FT : EU overhaul on financial market rules faces delay

The European Union's landmark post-crisis overhaul of its financial market rules is on course to be delayed after the EU commission said that technical challenges mean that the measures may have to be pushed back by as much as a year.

Martin Merlin, a director in the Commission's financial services department, told EU lawmakers this morning that the institution's "preliminary view at technical level is indeed that a delay is needed'' to the planned Jauary 2017 start date writes the FT's Jim Brunsden.

"Maybe the simplest and most legally sound approach would be to delay the whole package for one year,'' Mr Merlin said at a hearing of the EU parliament's economic and monetary affairs committee.

The Commission stance backs warnings from the European Securities and Markets Authority, an agency which brings together national regulators from across the EU, that time is running short to develop IT systems integral to key parts of the rules.

Steven Maijoor, ESMA's chairman, told the same hearing that "the timetable for stakeholders and regulators alike to implement the rules and build the necessary IT systems is extremely tight. There are areas where the calendar is already not feasible.''

(DBK) Strat : Higher real rates mean lower P/Es

Higher real bond yields mean lower P/Es

•The European Q3 earnings season has been weak: with 80% of companies having reported, only 48% of companies have managed to beat earnings estimates, compared to a long-term average of 55%. What is more, Q3/Q3 earnings are down by a staggering 43%, the largest year-on-year drop since Q4 2011. However, losses are concentrated in only a few sectors and appear mostly due to idiosyncratic factors: (a) energy names account for 45% of the fall in earnings; (b) a further quarter of the losses is accounted for by write-downs and provisions taken by two large German large corporates; (c) three large Swedish investment funds account for around 20% of Q3 losses, driven by a 16% correction of the Swedish equity market in Q3. While a further fall in the oil price might translate into additional downside for energy earnings, we would regard most of the other drivers of the weak Q3 season as one-offs – and, hence, stick to our EPS growth target of 3% for 2015 and 9% for 2016.

•European banks have seen solid EPS growth in Q3 – and are positioned for further upside. Despite the negative commentary around the sector, banks has continued to be among the sectors with the strongest year-on-year income growth at 12%. As a consequence, the sector’s relative 12-month forward RoE has risen to a seven-year high. This is consistent with a P/B discount to the market of around 40%, pointing to upside from the current 50% P/B discount.

•We are cautious on UK equities, in spite of our FX strategists’ bearish GBP call: our strategists expect sterling to fall to £/$1.27 by the end of 2016, given last week’s dovish Inflation Report, stretched valuations, more fiscal tightening to come and the large current account deficit (see their report Turn bearish GBP, Nov 5). A weaker GBP should help UK equities, given that 65% of revenues come from outside the UK and a 10% fall in sterling boosts EPS growth by around 14 percentage points, according to our model. Yet, we are still cautious on UK equities, given that: (a) we don’t think the case for GBP weakness is clear-cut (given wage growth at 3.2%, compared to 2.5% in the US); (b) the UK market still has a high commodity weighting (15% of market cap, versus 8% for Europe ex UK); (c) valuations are still not compelling: relative Shiller P/Es are only in line with the historical average, and while the P/B relative is at a 15-year low, this is not the case if we exclude resources. For investors wanting exposure to the theme of sterling weakness, our screen shows cheap UK exporters with a DB buy-rating (AstraZeneca, Smith & Nephew, EasyJet among others).

>>> Street Pre-Market ( ML, CS & Jefferies)

