>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • QTM +20.1%
  • ALQA +14.3%, (also to acquire the business of Soluble Systems)
  • ZUMZ +10.8%, (Zumiez reports September same store sales +6.3% vs -1.8% September last year and -1.5% last month; raising Q3 EPS and sales guidance above consensus)
  • DLGNF +4.3%
M&A news:
  • PHMD +47% (PhotoMedex to sell its consumer products business to ICTV Brands for $9.5 mln)
  • CRM +2.5% (likely to be remainer co interested in offer for TWTR)
Other news:
  • JAGX +31% (signs a non-binding LOI with Napo Pharma to potentially merge the 2 companies; Aspire Capital Fund purchases 348,601 shares of Jaguar common stock at $2.28/share)
  • AUPH +23.7% (announces 24-week data in all 10 patients from the AURION study)
  • SCYX +14.4% (announces complete results from two phase 2 Studies of Oral SCY-078 in patients with candida spp. infections; study results confirm overall antifungal activity of oral SCY-078 in patients with candida infections)
  • CATB +7% (presents data from Part A of the MoveDMD trial of edasalonexent for the treatment of DMD)
  • HIMX +3.7% (higher on Dialog Semi upside sales guidance)
  • RDHL +3.7% (provides progress update on RHB-104 phase III Crohn's disease program and introduces option for early stop for success in Q2/2017)
  • MET +3.3% ( confirms that Brighthouse Financial filed a Registration Statement on Form 10 with the SEC)
  • LRCX +3.2% (higher on Dialog Semi upside sales guidance)
  • CHK +2.2% (recent transactions significantly improve capital structure)
  • JD +1.9% (Wal-Mart increases passive stake)
Analyst comments:
  • YGE +4.9% (upgraded to Buy from Hold at Axiom Capital)
  • JASO +3.9% (upgraded to Buy from Hold at Axiom Capital)
  • BGFV +3.5% (upgraded to Buy from Hold at Deutsche Bank)
  • CPTA +2.1% (upgraded to Buy from Neutral at Ladenburg Thalmann)

(HSBC) Brexit Getting Harder : Reassessing the prospects for a complex divorce

* The UK government is taking a ‘harder’ line on Brexit
* Immigration control appears a higher priority than full Single Market access
* Hard exit could mean tariffs on UK-EU trade, but non-tariff barriers are the bigger concern for us

* Article 50 by March 2017 and the ‘Great Repeal’ to follow
The UK’s Prime Minister has announced that she intends to trigger Article 50 (which
starts the two-year EU exit process) by the end of March 2017. Assuming no delays
or extensions, this means that Britain will be out of the EU by April 2019. She has
also announced that the government will repeal the 1972 European Communities
Act, and re-write EU legislation as domestic law. The ‘Great Repeal’ Act will not take
effect until the UK has formally exited the EU and so there is no immediate impact.

* Hard talk from the ‘Brexiteers’
Perhaps emboldened by a run of strong data showing the UK economy did not grind
to a halt in the immediate aftermath of the referendum, some of the UK ministers
charged with delivering Brexit have started talking about a more distant relationship
with the EU, positioning the UK instead as a hub of global competition and leader in
global free trade. This is not a vision that will necessarily chime with Brexit voters
disaffected by globalisation.

* Soft vs hard
We first categorised Brexit options into ‘soft’ or ‘hard’ back in February 2015 in our
report A very British Dilemma. Theresa May recently suggested that the UK should
control its borders and seek “the best possible deal” for Single Market access. This
indicates a ‘harder’ Brexit than the Swiss or Norwegian models, for example. Indeed,
the UK’s Minister for International Trade has proposed that the UK should not enter a
customs union, implying a more distant relationship than the EU has with Turkey.
Being outside a customs union – and in the absence of a bilateral UK-EU free-trade
agreement – could mean tariffs on many goods. Also, outside of the Single Market,
UK services may find it harder to compete – particularly if financial sector firms
cannot replace their EU ‘passport’ with something equivalent.
Goods trade tariffs have been falling for decades, thanks to successive rounds of
global agreements. But non-tariff barriers and uncertainty about future trading rules
can pose huge barriers to trade. If left unaddressed, these could be equivalent to a
tariff of 10-15% on UK trade, according to some studies.

