(BofA-ML) Bank Exposure to Commodity Traders ; Over US$100bn in estimated gross

2 reports attached from yesterday, really interesting to have a read after DBk today and banks reporting in the US next week...funny to notice that moste investment banks have turned bullish on commo & Materilas since we had this Glencore story...no banks really want this to happen...

Over US$100bn in estimated gross exposures to Glencore (Page 12)
We estimate the financial system's exposure to Glencore at over US$100bn, and believe
a significant majority is unsecured. The group's strong reputation meant that the buildup
of these exposures went largely without comment. However, the recent widening in
GLEN debt spreads indicates the exposure is now coming into investor focus.

Debt broadly spread
GLEN debt breaks down as US$35bn in bonds, US$9bn in bank borrowings, US$8bn in
available drawings and US$1bn in secured borrowings. We then estimate that the group
has US$50bn in committed lines against which it can draw letters of credit with which
to finance its trading inventories. Based on public filings, we believe that the banks may
have limited capacity to reduce even the undrawn portion of these lines until 2017.
GLEN have publicly stated its financing is largely locked in - but we believe that this may
not provide comfort to risk-averse bank shareholders and supervisors.

>>> *ROLLS-ROYCE SAYS ASIA/CHINA TO BECOME KEY MARKET IN COMING YRS

*ROLLS-ROYCE SAYS ASIA/CHINA TO BECOME KEY MARKET IN COMING YRS
*ROLLS-ROYCE SAYS ORDER BACKLOG WEIGHTED TO EUROPE, N. AMERICA
*ROLLS-ROYCE SAYS CHINA ECONOMY SLOWDOWN OF NO IMMEDIATE CONCERN
*ROLLS-ROYCE AEROSPACE-UNIT CHIEF TONY WOOD SPEAKS IN INTERVIEW
*ROLLS-ROYCE SAYS SINGAPORE PLANT HAS CAPACITY TO MATCH DERBY
*ROLLS-ROYCE TO BUILD UP TRENT XWB OUTPUT IN SINGAPORE FOR A350
*ROLLS-ROYCE STEPS UP PLANS FOR TRENT-ENGINE MANUFACTURE IN ASIA

>>> What to look at today - 8th October 2015

Down+0.73% S&P+0.72% Nasdaq+0.90% Russell+1.57 Ibovespa+2.46% VIX 18.40(-5.10%)
US Market closed higher, bit stay below its 50D MA (1997). commodity-sensitive energy (+1.3%) and materials (+1.3%) paced the opening move higher, but both sectors surrendered a portion of their gains as the session wore on. The energy sector was up nearly 2.5% at the start, but retreated from its high as crude oil erased its intraday gain. The energy component settled lower by 1.5% at $47.81/bbl after sliding from its intraday high in reaction to the latest Energy Information Administration's inventory report, which showed a 3.07 million barrel build. IBB +2% helped sentiment. Volume were above average 21.15bil shares. US After Hours MG +15.9%, EDUC +9.0%, ZUMZ +3.8%, RELL +5.2%, CSII -19.7%, DB -6.9%, EXFO -1.0% following earnings/guidance, NVLS +16.2% (announced positive Phase 1b results for N91115, LL +10.9% (reached a settlement with the DOJ relate, JMG +8.4% (WSJ reporting Gannett (GCI) is close to acquiring the company for ~$300 mln), EMC: Dell said to be in talks to acquire all or parts of EMC +7.9% ORIG -12.6% (co announced an update on its fleet, DB -6.9% (co said it will recommend reduction or possible elimination of dividend following weak Q3...Asian indices are mixed in spite of the return of buyers in US markets, with technical ceiling of 2,000 in cash S&P. Shanghai Composite is back from a week-long break, rising nearly 4% on strength in property names. Recall mainland markets did not have a chance to respond to the latest PMI and property curbs easing data out of Beijing.Japan Machine Orders data are widely viewed as the "canary in the coalmine", containing evidence of spending intentions by Japanese companies. Today's figures showed unexpected 3rd straight month of sequential decline, leading the cabinet office to downgrade its assessment of the sector to "stalling"