ML
EVONIK - CVC selling 2.2m shs, 2% of co, EUR 32.55, BAML sole..............
* TEF DEUTSCH - KPN selling 150m shs, c 5% of co, Citi.......................
* ABN AMRO - Price range announced, EUR 16 20, call for details..............
* AMUNDI - Revised price range, EUR 43.00 - 45.00 per share..................
POST ITALIANE - 9m rev EUR 23.9bn v 22.6bn YoY, very weak in the auction.RSTR AAREAL BANK - Q3 ahead on 2-3% NII beat, raises FY EBIT tgts 9% above cons+3% DIALOG - Elliot takes 2.9% stake, says plans to vote against Atmel deal...+3% EXPERIAN - Solid org growth at 4%, HY EBITDA a 1.7% beat, US consumer +ve.+2% DCC - Operating profit £88.4m with cons circa 10% lower. FCF strong.....+1-2% NAT GRID - To sell stake in UK gas distro division, EPS a 13% beat too..+1-2% CAPCO - ongoing strength with both parts of the business delivering.....+1-2% VODAFONE - Service revs 1.2% v +0.9% est, EBITDA touch ahead, solid.......+1% KPN - Reduces O2D stake to 15.5% from 20.5% via placement overnight.......+1% LAND SECS - adj diluted NAV up 5.7%, solid enough, trading 7% below NAV...+1% ITV - 9m ad growth 6% in line with cons, sees > 5% ad growth for FY.......+1% ELIS - Solid Q3 with 4% org rev growth, FY EBITDA tgts 1% ahead of cons.+0.5% SYMRISE - Q3 EBIT 3% light, but underlying solid & reit FY guidance.......u/c DANONE - Pepsi reportedly stepping away from investment in Chobani........u/c MONCLER - 9m EBIT 2% ahead on GM but retail LFL slows on Asia/US weakness.u/c EIFFAGE - Q3 sales touch light but reaffirm FY so no cons downgrades....-0.5% BAER - AuM in line and gross margin a touch light as is net new money.....-1% ARKEMA - EBITDA a 3-4% beat, raise guidance but only in line with cons....-1% PANDORA - Rev 1% beat & stronger GM, EBITDA in line and guide maintained..-1% EON - Press spec to report 9m EUR 5bn net loss driven by 8bn impairments-1-2% UBM - Signs of China revenue slowdown with weakness in smaller shows....-1-2% OPERA - Q3 EBITDA ahead but nudges lower FY rev and EBITDA guidance.......-2% WOLSELEY - US LFL reduced to 4.5%, we see a 4% underlying d/g...........-2-3% VALLOUREC - Q3 loss > est & outlook terrible, we cut FY17e EPS 27%......-2-3% DELTA LLOYD - Sh/holder equity solid but disappointing nothing on capital.-3%
CS
Aareal Bank +3-4% Raises guidance, sees op pft E450m-E460m; was E400m-E430m
Ahold M/P More competition in the US. Lidl to Invest More Than E200m
Arm -0.5% CS research highlighting Iphone supply orders weakened
Arkema -1-2% Q3 EBITDA beat. FY guidance raised but below consensus
AVEVA +3% H1 Revs in line, outlook supports current expectations
Cloetta +2-3% 3Q operating profit SEK212m vs est. SEK197m, sales better
Delta Lloyd M/P Sales slightly better, savings on track
Evotec +2% Q3 revs better, EBITDA ahead, raised sales outlook
Experian +2-3% No's 2% ahead of cons, added $200m to the buyback
Hamborner +2-3% NAV increases to E8.53 vs E8.22, divi increase, raises FY
ITV +1-2% 2016 outlook encouraging
Julius Baer +1% AUM better, slowdown in NNM generation in East Europe/LatAm
Korian +1% Announces acquisition will purchase Casa Reha in Germany
Land Secs +1-2% Diluted EPS at 23.2p up from 21.4p. NAV at 1367p inline
Lufthansa UNCH Strike continues, Cancels another 136 flights for Tuesday
Moncler +2% 9m revs inline, EBIT 2% beat, EBITDA 2% beat, confirms FY
Miners UNCH Copper -1.1%, Brent +0.30%, Iron Ore -0.55%, China -0.16%
Nat Grid +1-2% EPS better, div inline, starting process for sale of UK gas
Opera -3-5% Q3 revs 1% miss, lowers guidance
Paysafe +1-2% Q3 trading strong, keep FY expectations
Pandora -1-2% Sales slightly ahead, EBITDA inline, FY guidance kept
Prem Foods +5% Sales and profits better, no change to FY expectations
Redrow +1% Strong sales performance, confident on full year
Speedy Hire +5% Statement fine, keep FY forecasts
Symrise -2% EBITDA, EBIT and sales miss, 2015 targets confirmed
Tom Tailor +1% Confirms forecasts given on 21st Sept
UBM M/P Numbers inline with market expectations, outlook fine
Vallourec -3-5% Q3 -€66m, cons €-44m, Q4 worse, downgrades for FY15
Vodafone +2-3% 2Q org service revs up 1.2%, cons up 0.8%, raises outlook
Wacker Chem M/P Sees Polysilicon Prices Rebounding on US, Asia Markets
Wolseley -1-2% Trading Profit £250mln vs CS at 260mln, outlook no change
JEFFFERIES
DCC +4% better numbers, likely index beneficiary
Experian +3% good quality numbers, increase buyback
ITV +1% inline vs low exp into print
Land Secs -1% NAV 2% light, talking +vely on London
Prem Foods +10% strong H1, pension defecit down
Natl Grid +3% good numbers, will divest UK gas grid
Vodafone +2% org service rev +1.2% vs cons +0.8%
Wolseley -2% Q1 lfl +3.1% vs cons +3.9%, no change to guidance
J Baer -1% Gross Margin Narrows, misses Net New Money Target
KPN +1% sells O2D shs, reits div of 8c plus sp div of 13c
Moncler +2% reassuring numbers, CEO upbeat
O2D -1% KPN selling 150m shs (5% of co)

