Asia:
- BoJ Gov Kuroda: Possible changes in risk appetite and risk profile of banks amid low-interest rate environment is an issue central banks are highly attentive too
- Japan Oct Trade Balance: -¥449.3B v -¥70Be; Adj Trade Balance: -¥302.7B v -¥48.3Be
Europe:
- PM May: Getting rid of me would risk delaying Brexit, not make talks easier; a delay could also see people try to stop it from happening; this is the right deal in the national interest (Note: 42 Tory MPs have submited letters of assurance to not support PM May; 25 have publicly said they have sent no confidence letters and 17 privately; leaves 6 votes shy of triggering a no confidence vote
- Graham Brady: Had not received the 48 MPs’ letters needed to trigger a confidence vote that could see Theresa May removed as Tory leader. Suggested some fellow Tories had lied about sending in their letters. “Very likely” the prime minister would survive a vote of no confidence if there was one
- UK PM May Political spokesman: PM May names Stephen Barclay as new Brexit Secretary; Role to be different to that held by former Brexit Minister Raab
- EU Brexit Chief Negotiator Barnier has floated the idea of extending Brexit transition by 2 years to end of 2022 – Delaying Brexit will cost UK £10B. A year-long extension would cost about £10bn on top of the £39BB divorce bill already agreed
- French PM Philippe: Won’t Back Down on Gasoline Taxes. Did not impose fuel taxes for the pleasure of annoying the French, but because we want to tax carbon more than labor,”
- SNB board member Maechler reiterated domestic monetary policy was appropriate. Financial markets are fragile with sources of risk including Brexit, Italy and the trade dispute between the United States and China. Reiterated stance that level of the CHF currency (Swiss franc) remained high
- Italy Dep PM De Maio Ready for talks with the EU Commission the country’s budget plan for next year. Might agree to some budget plan cuts but wants to keep the reforms in place
- ECB’s Villeroy (France): Asset purchases probably to end in Dec; outlook for Euro area inflation is firmer
Americas:
- Fed’s Harker (non voter, moderate): not convinced Dec rate hike is prudent; Fed has time to move slowly toward 3% rate – CIA said to have concluded that Saudi Crown Prince Mohammed bin Salman ordered the killing of journalist Khashoggi
Macro
- (UK) United Kingdom: The Prime Minister Theresa May still faces the possibility of a no confidence vote following a raft of senior level resignations from the government over her Brexit plan. The general consensus seem to expect she would survive a vote as the majority of Tory Party MPs do not want the distraction of a leadership contest as such a critical juncture in the discussions. The House of Commons will be voting on the agreement on December 10. Even if the PM stays in her post, it remains highly uncertain that the agreememt will pass a parliamentary vote.
- (EU) EU : The Eurozone current account surplus narrowed m/m to €16.9 B in September, from € 24.3B. This reflected mostly a marked narrowing in the goods surplus. The surplus remains largely due to Germany and data will add to ongoing criticism that the German economy remains unbalanced. The financial account though showed that a marked decline in the foreign portfolio investments in the Eurozone, which was just €98B in the 12 months to September, versus €267B y/y. Not a positive picture for investment in the Eurozone economy at all.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.2% at 358.5, FTSE +0.3% at 7037, DAX +0.1% at 11349, CAC-40 +0.1% at 5031, IBEX-35 +0.2% at 9075, FTSE MIB +0.6% at 18990, SMI -0.2% at 8894, S&P 500 Futures -0.1%]
- Market Focal Points/Key Themes: European indices trade mostly higher across the board, coming off the morning highs following mixed US futures on a quieter day on the Macro front. On the corporate front, shares of Renault trades sharply lower approaching 3 year lows after reports that Chairman of the Renault-Nissan-Mitsubishi alliance Carlos Ghosn has been arrested for alleged financial violations. Elsewhere shares of Diploma, trades higher on Earnings; On the M&A front Lotte 24 rising on a takeover offer from ZEAL Network, Technicolor falls after a review of strategic options, ABB continues to rise after further press reports regarding the potential sale of its Power Grid business. In the US Apple shares to be in focus after further press reports regarding production cuts on weaker Iphone demand. Looking ahead notable earners include JD.com, Leju and Spectrum Brands.