Nikkei -0.89% Hang Seng -0.90% Shanghai +3.42%

Eur$ 1.1257 CNY 6.3513 JPY 119.82 EURCHF 1.0943 GBP 1.5315 BRL 3.8862 RUB$ 62.80 WTI $47.92 (+0.23%)

S&P -0.64% EuroStoxx +0.10% Dax -0.05% SMI +0.2%

Macro :
- German Exports Slump Most Since 2009 Recession in Sign of Risks
- Deutsche Bank Braces for $7 Billion Loss, May Scrap Dividend
- Man Who Called China’s Boom and Bust Says Use This Rally to Sell
- Hillary Clinton to Propose High-Frequency Trading Tax, Volcker Rule Changes
- Morgan Stanley Bond Team Faces the Question: Can Fed Avoid QE4?

Keep an eye on :
- AIR FP : Bombardier Still Open to C Series Deal With Airbus: Globe & Mail
- AF FP : Air France-KLM Sept. Passengers At 8.3M, Up 21%
- BT/ LN : Vodafone to Call for Breakup of BT: FT
- DBK GY : Deutsche Bank Sees 3Q Impairment of About EU5.8b --> -7% in after hours in the US, -9% in Europe
- DGE LN : Diageo focuses operations with £515m assets sale to Heineken - FT
- DGE LN : Diageo Being Pressed to Sell Guinness or Beer Business: NY Post
- EDCL LI : Eurasia Drilling Says Got M&A Proposal From Some Mgmt, Holders
- GXI GY : Gerresheimer 3Q Rev., Adj. Ebitda in Line; Keeps Forecast
- OHL SM : OHL Makes Offer to Buy Back 2020, 2022, 2023 Bonds
- SAN FP : Sanofi Says Company in Talks With Unions on 12 Sites in France
- SGO FP : Saint-Gobain to Sell Gallhoefer Dach Unit in Germany; No Terms
- SHP GY : Schaeffler Said to Narrow IPO Price Range to EU12.50-EU13
- SZU GY : Suedzucker 2Q Revenue Little Changed, Maintains Guidance
- TLW LN : Tullow Reaches Onal License Agreement With Gabon Govt.
- VOLVB SS : Volvo Cars Would Accept Autonomous Car Liability, CEO Says

>>> Europe : Brokers Upgrades & downgrades - 8th of October 2015

>>> Up
*APERAM RAISED TO BUY VS NEUTRAL AT GOLDMAN
*BBVA BANCO FRANCES RAISED TO BUY AT SANTANDER
*DSM RAISED TO BUY VS SELL AT ABN AMRO
*FIRSTGROUP RAISED TO NEUTRAL VS SELL AT UBS
*LUFTHANSA RAISED TO SECTOR PERFORM VS UNDERPERFORM AT RBC
*STANDARD CHARTERED RAISED TO BUY VS NEUTRAL AT GOLDMAN
*TULLOW OIL RAISED TO OVERWEIGHT AT JPMORGAN
*WINCOR NIXDORF RAISED TO BUY VS NEUTRAL AT UBS

>>> Down
*ATLAS COPCO CUT TO NEUTRAL VS OUTPERFORM AT EXANE
*COLOPLAST CUT TO SELL VS NEUTRAL AT UBS
*LUNDIN PETROLEUM CUT TO SELL VS NEUTRAL AT UBS
*MARKS & SPENCER CUT TO SELL VS HOLD AT PEEL HUNT
*MAUNA KEA TECHNOLOGIES CUT TO SELL VS BUY AT SOCGEN
*SKF CUT TO UNDERPERFORM VS NEUTRAL AT EXANE
*SOCO INTERNATIONAL CUT TO SELL VS NEUTRAL AT UBS
*SYNGENTA CUT TO HOLD AT BAADER-HELVEA (EARLIER)