(BofA-ML) The RIC Report : Markets count down to Fed liftoff

Markets count down to Fed liftoff

* Don’t be fooled by bond market’s low quality rally
We are wary of the recent rally in low-quality bonds. Emerging markets remain
vulnerable to currency weakness and further erosion of commodity prices. High yield
issuers face high debt levels as well as deteriorating earnings.

* Market now priced for a December rate hike
The market is now priced for a rate hike at the December 16 FOMC meeting. The key, in
our view, is that the Fed will likely raise rates gradually in 2016, so most markets should
be able to withstand the moves.

* Quality the best hedge for volatility in equities
High-quality stocks have a track record of outperforming lower quality in periods of
rising volatility. Our US Equity Strategy team identifies quality by low variability of
earnings and high returns on equity. Low beta does not necessarily equate to higher
quality. Big, old and ugly stocks are generally high-quality candidates.

* Dividend growers offer “Fed-proof” income
Rather than looking for the highest yielding stocks in the market, Equity and Quant
Strategist Savita Subramanian suggests that investors seek out stocks with dividend
growth. In periods of rising rates, dividend growers have outperformed high dividend
yielders. Currently, dividend growers have more attractive valuations than high dividend
stocks as well. Screens of dividend growth stocks may be found on pages 13-15.

* Lower but more balanced growth in China
Asian Economist Helen Qiao lowers her China GDP growth forecasts and offers rationale
for her view that Chinese growth, although slower, should be more balanced. Weaker
export and industrial sectors can be partially offset by growth in consumption and
services. She also expects policymakers to weigh in with fiscal measures and interest
rate cuts in 2016.

(Le Temps.ch) Là-haut sur les Alpes vaudoises en hÊlicoptère

Là-haut sur les Alpes vaudoises en hélicoptère - Link : http://bit.ly/1OB355c

Mettre en valeur Leysin et Les Diablerets, le plaisir du vol en plus: telle est cette nouvelle offre, disponible dès le 25 novembre

Il faut imaginer un samedi matin. Grand beau. Il a neigé la veille. On parque sa voiture au tennis de Saint-Légier (VD), vers 8 heures. Et pif paf pouf, un hélicoptère d’Air Glaciers vient nous chercher dans le pré d’à côté. Pendant les six minutes qui suivent, on colle son nez à la vitre pour voir la Riviera et le Chablais sous un angle à couper le souffle. Direction: les remontées mécaniques de Leysin, où un membre de l’équipe nous remet l’abonnement de ski.

Le prix de cette expérience unique? 170 francs l’aller simple. D’où l’intérêt de ce nouveau service lancé par Vincent Girardet en partenariat avec Air Glaciers et l’Héliport de la station vaudoise. «L’idée est de mettre en valeur les Alpes vaudoises, un peu délaissées par ce type d’offres, et de donner une chance aux gens de la plaine de monter skier sans aucune contrainte, le plaisir du vol en plus», explique l’initiateur du projet lancé officiellement le 25 novembre prochain. Plusieurs forfaits ont été imaginés avec d’autres acteurs du tourisme des stations de Leysin et des Diablerets, ainsi qu’avec certains hôtels de luxe de la Riviera, comme les Trois Couronnes à Vevey ou le Mirador Kempinski à Chardonne.