>>> Street Pre-Market indications

Bofa-ml
* REFRESCO - Ferskur Holding, Tamoa, 3i selling c8m shrs; JPM/ABN/RABOBANK......
OSRAM - San'An Opto said to plan EU70/shr bid for Osram stake (EUR60.28).+10-12%
BTG - Says FY revenue at current FX rates will top market expectations (679).+5%
DIALOG SEMI - Preannounce Q3 revs $345m v prior guidance of $290-320m (E36)+3-4%
UNICREDIT - +ve. Amundi Ready to Offer EU4b for UniCredit’s Pioneer (2.13)...+2%
GERRESHEIMER - 3Q EBITDA +24.2% to EU 84.4m & raising its targets (76.2)...+1-2%
RAIFFEISEN - Green light for RBI/RZB merger to be completed this yr (14.13)..+1%
MINERS - Copper -0.2%, Gold -0.2% with BHP OZ +1.2% and RIO OZ +0.6%.........u/c
BAE - Inline with positive tone on programs & comments around the UK (538)...u/c
DFS - Inline & announce a capital return but recognise risk of slowdown (278)u/c
CENTRICA - Conservative party trying to raise equity risk premiums (223p)....-1%
M&S - Negative read across from poor Dunelm numbers with sales missing (334).-1%
DUNELM - Group sales -1.8% to £198.7m v cons +0.8% growth. LfLs -3.8% (825)..-4%
EASYJET - EPS -9% inline c-4% d/g to PBT this yr & more for next on FX(958)-4-5%

CS INDIC
ABB +0.5% CEO held sell-side dinner that reinforced positive view
AMS +1% Positive read from Dialog Semi numbers
Airbus M/P Spec more job cuts in Helicopters will be announced
BAE Systems M/P Trading statement inline, outlook unchanged
Banca Gen M/P Net inflows for Sept. Eu295m, inline
Banks +1% Spec German govt supporting DBK in US talks + rates better
BTG M/P Underlying trading inline, guidance upped on FX
Deut Bank +1-2% Spec German govt supporting DBK in US talks
DFS +2-3% FY numbers inline, pretax slightly ahead, divi inline
Dialog Semi +3% Revenues ahead, $345m, guidance of $290 to $320m
Dunelm -2-3% Q1 revs -1.8%, lfl growth -3.8%, hurt by warmer weather
Easyjet -3% Cuts PTP guidance to 490-495m CS at 500m and cons 516m
Gerresheimer +2% Q3 margins ahead and medium term margin guidance raised
Imagine Tech +1% Positive read from Dialog Semi number
Meyer Burger +3% Contract win for CHf15m
Miners UNCH Copper -0.30%, Brent -0.55%, Iron Ore closed, China closed
Osram R San’An Opto Said to Plan EU70/Shr Bid for Osram Stake: Wiwo
Shire +0.5% Patent trial/appeal board upholds validity of Lialda Patent
Unicredit +2-3% Amundi ready to offer EU4B for Pioneer, Messaggero

MainFirst Pre Mkt Indications
*DBK-Mismarked 37 loans in 2013 like Monte Paschi says Audit.........+0.75%
*GERRESHEIMER-Rev 373.1m(375.5),Ebitda 84.4m(79.9)Targets raised.....+1%
*OSRAM-San'An Opto plans a €70 bid for Osram stake vs cls €54.31.....+14%
*THALES-Seeks to sell Secure Identity Systems worth €50-Tribune......+1%
*AIR FRANCE-French Blue undercuts AF on Paris-La Reunion-Tribune.....-1%
*BSCH-Said to evaluate bid for BOFA's MBNA UK - Expansion............U/C
*OERLIKON-Is planning to add to its additive bizz this year-HZ.......U/C
*RENAULT-Studying Proton co-op as Asia growth opportunity............U/C
*UNICREDIT-Amundi ready to offer €4b for Unicredit's Pioneer.........+0.5%
*DIALOG-Q3 Prelims $345m(Cons $303m),Co to review Q4 in coming wks...+3.5%
*EASYJET-FY PT £490-£495m(516m),Sees FX hit £90m in FY...............-4%
*COVESTRO-Eyes acquistions and aims for DAX membership...............+0.5%