>>> PT change


>>> Initiation
*ATLAS COPCO RATED NEW HOLD AT KEPLER CHEUVREUX
*C&W COMMUNICATIONS RATED NEW OUTPERFORM AT RBC; PT 76P
*JULIUS BAER RESUMED AT OUTPERFORM AT MEDIOBANCA; PT CHF53.6
*SANDVIK RESUMED AT BUY AT KEPLER CHEUVREUX; PT SEK91
*SKF RATED NEW BUY AT KEPLER CHEUVREUX
*SYNTHOMER RATED NEW BUY AT BERENBERG; PT 400P

>>> Call
>> Stock
*CAIXABANK ENTERS CONVICTION LIST FOR EUROPE BANKS AT MACQUARIE

>>> Asian Update

Asian Mid-session Update: Shanghai Composite returns from holiday with a broad rally; Japan Machine Orders disappoint

***Economic Data***
- (JP) JAPAN AUG MACHINE ORDERS M/M: -5.7% (3rd straight decline) V +2.3%E; Y/Y: -3.5% (first decline in 9 months) V +3.5%E
- (JP) JAPAN AUG CURRENT ACCOUNT BALANCE: ¥1.65T V ¥1.23TE; ADJUSTED CURRENT ACCOUNT: ¥1.59T V ¥1.29TE; TRADE BALANCE: -¥326B (biggest deficit in 7 months) V -¥395BE
- (NZ) New Zealand Sept Truckometer Heavy M/M: +1.7% v -0.5% prior
- (UK) UK SEPT RICS HOUSE PRICE BALANCE: 44% V 55%E

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.7%, S&P/ASX +0.6%, Kospi +0.1%, Shanghai Composite +3.8%, Hang Seng -0.4%, Dec S&P500 -0.4% at 1,980

***Commodities/Fixed Income***
- Dec gold -0.5% at $1,143/oz, Nov crude oil +0.5% at $48.06/brl, Dec copper -0.7% at $2.35/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.8 tonnes to 687.2 tonnes
- SLV: iShares Silver Trust ETF daily holdings fall to 9,802 tonnes from 9,855 tonnes (lowest level since Dec 2012)
- JGB: Japan's MOF sells 30-year JGB sells ¥728B in 1.4% 30-year bonds; Avg yield: 1.350% v 1.412% prior; Bid to cover: 3.33x v 3.11x prior
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3505 v 6.3613 prior setting; strongest Yuan setting since Aug 12th
- (CN) PBoC to inject CNY120B in 7-day reverse repos (28th consecutive injection)
- (JP) Japan investors net sold ¥1.26T in foreign bonds v bought ¥1.04T in prior week; Foreign investors sold net ¥177B in Japan stocks v sold ¥192B in prior week

***Market Focal Points/FX***
- Asian indices are mixed in spite of the return of buyers in US markets, with technical ceiling of 2,000 in cash S&P on Wednesday deterring a follow-through rally in the region. Nikkei is one of the bigger underperformers as USD/JPY sold off about 25pips from the highs below 119.90. Shanghai Composite is back from a week-long break, rising nearly 4% on strength in property names. Recall mainland markets did not have a chance to respond to the latest PMI and property curbs easing data out of Beijing. Macau names are also bid on speculation of more support from the govt. US equity futures are under pressure, with S&P e-minis down about 0.5% below 1,980. In other USD majors, AUD/USD and NZD/USD are down about 40pips from their highs, falling below 0.7170 and 0.6590 respectively.

- Commentary out of China's NDRC official estimated 2015 fixed asset investment growth of about 14%, which is below 15% official target. Side effects of Yuan devaluation - investment outflows - have haunted China policymakers, and PBoC has set Yuan midpoint at its strongest level since August upon return to trade. PBoC Dep Gov Yi separately noted China is looking to make currency policy more market oriented, and will continue to allow currency to move with market.

