. Les deux sujets finissent par faire l'objet d'un deal global en 2013.
Un protocole d'accord est alors paraphé entre les concessionnaires et l'Etat, avec deux volets : la répercussion sur les péages de la hausse de la redevance domaniale, et le plan de relance autoroutier, soit 3,2 milliards d'euros de travaux à la charge des concessionnaires, en échange d'une prolongation de trois ans en moyenne des concessions.
Le plan de relance nécessitait le feu vert de Bruxelles pour que le protocole puisse être officiellement signé. Un feu vert obtenu en octobre dernier. Dès lors, plus rien n'empêche une signature officielle. D'autant que les concessionnaires ont déjà décaissé cette année, pour la première fois, une redevance majorée de 50 %. Ils attendent donc la compensation promise. Selon le protocole, elle doit prendre la forme d'une hausse des tarifs lissée sur la période 2015-2018, dont une hausse de 0,5 % dès février 2015.
Marche arrière impossible
L'ennui, pour le gouvernement, c'est que depuis cet accord, resté secret mais validé par le Conseil d'Etat, il a lui-même suscité une polémique sur le niveau des péages et des profits des concessionnaires, qui rend désormais toute hausse des péages politiquement désastreuse. Il doit donc sortir de cette impasse en renégociant le protocole, dans le cadre d'un accord plus global sur les profits des concessionnaires (lire ci-dessus). Et il faut y parvenir rapidement car les péages sont révisés tous les ans au 1er février.
L'Etat ne peut revenir unilatéralement sur l'accord, les concessionnaires attaqueraient au contentieux. Ils n'ont pas le choix : renoncer aux clauses de compensation prévues par les contrats serait une atteinte à l'intérêt social de l'entreprise, avec le risque de poursuites de la part des actionnaires.
En attendant, les gesticulations politiques se multiplient. Il y a quelques jours, le traditionnel courrier de l'administration notifiant chaque année au Comité des usagers l'augmentation annuelle des péages calculée par ses soins a été présenté par Ségolène Royal comme une proposition des concessionnaires contre laquelle elle s'insurgeait. Alors même que les concessionnaires n'avaient même pas été notifiés du courrier, ont-ils amèrement souligné, et que la formule de calcul est contractuelle…

>>> What to look at today - 17th of December 2014

US Market was volatile, managed to trade in positive territory during the day before the last hour sell off, Russia & Oil was still the main catalysts for pushing world market lower, cyclical sectors could not stay out of the red with consumer discretionary (-1.6%), financials (-1.0%), and technology (-1.5%) driving the market to fresh lows during afternoon action...the industrial ended on its flat line, owing its outperformance to defense contractors, and specifically, shares of Boeing +1,8%, Energy closed in positive territory after a rebound on crude but this move look difficult to hold higher levels...Volume were above average @ 996m shares...VIX @ 23,57 +15,43%...US After Hours PLAY +7.7%, DRI +2.0%, RT -5.1%, CFX -1.7%, HEI -1.0% following earnings/guidance...Asian indices are modestly higher despite the final hour selloff on Wall St and continued uncertainty surrounding Russia, with short-covering flows heading into Wednesday's FOMC policy statement. According to some surveys, more analysts are leaning in favor of the FOMC eliminating the "considerable time" language which would likely pave the way to the first rate hike some time in Q2 of next year, Asia Development Bank lowered developing Asia GDP forecast to 6.1% from 6.2% prior and 2015 to 6.2% from 6.4% made in September...Japan put out a lower than expected trade deficit even though exports growth of 4.9% was below 7.0% expected, as imports registered an outright contraction of 1.7% against expected rise of 1.6%...Nikkei +0.38%...Hang Seng -0.27%...Shanghai +0.30%

--> As everybody is focus on Russia RUB @ 71.4 WTI @ $55.70 Brent @ $60.15

Eur$ 1.2478 S&P +0.36% EurosToxx -1.41% DAX -1.2% SMI -0.63%

Macro :
- Coeure Sees ‘Broad Consensus’ in ECB on More Stimulus: L’Opinion
- S&P Lowers Crude Oil Assumptions for WTI, Brent for 2015, 2016

Keep an eye on :
- AFR LN : Afren rallied on Madagascar Discover (yest)
- ALO FP : Alstom Power Ltd Said to Face New Charges From U.K. SFO: FT
- EN FP : Bouygues Telecom in Partnership With Spotify, Les Echos Says
- BVD FP : Belvedere planning assets sale worth more than EUR 20m - Company press release
- CGL LN : Catlin rumoured to be in line for takeover approach - FT
- CRH LN : CRH, Blackstone, CVC May Bid for Holcim-Lafarge Assets: Reuters
- DGE LN : Ex-Diageo CEO Said to Walk Away From Formula 1 Chairmanship: FT
- ELEB BB : Electrabel Reactor Safety-Case Methodology Not Mature: FANC Link
- FNC IM : Finmeccanica Says It Received Insigma Offer for AnsaldoBreda
- HAW GY : Hawesko Says Permira Has No Intention to Bid for Co.
- RMS FP : Hermes closed +1,52% , 773k shares traded
- MEO GY : Metro would not rule out eventual Kaufhof sale; not actively looking for buyer - Rheinische Post
- OLE SM : Deoleo Board Says Improved Bid From Ole Is ‘Positive’
- PHIA NA : Philips to Buy Volcano for $18/Shr in Cash / +56.7% Premium vs yest close (VOLC US / Medical Devices) / $1bil deal
- PUM GY : Puma Signs Rihanna as Global Brand Ambassador
- REP SM : Talisman CEO Confident of Canadian Approval of Repsol Takeover
- SBMO NA : SBM Offshore Reiterates 2014 Sales Outlook
- SCHP VX : Schindler May Be Takeover Target for PE, CEO Napoli Tells FuW
- SIK VX : Sika Board to Meet Investors on Planned Saint-Gobain Deal
- SN/ LN : Philips/Volcano deal could helped the stock, +3% yest.news that Stryker had increased the size of a short-term debt fundraising to $1.25bn from up to $500m. Stryker has been free under Takeover Panel rules to bid for S&N since late November
- UCG IM : UniCredit CEO Rules Out 4Q Writedowns for Russian Unit
- DG FP : France Made Secret Agreement With Highways 2H 2013: Echos
- WPP LN : WPP Said to Name Roberto Quarta Chairman, Replacing Lader: Sky

