$JPM is Out With a Report on the Themes That Will Dominate 2013

“Euro-zone equities will outperform U.S. stocks in 2013. That is one of J.P. Morgan Cazenove’s predictions for 2013, appearing in a note to investors released Monday. The argument holds that the fiscal drag could be bigger for the U.S. in 2013 than Europe, where much of the worst is already built in.

Here are the nine market themes identified by J.P. Morgan Cazenove strategists for 2013:

1. Improved risk-reward in European periphery.  Look for these stocks to perform in peripheral spread tightening: Enel  IT:ENEL +0.76%, Fiat IT:F -0.79%, Telefonica  TEF +0.15% ES:TEF -0.40% and others.

2. Improving risk-reward for financials: BNP Paribas FR:BNP -0.87%, Banco SantanderES:SAN -0.27%  SAN +0.39%and Commerzbank DE:CBK -0.87% are among those that are most sensitive to bank credit spreads and still trade below book value.

3. Caution on cyclical U.S. top-line plays. The analysts expect a slowdown in U.S. activity in the first half of 2013 and advise a rotation to euro-zone exposure. That’s away from stocks like ARM Holdings  UK:ARM -0.45% ARMH -0.46%….”

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