* Events we are watching
While we await further data from the tail end of 3Q earnings next week, we are also keenly focused on two GS events:
1) the GS China Conference 2015 (Nov. 11/12) will include topical panels on the economic outlook and fiscal reform; and
2) on a related note, the 4th annual GS Natural Resources conference takes place in London on Nov. 11/12, during which we will hear from 40 companies and a variety of industry experts on the key themes of the moment,
including some topical insights into the gas market with a panel discussion on Nov. 11.
* Gas glut gloom
This week, in Towards a new LNG equilibrium, our commodities team paints a negative picture for the gas price outlook, as new liquefaction projects in Australia and the US drive oversupply. Our utilities team expects this weakness in gas to drive a sharp decline in power prices across a number of European countries and, as a result, added SSE to our Conviction List (Sell) and downgraded both Enel & PPC to Sell (see Reflecting large gas price
downside). Accordingly, our oil & gas team reiterates its Sell ratings on Statoil & Gazprom, as weaker gas prices result in lower estimates for both.
With a weaker gas price leading to lower consumer energy prices for consumers, we see this as a further tailwind to the recovery in European household discretionary spending and, as such, positive for EasyJet and Europcar (both
CL Buy). Lending survey results for all loan types in Europe weakened in 3Q vs. the previous quarter, although they remain in positive territory, supporting moderate European recovery; residential & consumer lending remain the
relative bright spots. Finally, this week we saw strong KPIs from European Telco incumbents TDC, DT & Orange (all CL Buy).