>>> Brokers Upgrades & Downgrades - 17th of December 2014

>>> Up
*A2A RAISED TO BUY VS NEUTRAL AT GOLDMAN
*ANGLO AMERICAN RAISED TO HOLD VS SELL AT LIBERUM
*GAS NATURAL RAISED TO BUY VS NEUTRAL AT GOLDMAN
*GLENCORE RAISED TO HOLD VS SELL AT LIBERUM
*IBERDROLA RAISED TO NEUTRAL VS SELL AT GOLDMAN
*INTERTEK RAISED TO OVERWEIGHT VS NEUTRAL AT HSBC
*RIO TINTO RAISED TO HOLD VS SELL AT LIBERUM
*TATE & LYLE RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE

>>> Down
*EVN CUT TO NEUTRAL VS BUY AT GOLDMAN
*PETROFAC CUT TO NEUTRAL VS BUY AT CITI
*SGS CUT TO UNDERWEIGHT VS NEUTRAL AT HSBC

>>> PT Changes


>>> Initiation
*DEUTSCHE ANNINGTON RATED NEW NEUTRAL AT GOLDMAN, PT EU25.5
*GN STORE NORD RATED NEW BUY AT CITI, PT DK158
*SONOVA RATED NEW SELL AT CITI, PT CHF121
*WILLIAM DEMANT RATED NEW BUY AT CITI, PT DK578
*WOOD GROUP RATED NEW NEUTRAL AT CITI, PT 600P

>>> Call
>> Stock
*BEIERSDORF ADDED TO TOP PICK LIST AT BAADER-HELVEA
*DUFRY, PARTNERS GROUP ADDED TO TOP PICK LIST AT BAADER-HELVEA
*HUBER & SUHNER ALSO ADDED TO TOP PICK LIST: BAADER-HELVEA
*NOVARTIS ADDED TO TOP PICK LIST AT BAADER-HELVEA
*SIXT ALSO ADDED TO TOP PICK LIST: BAADER-HELVEA
*TERNA ADDED TO GOLDMAN CONVICTION SELL LIST; WAS SELL
>> Sector
*MINING SECTOR RAISED TO HOLD AT LIBERUM

>>> Sika continues to not support SGO offer, to discuss situation with investors

Sika continues to not support SGO offer, to discuss situation with investors following shareholder requests
 
In response to numerous requests from shareholders and with the intent of entering into a constructive dialogue, Sika will discuss the situation resulting from the planned transaction between the Burkard Family and Saint-Gobain with its investors, based on the presentation as published on the Sika website here.

KEY EVENTS OF THE LAST 10 DAYS

* December 5, board and management of Sika were informed of transaction for first time on Friday evening by family and SGO
* Initial limited discussions between Sika and SGO during following weekend, with SGO rejecting constructive suggestions to mitigate apparent flaws of current structure
* Publication of independent position of Sika board and management on transaction last Monday (8 December)
* Planned transaction is not in the best interest of Sika or its public shareholders
* Board and management do not support transaction in its planned form
* Family requested EGM to replace three independent board members with two nominees to gain majority in board (10 December)
* No further interaction between Sika and SGO to date

>>> US After Hours : PLAY +7.7%, DRI +2.0%, RT -5.1%, CFX -1.7%, HEI -1.0% foll

After Hours Summary: PLAY +7.7%, DRI +2.0%, RT -5.1%, CFX -1.7%, HEI -1.0% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: PLAY +7.7%, DRI +2.0%

Companies trading higher in after hours in reaction to news: ASPX +71.4% (announced positive topline results from registration trial of SD-809 for chorea associated with Huntington's Disease; Pivotal Phase 3 trial met primary and multiple key secondary efficacy endpoints), CERS +22.2% (confirmed FDA approval of INTERCEPT Blood System for plasma), PTRY +17.8% (seeing reports that co is nearing a deal to be sold), APP +15.5% (named Paula Schneider CEO; terminated Dov Charney), AREX +2.4% (announced capital budget plans for 2015: Estimated capital spending of $180 million in 2015; Projected y/y production growth of 10-14% in 2015; Projected 2015 oil volumes 64% hedged at a weighted average floor price of $82.38), TRGT +1.7% (disclosed that on December 11, 2014, the Board appointed Mauri K. Hodges to serve on an interim basis as the Company's Vice President, Finance and Administration, CFO and Treasurer, effective immediately)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: RT -5.1%, CFX -1.7%, HEI -1.0%

Companies trading lower in after hours in reaction to news: IVR -2.0% (declared Q4 cash dividend of $0.45/share of common stock, down from $0.50/share),