Equities
- Consumer discretionary: Lotto24 [LO24.DE] +7.5%, ZEAL Network [TIM.DE] -9% (ZEAL Network announces public takeover offer for Lotto24; ZEAL Network adjusts guidance), Technicolor [TCH.FR] -14% (said to consider strategic options including a potential sale), Mears Group [MER.UK] -6.5%, Mitie Group [MTO.UK] +2.5% (Mears Group to acquire maintenance services business from Mitie Group; announces share placing to raise equivalent amount)
- Materials: Arkema [AKE.FR] -3% (analyst action)
- Financials: Diploma PLC [DPLM.UK] +2.5% (earnings), Danske Bank [DANSKE.DK] -0.5% (reportedly whistle-blower holds talks with U.S. authorities; Danish FSA comments on case), Banca Carige [CRGI.IT] +12% (CEO: not planning further assets sales), ABN AMRO Holding [ABN.NL] +2% (company’s managers said to have sent warning letter to SPVY board chairman)
- Healthcare: Novartis [NOVN.CH] +1% (FDA approves Novartis drug Promacta for first-line SAA and grants Breakthrough Therapy designation for additional new indication)
- Industrials: Renault [RNO.FR] -13.5% (reportedly Chairman of Renault-Nissan-Mitsubishi Alliance Ghosn to be arrested for alleged financial trading violations), ABB Ltd [ABBN.CH] +1.5% (reportedly in talks with China state Grid, Mitsubishi and Hitachi to sell its Power Grid Business)
- Telecom: Telecom Italia [TIT.IT] +4.5% (named Luigi Gubitosi new CEO; Italian govt to speed-up Telecom Italia and Open Fiber fixed network decree)
Speakers
- UK Business Min Clark: Longer Brexit transition period could occur at out request
- EU Parliament president Tajani (Italy): Would be a miracle if the current Italian govt last until May
- Italy Gov official Buffagni: Key points of 2019 draft budget would not change
- Italy Dep PM Salvini: Could oppose Euro Zone budget plan. Franco-German Eurozone reform plans ‘will never have our backifing if it seemed they damage Italy
- ECB’s Nouy (SSM chief): Stress test had not shown the need for recapitalization
- Bank of Portugal Gov: Country should increase its productivity to help sustain economic growth
- Spain Govt said not to rule out a snap election in May (**Reminder: Sanchez came into power after Spain Parliament passed its no-confidence motion against then PM Rajoy (as expected) back on Jun 1st)
- Russia Econ Min Oreshkin stated that saw the risks of 2018 inflation exceeding forecast
- Russia Energy Min Novak: Planning on signing agreement with OPEC on output in Dec; need to make a balanced decision on production Various European Finance Ministers comment ahead of Eurogroup meeting
- Eurogroup chief Centono: Italy was not on the agenda for today’s meeting; it was an issue for the EU Commission. Franco-German Euro Zone budget proposal could be a breakthrough
- German Fin Min Scholz stated that banking union decisions to come in Dec. Chance for an agreement on a Euro-zone budget has increased
- Netherlands Fin Min Hoekstra: All were worried about the existing situation in Italy
- Austria Fin Min Loeger stated that was concerned that Italy had not changed its stance on the 2019 budget
Currencies/Fixed Income
- The USD was consolidating its losses after the broad sell-off on Friday following Fed global growth concerns
- GBP currency was steady as PM May held onto power for the time being after reports circulated that 48 letters necessary to put a confidence vote into motion had yet to materialize. GBP EU chief negotiator Michel Barnier offered the UK an extension to the transition period
- EUR/USD was holding above the 1.14 level in quiet trading but Italy could remain a headwind for the pair. EU Commission to publish opinion on Italy 2019 fiscal budget and could take the first step to discipline Italy over its 2019 budget in the excessive deficit procedure.
- Goldman Sachs put out its 2019 macro outlook which expected a broad USD decline to begin in 2019 as the US growth boom moderated its pace of expansion compared to the rest of the world. Euro had room for appreciation, but only on a resolution or containment of the budget standoff in Italy—until then, risks were skewed to the downside. Revised its long-standing bearish view on the Yen due to slower US growth, a more challenging risk asset environment, and possible policy tweaks by the Bank of Japan
Economic Data
- (EU) Euro Zone Sept Current Account (Seasonally Adj): €16.9B v €24.3B prior
- (CH) Swiss Weekly Total Sight Deposits (CHF): 577.3B v 577.2B prior; Domestic Sight Deposits: 474.5B v 475.6B prior
- (PL) Poland Oct Employment M/M: 0.0% v 0.0%e; Y/Y: 3.2% v 3.2%e
- (PL) Poland Oct Average Gross Wages M/M: 3.1% v 2.2%e; Y/Y: 7.6% v 6.7%e
- (GR) Greece Sept Current Account Balance: €0.6B v €1.6B prior
- (IT) Italy Sept Current Account Balance: €3.2B v €5.0B prior
- (EU) Euro Zone Sept Construction Output M/M: +2.0% v -0.6% prior; Y/Y: 4.6% v 2.2% prior
Fixed Income Issuance
- (SK) Slovakia Debt Agency (Ardal) sold total €150.5M in 2028 and 2029 Bonds
Looking Ahead
- (SA) Saudi Arabia Sept Crude Oil Exports: JODI
- 05:25 (BR) Brazil Central Bank Weekly Economists Survey
- 05:30 (SE) Sweden Central bank (Riksbank) Jochnick
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-2.0B in 6-month Bills
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €3.0-3.4B in 2024, 2028, 2034 and 2057 OLO Bonds
- 06:00 (RO) Romania to sell Bonds
- 06:00 (IL) Israel to sell Bonds
- 06:10 (UK) PM May at event
- 06:30 (CL) Chile Q3 GDP Q/Q: 0.4%e v 0.7% prior; Y/Y: 2.9%e v 5.3% prior
- 06:30 (CL) Chile Q3 Current Account Balance: -$3.2Be v -$1.9B prior
- 06:45 (US) Daily Libor Fixing
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions (bills on Tues)
- 08:10 (UK) Baltic Dry Bulk Index
- 08:50 (FR) France Debt Agency (AFT) to sell combined €3.9-5.1B in 3-month, 6-month and 12-month BTF Bills
- 09:00 (NO) Norway Central Bank (Norges) Bank Dep Gov Nicolaisen in Oslo
- 09:30 (EU) ECB announces Covered-Bond Purchases
- 10:00 (US) Nov NAHB Housing Market Index: 67e v 68 prior
- 10:45 (US) Fed’s Willaims (moderate, voter) – 16:00 (US) Weekly crop report