(Barclays) Vivendi : Despite music

Alongside this report, we publish today our third annual in depth report on the music industry, Dancing days are here again. While the industry is now growing thanks to streaming, music remains an industry in transition with many layers of complexity (cannibalisation, spending skew towards big spenders, risk of disintermediation, appropriate level of royalties to develop a robust streaming ecosystem, emerging market opportunities and value gap among others). Taking all these elements into account, we now forecast the music market to experience a 6% CAGR over the next five years, a more constructive view than before (we had 3% last year). We also study margins in-depth and conclude that margin expansion should only come from operational gearing as opposed to expanding gross margins. While we are more positive on music, Vivendi currently trades at 13.7x 2016E EV/EBITDA, an 11% premium to the sector on 12.3x. This is hard to justify taking into account; (1) lack of visibility on strategy, (2) diversified nature of the assets, (3) cash flow generation characteristics, and (4) question marks on Canal+ turn around. We like UMG but investors are already paying 18x EV/EBITDA for the asset (see Figure 4, page 6). Re-iterate Underweight with unchanged €17.00 target.

>>> What to look at today - 6th of October 2016

Dow +0.62% S&P +0.43% Nasdaq +0.50% Russell +0.69% VIX 12.99 (-4.7%) VXX 33.50 (-0.8%)
US Market closed higher as Rally on Crude & Rebound of financials helped the sentiment. WTI crude finished the day higher by 2.2% ($49.76/bbl; +$1.08). On back of data today Treasury complex sold off in response as yields moved higher across the curve. The increase in interest rates pressured defensively-oriented real estate (-1.9%), telecom services (-1.8%), utilities (-0.3%), and consumer staples (-0.2%) for a second straight session. Seven sectors settled in the green with financials (+1.5%), energy (+1.4%), and materials (+0.7%) leading the advance. TWTR +5.7% on takeover approach again. (DIS, GOOG, CRM & MSFT cited as suitor. Volume were above average with 962mil shares traded. US After Hours ZUMZ +13% following SSS/guidance, semi/tech names higher following upside Dialog Semi sales... YUM -2.2% following earnings/guidance, TWTR -11% on news that DIS, GOOG & AAPL won't bid for the co. Asian market was very slow with Golden week going on, Samsung Electronics rallied after receiving a letter from Elliott Affiliates urging restructuring and greater capital return - company is set to report prelim Q3 results tomorrow. Fujitsu and Lenovo rallied on speculation of a tie-up in PC operations.

Nikkei +0.65% Hang Sang +0.63% CSI Closed Shanghai Closed

Eur$ 1.1197 CNH 6.6970 CNY 6.6718 JPY 103.54 GBP 1.2711 CHF 0.9759 RUB 62.4238 WTI$ 49.56 ( -0.54%)

S&P -0.06% EuroStox+0.20% Dax +0.25% FTSE +0.15% SMI +0.02%

Macro :
- Norway to Propose Rules to Boost Biofuel Sales, NTB Reports
- Hurricane Could ‘Wipe Out’ One Qtr of Insurer Earnings: Barclays
- German Finance Ministry Plans EU6.3b Tax Break: Handelsblatt
- Angeloni: Some EU Banks Need to Address Problems Quickly
- Fed’s Fischer Sees Reasons to Worry About Ultra-Low Rates

Keep an eye on :
- AIR FP : Airbus Helicopters Could Cut More Jobs: Les Echos
- AF FP : French Blue Undercuts Air France on Paris-La Reunion: Tribune
- POP SM : Banco Popular Dividend to Have 40% Cash Pay-Out in 2018
- CSGN VX : Credit Suisse Paying $90m Penalty for Wealth Mgmt Metric: SEC
- DBK GY : Germany Said to Seek Talks w/ U.S. on Deutsche Bank: Reuters
- DBK GY : Deutsche Bank May Need to Boost Risk Mgmt on Russian Case: SZ
- DBK GY : Deutsche Bank Mismarked 37 Loans Like Monte Paschi’s, Audit Says
- DGE LN : Jose Cuervo Said to Plan IPO for After U.S. Election: Reuters
- DLG GY : Dialog Semi 3Q Sales Beat on IPhone 7 Reception: Baader-Helvea
- GEA GY : GEA Cost Savings May Weigh S-T, Are L-T Positive: Morgan Stanley
- GNFT FP : Genfit is trying to raise 75mil by Cap hike
- GXI GY : Gerresheimer 3Q Adj. EBIDTA +24.2% to EU84.4 mln, Raises Targets
- OERL SW : Oerlikon May Make Acquisition This Year, HZ Says
- RBI AV : Raiffeisen, RZB Resolve to Merge RZB and RBI
- RNO FP : Renault Studying Proton Cooperation as Asia Growth Opportunity
- CRM US : Salesforce CEO Declines to Comment on Twitter Speculation: CNBC
- HO FP : Thales Seeks to Sell Secure Identity Systems, Tribune Says
- TPC US : Muddy Waters’ Block Discloses Tutor Perini Short at Sohn Conf.
- TWTR US : Disney Said to Not Pursue Bid for Twitter, Recode Says
- TWTR US : Twitter Plunges on Report That Google Doesn’t Plan Takeover Bid

