LIVE MARKETS-Brexit: Face it, you have no edge

* STOXX hits fresh 2-week low, down 1.2 pct

* UK ministers quit in severe blow to PM May

* Brexit drama offsets optimism over trade war

Nov 15 - Welcome to the home for real time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to

share your thoughts on market moves: rm://josephine.mason.thomsonreuters.com@reuters.net

BREXIT: FACE IT, YOU HAVE NO EDGE (1537 GMT)

We happened to have UBS Wealth Management's Brexit specialist at our Reuters Global

Investment Outlook Summit this morning just a few minutes after Raab's resignation.

One of Dean Turner's key conviction is that there is no way investors can have "an edge" to

trade on the drama unfolding given the unpredictable nature of this crisis.

"It’s very difficult to believe you’ve got an edge over anyone else in this situation. Who

has got insight into how the Tory Party is going to react? We have views, and I’m sure other

people in the market have views. But no one has that edge. So taking active positions is risky."

As an economist, it's possible to try to anticipate how an economic agent will respond to a

financial incentive. But in the case of Brexit "it's an emotive issue," Turner said.

There's also a case to remember how many investors got burnt by the referendum. Fool me

once...

Thinking about it, there's probably a case to draw a parallel between Brexit speculation and

calling the weather in three months.

More about the chaos theory here: https://reut.rs/2Q1pRcX (Edward Lorenz, father of chaos

theory, dead at 90)

Butterfly effect:

(Julien Ponthus, Jamie McGeever and Karin Strohecker)

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BREXIT SCENARIOS FOR BUSY PEOPLE (1442 GMT)

If you haven't had time to go through the plethora of views on what the multiple

resignations from UK PM Theresa May's cabinet mean, here's a recap from two top brokers of

possible scenarios, courtesy of a forex trader.

*** Deutsche Bank (IOB: 0H7D.IL - news) 's Oliver Harvey:

* Fail and try again, ultimately goes through on second attempt but GBP lower in the

meantime (40

percent)

* May resigns/is toppled - highly negative as Tory leadership contest. Market to price no

deal (20

percent)

* The EEA pivot - joint Labor/Tory deal (20 percent)

* May calls new referendum (20 percent)

*** Nomura's Jordan Rochester:

"I would put it in this order of likelihood. I am not even going to try and put percentages on

it yet – maybe when the dust has settled. But the order of likelihood I see is:

* This deal somehow trudges on through parliament

* Second referendum

* General election

* Hard Brexit"

(Danilo Masoni)

*****

DOOM AND GLOOM FOR FUND MANAGERS (1432 GMT)

It's exactly what fund managers and many European banks don't want to hear but the rise of

ETFs (Shenzhen: 395013.SZ - news) and passive management is not going away, quite on the contrary.

Moody's says that in Europe, it expects "the wider passive fund sector, including tracker

funds, to grow to 22% of total assets under management (AUM) from 14% at year end-2017 in our

base case scenario, and to 27% in our fast case scenario".

"In these scenarios, ETFs share of total fund AUM would rise to close to 11% and 14%

respectively, from 6.2% at the end of 2017", the rating agency adds.

Moody's notes that traditional European banks, which control a big chunk of the retail

market will be less successful in selling their own costly funds and prevent the rise of ETFs on

the old continent.

"Asset managers with passive capabilities, such as BlackRock (Sao Paolo: BLAK34.SA - news) , DWS and Lyxor, will benefit

from this growth phase and continue to grow their market share", Moody's believes.

It's true that the last few years were not exactly a showcase for stock pickers who

struggled to keep up with benchmarks, particularly in the U.S. where just a handful of stocks

such as the FAANGS drove indexes higher.

That said, some stock pickers probably needn't worry.

Here's a link to Moody's press release: https://bit.ly/2Pz6WqI

(Julien Ponthus)

*****

INTRODUCING OUR VERY OWN INTERACTIVE "ROLLING BEAR MARKET" (1234 GMT)

Our graphics team has just put online an interactive "Rolling bear market" chart, which

shows you both how many stocks are in bear territory within the world's main benchmarks and

whether these indexes are themselves down 20% from their peak.