- Japan Machine Orders data are widely viewed as the "canary in the coalmine", containing evidence of spending intentions by Japanese companies. Today's figures showed unexpected 3rd straight month of sequential decline, leading the cabinet office to downgrade its assessment of the sector to "stalling".

***Equities***
Extended Session US equities / ADRs:
- JMG: Gannett confirms to acquire Journal Media Group for $280M; +43.1% afterhours
- NVLS: Announces positive Phase 1b results for N91115 in patients with cystic fibrosis and plans to initiate Phase 2 trial; +16.2% afterhours
- MG: Reports Q1 $0.23 v $0.10e, R$179.9M v $165Me; Authorizes repurchase of $50M (12% of market cap) in common stock; +16.0% afterhours
- LL: Announces settlement related to Lacey Act investigation; agrees to pay $10M in fines (unrelated to CARB allegations raised by 60 Minutes); +9.5% afterhours
- EMC: Dell said to be in talks to acquire all or parts of EMC - financial press; +7.9% afterhours
- ZUMZ: Reports Sept SSS -1.8%; +3.8% afterhours
- DB: Guides Q3 IBIT loss at €6B; cites impairment of goodwill and intangibles; may eliminate dividend for FY15; -6.3% afterhours
- ORIG: Announces Fleet Update; -12.6% afterhours
- CSII: Guides Q1 -$0.43 to -$0.41 v -$0.39e, R$43.9M v $49.2Me; -15.0% afterhours

Post Afterhours session:
- FCAU: UAW and Fiat Chrysler reach agreement, averting a strike - financial press

Notable movers by sector:
- Consumer discretionary: Skyworth Digital 751.HK +3.3% (Sept data); Aeon Co 8267.JP -5.5% (H1 result); Seiko Holdings 8050.JP -4.5% (H1 result speculation); Hokuetsu Kishu Paper 3865.JP +2.3% (H1 result speculation); FamilyMart Co 8028.JP -2.2% (H1 result, to issue formal merger agreement soon)
- Financials: China Vanke 000002.CN +3.5%, Poly Real Estate Group 600048.CN +4.0% (China lowers down payment); ANZ Bank ANZ.AU +1.3%, Macquarie Group MQG.AU +1.1% (Macquarie to acquire ANZ portfolio); Bank of Queensland BOQ.AU +7.8% (FY15 result)
- Industrials: Geely Automobile Holdings 175.HK +1.8% (Sept data); Shuangliang Eco-Energy Systems 600481.CN +5.1%(contracts with Siemens); Daikin Industries 6367.JP +0.8% (H1 earnings speculation)
- Technology: IMAX China 1970.HK +6.9% (IPO debut); TPK Holding 3673.TW -2.5% (Sept result)
- Materials: Bluescope Steel BSL.AU +4.6% (to cut jobs); Mitsui Mining & Smelting Co.5706.JP +2.1% (H1 earnings speculation); Ramelius Resources RMS.AU +2.6% (Q1 result)
- Healthcare: Jiangsu Hengrui Medicine 600276.CN +5.0%, Shanghai Fosun Pharmaceutical Group 600196.CN +10.0% (momentum for wining Nobel Prize for medicine)
- Utilities: CLP Holdings 2.HK +0.8% (asset sales)

FT : Vodafone joins calls for BT to be broken up

Vodafone joins calls for BT to be broken up

Vodafone will add its voice to mounting calls for the break-up of BT, as part of wider market reforms ahead of a regulatory review of the UK communications industry.
Ofcom, the telecoms regulator, will on Thursday close a consultation into an overarching review of the sector that will set the regulatory framework for the next 10 years.