>>> Europe : Brokers Upgrades & Downgrades - 6th of October 2016

>>> Up
*AFRICA OIL RAISED TO OVERWEIGHT AT BARCLAYS
*ASSA ABLOY RAISED TO BUY VS NEUTRAL AT GOLDMAN
*BASF RAISED TO BUY VS NEUTRAL AT UBS
*CRODA RAISED TO BUY VS SELL AT UBS
*FLSMIDTH RAISED TO BUY VS NEUTRAL AT GOLDMAN
*JOHN MENZIES RAISED TO ADD VS HOLD AT PEEL HUNT
*SCHNEIDER RAISED TO CL-BUY VS NEUTRAL AT GOLDMAN
*SYMRISE RAISED TO BUY VS NEUTRAL AT UBS

>>> Down
*ABERDEEN CUT TO UNDERPERFORM AT RBC
*AIR LIQUIDE CUT TO SELL VS NEUTRAL AT UBS
*APPLUS SERVICES CUT TO ’NEUTRAL’ AT EXANE BNP PARIBAS
*BARLOWORLD CUT TO NEUTRAL VS OUTPERFORM AT MACQUARIE
*DUERR RATED NEW SELL AT GOLDMAN, PT EU60
*FINECOBANK CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
*METSO CUT TO SELL VS NEUTRAL AT GOLDMAN
*SMITH & NEPHEW CUT TO HOLD VS BUY AT BERENBERG
*TESCO CUT TO NEUTRAL VS OUTPERFORM AT EXANE

>>> PT Change


>>> Initiation
*ANDRITZ RATED NEW NEUTRAL AT GOLDMAN, PT EU46
*DUERR RATED NEW SELL AT GOLDMAN, PT EU60
*ELECTROLUX RATED NEW CONVICTION BUY AT GOLDMAN; PT SEK280
*GEA RATED NEW NEUTRAL AT GOLDMAN, PT EU52
*GKN RATED NEW ’BUY’ AT HSBC
*HOLMEN RATED NEW SELL AT DNB MARKETS, PT SEK290
*METSA BOARD RATED NEW BUY AT DNB MARKETS, PT EU5.90
*SUNRISE RATED NEW BUY AT JEFFERIES; PT CHF88
*SWISSCOM RATED NEW HOLD AT JEFFERIES; PT CHF449

>>> Call
>> Stock
*ELECTROLUX RATED NEW CONVICTION BUY AT GOLDMAN; PT SEK280
*SCHNEIDER RAISED TO CL-BUY VS NEUTRAL AT GOLDMAN
>> Sector
*EUROPE EX-U.K. RAISED TO NEUTRAL VS UNDERWEIGHT AT CITI
*EUROPEAN TELECOMS CUT TO NEUTRAL AT CITI
*EUROPEAN BANKS RAISED TO OVERWEIGHT VS NEUTRAL AT CITI

>>> Italian 'good banks' may see renewed bids from private equity if talks with

Italian 'good banks' may see renewed bids from private equity if talks with UBI Banca falls through - report (translated)

Private equity firms could re-enter the race for four Italian “good banks” restructured in a government-backed bailout, Italian-language daily Il Sole 24 Ore reported.
The unsourced report said that Apollo [NYSE: APO] and Lone Star, which made offers for Banca Etruria, Banca Marche,CariFe and CariChieti in the summer, could return to the table if UBI Banca withdraws from the bidding.
The report said that other private equity firms could also become involved.
The report further noted that UBI Banca is interested in Banca Etruria, Banca Marche and CariChieti. The report said that UBI's stance on the dossier is likely to become clearer by next week.