As you can see, on the surface, the performance of global stocks overall does not appear

that troubling, but a closer look at the share of constituents in bear markets is a totally

different story.

Here's the link to the "Rolling bear market": https://tmsnrt.rs/2QCzyvm

Here's another link to our Oct (Shenzhen: 000069.SZ - news) . 24 analysis on how bears are taking over world stock markets

(Lea Desrayaud, Ritvik Carvalho and Julien Ponthus)

*****

DON'T FORGET THE BREXIT RESILIENT STOCKS! (1223 GMT)

Volumes and sell orders are on the rise as the Brexit drama unfolds but there are a handful

of UK stocks that are surviving quite decently, mostly because they are exporters and benefit

from a weaker pound or because their business could benefit from a disorderly Brexit.

Here is Goldman Sachs (NYSE: GS-PB - news) ' so-called "UK8" basket of big international stocks that get a boost

when the sterling falls.

And here is the Societe Generale (Swiss: 519928.SW - news) 's "Brexit+" plus basket of Brexit resilient companies:

"People are dumping stocks geared to the UK's domestic economy like homebuilders, banks like

RBS (LSE: RBS.L - news) and LLoyds and real estate and of course they're buying UK exporters," said Stephane Ekolo,

equity strategist at TFS Derivatives.

Our latest update from the British capital: British PM May battles to save Brexit deal as

ministers quit

(Danilo Masoni)

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BREXIT: "WE ARE EXPERIENCING HUGE SELL ORDERS" (1136 GMT)

"We are experiencing huge sell orders and the sterling-dollar pair is in free fall for now",

Think Market analyst Naeem Aslam said a bit more than an hour ago after the resignation of

Brexit minister Raab gave cable a kick in the face.

Aslam took the view that "The Brexit deal is dead in the water" and that "this could be the

end of the road for May" while other analysts witnessed their clients' rush for answers.

Nomura's Brexit specialist said "huge numbers of questions from clients this morning show

most are in scenario planning mode".

So what were investors doing apart from witnessing sterling make a spectacular fall in what

Oanda's Craig Erlam called a "crazy start to trading" which is likely to last all day?

"Short term traders looking to jump on the big moves and ride them for smaller short term

gains have been busy, and will be the ones who take the big risks but could ultimately be the

only ones willing to trade the currency", said James Hughes from AxiTrader.

For IG's Chris Beauchamp, who said it was just "one of those morning" there is a case to say

that how this crisis unfolds is anybody's guess.

"There are, at present, too many moving parts to guess whether the deal can still get

through".

(Julien Ponthus)

*****

MARKET GYRATES ON BREXIT DRAMA, STOXX AT 2-WEEK LOW (1029 GMT)

The positive open we've seen here in Europe has been short-lived and now all regional

benchmarks are trading in the red after the resignation of Brexit Minister Raab has clearly made

even more difficult an orderly exit of the country from the European Union.

The STOXX 600 has just hit a two-week low with UK domestic stocks feeling most of

the pain, as sterling comes under fresh pressure.

Here are a couple of takes:

"This departure could put at risk the Brexit deal and traders are selling the British

currency due to growing uncertainty about the future of the UK," says Carlo Alberto De Casa,

chief analyst at ActivTrades in London.

"Raab resigning just now changes the ballgame. Hard to be optimistic on GBP in the short

term. But equally Theresa May has survived much worse. It’s whether we get a flood of

resignations to follow," Nomura analysts tell clients in an email.

The STOXX 600 is now down 0.6 percent while political uncertainty is penalising stocks in UK

companies with high domestic exposure, offsetting losses in exporters and weighing even on the

FTSE 100, struggling to remain in positive territory.

And here's a snapshot:

(Danilo Masoni)

*****

OPENING SNAPSHOT: MINERS LEAD, AUTOS LAG (0831 GMT)

A strong rebound in mining stocks is helping drive European stocks up this morning with the

STOXX up 0.4 percent and DAX up 0.7 percent.