The future structure of BT has become a focus because of complaints over its role in providing broadband services to homes and to rivals that rely on its national network to supply their own customers with broadband.
In a submission to Ofcom, Vodafone will argue that BT generated £6.5bn in “excessive profits” in the past 10 years from its Openreach division, which controls the national network.
Vodafone believes that these profits give BT an advantage over rivals which also offer broadband services.
Openreach is regulated to provide access to all groups including BT’s retail business on the same terms.
But Vodafone wants Ofcom to push for BT to be split entirely from Openreach. It argues this would create a standalone infrastructure business that would be incentivised to roll out the best broadband networks for all retail internet providers.
“We want to see a separate Openreach whose business is selling network connectivity and access for all,” said Matthew Braovac, head of regulatory affairs at Vodafone. He added that this would also help give his company access to the national network on better wholesale terms.
Mr Braovac said that access to national fixed-line networks in countries such as Spain was easier and less expensive, leading to innovative products, cheaper cost for consumers and quicker repairs for faulty lines.
BT said the UK was the “most digitally advanced nation in the G20”, in part owing to its “multibillion-pound investment in broadband”. It labelled Vodafone’s claims “misleading” and said it had ambitious plans for the next decade that will take the UK from “a superfast nation to an ultrafast one”.
Sky and TalkTalk will make similar submissions to Ofcom for BT to be separated from its national network, which they argue is needed to increase investment in faster fibre services in the UK for the next generation of online services.
Ofcom has acknowledged that a full separation of BT is among options being considered.
However, Ed Vaizey, the UK’s minister for the digital economy, has come out in support for the existing structure. He highlighted the difficulties in separating Openreach last month in an interview with the Financial Times, and pointed out there were commercial interests behind the calls by BT’s rivals for a break-up of the group.

>>> US After Hours Summary: MG +15.9%, EDUC +9.0%, ZUMZ +3.8%, R

After Hours Summary: MG +15.9%, EDUC +9.0%, ZUMZ +3.8%, RELL +5.2%, CSII -19.7%, DB -6.9%, EXFO -1.0% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: MG +15.9%, EDUC +9.0%, ZUMZ +3.8%, RELL +5.2%, RECN +0.6%

Companies trading higher in after hours in reaction to news: NVLS +16.2% (announced positive Phase 1b results for N91115 in patients with Cystic Fibrosis; plans to initiate Phase 2 Trial in the 4Q15), LL +10.9% (reached a settlement with the DOJ related to compliance with the Lacey Act, regarding the sourcing of timber by foreign suppliers; settlement unrelated to current California Air Resources Board related claims around certain Lumber Liquidators products), JMG +8.4% (WSJ reporting Gannett (GCI) is close to acquiring the company for ~$300 mln), BTX +6.3% (OncoCyte subsidiary filed Registration Statement with the SEC in connection with co's planned distribution OncoCyte common stock to holders of BioTime), MBLX +4.0% (entered into a $20 mln common stock purchase agreement with Aspire Capital Fund), INTL +3.1% (to replace AMSG in the S&P SmallCap 600), SLRC +1.7% (announced a $30 mln repurchase program), AMSG +1.2% (to replace CNW in the S&P MidCap 400), VRTX +1.0% (co's sNDA for the use of KALYDECO in people with cystic fibrosis ages 2 and older accepted by the FDA), RBA +1.0% (reported September gross auction proceeds rose $17 mln, or 3.8% from prior year on a reported basis; Q3 gross auction proceeds rose $8 mln, or 0.9% from prior year on a reported basis)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: CSII -19.7%, DB -6.9%, EXFO -1.0%

Companies trading lower in after hours in reaction to news: ORIG -12.6% (co announced an update on its fleet, stating 'the market continues to remain challenging due to the massive spending cuts initiated by the oil companies'), PIP -9.9% (announced oral arguments in SIGA's appeal and PharmAthene's cross-appeal have concluded), DB -6.9% (co said it will recommend reduction or possible elimination of dividend following weak Q3), NEWT -3.4% (to launch a public offering of 2 mln shares of common stock), SMG -1.1% (priced $400 mln of 6.000% senior notes due 2023)