Parmi les propositions à retenir: le bivouac avec fondue dans un chalet auquel on accède avec une cordée de chiens de traîneau, qui patiente au pied de l’hélicoptère. Ou encore le pique-nique surprise, au milieu de nulle part, en hiver ou en été, avec un panier de produits du terroir; l’hélicoptère revient nous chercher plus tard (350 francs par personne). Les plus pressés opteront pour l’option Glacier des Diablerets, où 10 centimètres de poudreuse les attend déjà.

(Exane) Rolls-Royce - New CEO’s maiden ID: flight check

New CEO’s maiden ID: flight check

Why we write this report
The share has been the sector’s worst performer over 12-months. The arrivals of Warren East as
CEO and of an activist fund in the share capital have revived hopes of turnaround. Communication
and transparency have started to improve, attracting interest from value investors tempted to capture
the potential of a large, young installed base that should turn cash generative over time. In this report,
we discuss six key issues that the CEO may address at the Investor Day on 24 November.

Trent unit costs are crucial for mitigating expected price pressure
We believe the economics of aircraft engine programs are changing, with the added visibility from
the rising proportion of monopoly positions (80% of Trent engine deliveries by 2020e) offset by
stronger cash pressure in ramp up. We expect three years of heavy pricing pressure on Trent
deliveries. The CEO’s main lever is probably on costs by accelerating facility specialisation.

Don’t minimize regulatory risk
We see a case for the EU to start a formal investigation of engine-makers’ aftermarket practices,
including Rolls-Royce’s TCA model on monopoly propulsion positions. Less protection of
aftermarket revenues on engines like the Trent700 and TrentXWB could prevent the return of value
investors to the share. SFO risk also needs watching closely (Petrobras case).

Structural risks from R&D and at defence; cyclical risks weigh on short-term outlook
We see short-term downside risk to cyclical activities (up to 46% of sales), on which Rolls is likely
to comment in its IMS, due on 12 November. We also explain why R&D (outside large engines)
and defence (at peak margin) could increasingly become headwinds to the group’s earnings.

Long-cycle businesses take time to fix – we maintain our Neutral rating
The uncertainties on the economics of new engine programs complicate the valuation exercise.
Most of the issues, including regulatory, are unlikely to be resolved in the short run, hence our
Neutral stance. Turning more optimistic depends notably on positive outcomes to the debate on the
pricing/unit cost equation, which would back the thesis of a recovery in cash generation.

(BarCap) E&P Africa Oil dwg from OW to EW - note attached

European Oil & Gas: E&P - Road to redemption

*UPGRADE sector to POSITIVE

*AMERISUR – Initiate OW, 34p PT

*DNO – Initiate OW, NOK14.00 PT

*ITHACA – Initiate OW, 70p PT

*DET NORSKE – Initiate EW, NOK70.00 PT

*FAROE – Initiate EW, 75p PT

*AFRICA OIL – Downgrade to EW from OW. Lower PT to SEK16.00 from SEK20.00

*PREMIER OIL – Downgrade to EW from OW. Lower PT to 90p from 190p

*CAIRN – Downgrade to UW from EW. Lower PT to 170p from 180p

*SOCO (UW) Raise PT to 170p from 150p

PT Changes in the note

The sustained low oil price during the last year has been a painful experience for the European E&P sector. But it has also been the catalyst for a much-needed change in mindset, prompting management teams to address the operational inefficiencies, bloated budgets and poor capital allocation that eroded returns and investor confidence before oil prices fell. We believe the results of these changes should begin to emerge in 2016 in the shape of a more focused group of businesses presenting strategies centered upon value over volume and capital-constrained growth. Our optimism does not depend on a sudden rally in oil price, rather a gradual recovery as supply/demand dynamics rebalance in the medium term and recognition from investors of the strategic and behavioral changes made. We expect 2016 outlook statements to emphasise the ability to create and realise value while operating within the constraints of ~$50/bbl, potentially marking the first steps towards redemption. It is on this basis that we revise our industry view to Positive from Neutral. This report adds five new stocks to our coverage group - Amerisur Resources (OW), Det Norske (EW), DNO (OW), Faroe Petroleum (EW) and Ithaca Energy (OW) - and includes updated investment cases for the whole group. Ophir Energy remains our Top Pick, while DNO, Ithaca Energy and Tullow Oil, in our opinion, provide the most attractive investment cases to benefit from an improving oil price outlook and recovery in investor sentiment towards the sector.