Hopes that a trade war between China and the U.S. could be nearing endgame after China sent

a written response to U.S. trade reform demands are likely helping boost the mining sector

up 1.8 percent after a sharp fall yesterday on growth worries. A weaker dollar is likely

also supporting the sector.

Autos stocks meanwhile are the worst-performing, down 0.4 percent after China poured

cold water on hopes for auto tax cuts there.

AMS (IOB: 0QWC.IL - news) fell as much as 8 percent at the open after it cut its revenue guidance,

reigniting fears around the semiconductor sector.

On the UK front, newly-listed carmaker Aston Martin reported strong Q3 profit and

said it expected full-year sales to come in at the top end of expectations.

Its shares opened up 2.7 percent but quickly turned negative, now down 7.6 percent and set

for their worst ever daily fall.

Here are the top movers:

(Helen Reid)

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EUROPEAN FUTURES UP, BUT BEWARE BAD NEWS FROM AUTOS, CHIPMAKERS AND PERSIL MAKER (0719 GMT)

European futures are higher, defying earlier calls for another drop by financial

spreadbetters as renewed optimism over a possible end to the prolonged trade spat between the

United States and China appeared to offset worries over Rome's showdown with Brussels and May's

Brexit drama.

Some negative headlines may curb the gains though: China has poured cold water on industry

hopes for a cut in auto purchase taxes, in Austria AMS cut its sales forecast, the latest chip

supplier hurt by Apple (NasdaqGS: AAPL - news) 's weak sales forecast for the upcoming holiday season, and Henkel (LSE: 0IZ8.L - news) shares

are indicated lower after the maker of Persil detergent and Loctite adhesives reported a

slowdown in sales.

AMS shares are seen down 10 percent at the open. They have already lost almost a third of

their market cap this month, on track for their worst month in a decade.

Here are this morning's headlines to watch:

Austria's AMS becomes latest Apple supplier to slash forecast

China state planner douses hopes for auto tax cuts, tells sector to buckle up

Henkel sales growth slows as adhesives cool

Hugo Boss (IOB: 0Q8F.IL - news) seeks sales boost from speed, online, Asia

French group Bouygues (LSE: 0HAN.L - news) maintains toned-down outlook as 9-month profits fall

NN Group's Q3 profit rises on improving Dutch market

European passenger car sales slump 7.4 pct in October

Global regulators hold off designating 'too big to fail' insurers

Linde AG (Xetra: 648300 - news) expects revenue and earnings to be at top end of forecast

Antofagasta (Other OTC: ANFGF - news) approves $1.3 bln Los Pelambres copper mine expansion

K+S (Swiss: SDF-EUR.SW - news) cuts outlook after dry weather weighs on production

SKF (LSE: 0NWW.L - news) to increase cost focus against an uncertain macro backdrop

Dutch insurer NN Group's Q3 core profit beats estimates with 7 pct rise

UK forced to accelerate planned reform to gambling regulations

Ericsson (Hanover: ERCB.HA - news) doesn't see sales lift after security concerns hit Chinese rivals

Vodafone may replicate elements of UK tower sharing venture elsewhere

Britain's Lloyds agrees settlement with HBOS whistleblower

BMW (EUREX: BMWE.EX - news) , Vodafone, Ericsson urge EU to consider 5G car standard

(Josephine Mason)

*****

MORNING CALL: POLITICS CONTINUE TO DOMINATE

Good morning and welcome to Live Markets.

European stocks are called to open lower today even after Asian equities rose overnight on

news that China has delivered a written response to U.S. trade demands.

Politics and falling oil prices continue to overshadow, with Brexit drama dominating the UK

market and Italy's deepening budget crisis and showdown with the EU Commission driving bond

yields up and bank stocks down.

"While (Theresa May was able to achieve what she called collective approval from her cabinet

to accept the deal, the gritted teeth consensus could well be tested in the coming days," says

Michael Hewson, chief market analyst at CMC Markets UK.

Financial spreadbetters call the DAX 30-35 points lower, the CAC40 is expected to open 11-15

points lower and the FTSE 100 will be flat to down 28 points, according to IG (Frankfurt: A0EARV - news) and CMC Markets (LSE: CMCX.L - news)

UK.

(Josephine Mason)

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