Notes/Observations
- Major European manufacturing PMI data disappoint but hold onto expansion territory (France, Germany and Euro Zone all below expectations); data flags growth concerns in region
- German Q3 Final GDP data confirmed 1st quarterly contraction since Q2 2014
- UK PM May faces fresh battles to save Brexit strategy Tory rebels demand rethink while EU states express concerns over fishing and Gibraltar;
- US returns from Thanksgiving holiday; focus turn to shopping season (Black Friday and Cyber Monday) to confirm the US consumer is still supporting the economy
- US ratcheting up a campaign against Huawei Technologies
Asia:
- US government said to ask its foreign allies to stop using Huawei [HUAWEI.CN]
- China Commerce Ministry (MOFCOM) said it is deeply concerned about the US new Section 301 report update. Rejected fresh US accusations of perpetuating “unfair” trade practices and urged Washington to stop making provocations. China was evaluating the potential impact from the US proposal to increase technology export controls
Brexit:
- EU-UK declaration on future relationship draft said to foresee equivalence for UK banks. EU-UK to commit to deep customs cooperation and build on single customs territory. EU-UK State determination to replace backstop in the future. EU to recognize UK independent trade policy and EU-UK sought to ratify fisheries agreement by July 2020 (Note: Next step was for the 27 EU member states to decide if they accept it before leaders’ summit on Sunday. No final deal could be agreed without approval of the EU council on Sunday, Nov 25th)
- PM May Statement: To do everything possible in 72 hours ahead to deliver this deal. political deal declaration ended the free movement; protected the union; included reference to independent trade policy. Absolutely clear to Spanish PM that Gibraltar’s British sovereignty must be protected
- PM May political spokesperson: PM would be seeking to persuade members of her Tory party and the DUP on merits of the Brexit deal; believed she could win the vote in parliament on Brexit. UK had no further demands in Brexit negotiations ahead of Sunday EU summit. Impossible to determine at the moment the cost of any extension to Brexit transition period
- Spain PM Sanchez: Spain would veto Brexit deal if there were no changes. After conversation with UK PM May, our positions remained far away.
Europe:
- ECB’s Praet (Belgium, chief economist): Too soon to decide on a new TLTRO now, or to discuss adjust key interest rates
- BoE’s Saunders reiterated monetary policy implications of different Brexit outcomes could go either way; policy stance would need to return to something like Neutral rather earlier than yield curve implied in event of ‘smooth’ Brexit
- Germany Fin Min Scholz said not threatened with new Euro crisis due to Italy
Americas:
- US President Trump: Very prepared’ for talks w China President Xi at G20 Meeting. Reiterated China wanted to make a deal on trade ‘very badly’ because of tariffs, if we could make a deal we would
Energy:
- Saudi Oil Min Al-Falih: Saudis would respond to market demand for oil and l not flood oil market with supply. Nov oil output now above 10.7Mb/d. Saw demand for oil in Jan being lower and would respond to cool off anxiety
Macro
- (DE) Germany: Q3 GDP was confirmed at -0.2% q/q impacted by a marked contraction in exports, which were hit not just by global trade tensions, but new global emission tests in the auto sector. The main surprise in the numbers was the weakness in consumption, which also contracted -0.3% q/q.
- (EU) Eurozone: The flash Eurozone manufacturing PMI fell to a 65 month low, services PMI fell back to a 25-month low and the composite reading a 47 month low. The weakness in the flash readings reflects slowing order books growth and a drop in exports. A new index for export orders across manufacturing and services sectors that was released for the first time this month, was actually at lowest level in the four-year history . The backlog of orders picked up only marginally, which means capacity constraints are easing. While the headline numbers are disappointing, the backlog of work suggests that this is still a slowdown in growth, rather than a contraction and that capacity utilization remains elevated. So the data won’t likely impact the ECB’s decision to phase out of QE in December.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.4% at 353.9, FTSE +0.3% at 6980, DAX +0.5% at 11192, CAC-40 +0.5% at 4963, IBEX-35 +0.4% at 8945, FTSE MIB +0.8% at 18753, SMI 0% at 8787, S&P 500 Futures -0.2%]
- Market Focal Points/Key Themes: European Indices trade higher across the board despite weaker prelim PMI readings out of Europe. After the EU-UK draft agreement yesterday, traders await further developments on Brexit talks as uncertainty continues to exist. On the corporate front Flybe outperforms after talks of bid interest from Virgin Atlantic. On the earnings front Parrot falls almost 50% after a sharp decline in profits and Revenue; Rockwool, Interserve, CFE among other names lower on earnings while GEA Group declines after cutting its outlook. Elsewhere Ibstock trades higher after announcing the divestment of its subsidiary to Brickworks as well as affirming its outlook. Looking ahead earnings on docket include Diana Containerships and StealthGas on a shortened trading day in the US.
Equities
- Consumer discretionary: Flybe Group [FLYB.UK] +25% (Virgin Atlantic said to be interested in acquiring Flybe), Starbreeze [STAR.SE] -16% (launches business review), Rockwool International [ROCKA.DK] -9% (earnings)
- Materials: Eramet [ERA.FR] +17% (analyst action), Ibstock [IBST.UK] +11% (trading update; divestment)
- Healthcare: Novartis [NOVN.CH] -0.5% (European Commission Approves LUXTURNA), Curetis [CURE.NL] +14% (earnings; accelerates 510(k) Submission Preparation)
- Industrials: Volkswagen [VOW3.DE] +0.5% (Reportedly company has to refund each Volkswagen Golf with the full purchase price of €30K as higher court in south Germany rules; minor acquisition), Renault [RNO.FR] +3% (Nissan reportedly seeking to review Renault shareholding structure), GEA Group [G1A.DE] -14% (profit warning)
- Technology: Parrot [PARRO.FR] -48% (earnings; adjusts guidance)
- Telecom: Nokia [NOKIA.FI] +1.5%, Ericsson [ERICB.SE] +2% (US government said to ask its foreign allies to stop using Huawei), Vodafone [VOD.UK] -0.5% (Reportedly studying jobs cuts in Spain)
Speakers
- Brexit Gibraltar chief Picardo: reached an agreement with Spanish colleagues. Had very positive meeting in Madrid and delivered on Gibraltar
- Italy Deputy PM Di Maio reiterated stance of no cuts to key reforms and urged dialogue with EU, not ‘war’. Reiterates stance that was important to repeat that this govt did not want to leave Europe or the Euro
- Italy official Siri (adviser to Dep PM Salvini): some budget measures can be improved
- Italy’s EU Affairs Minister Savona said to consider resigning from Govt as a sign of dissent with Govt strategy to challenge EU budget rules (**Note: story later refuted)
- Former UK Brexit Min Raab: UK Parliament will vote down PM May’s Brexit deal
- Northern Ireland DUP party official Donaldson (part of May coalition): Withdrawal agreement will be voted down; need guarantees within the agreement
- Austria EU Min Bluemel: Convinced that EU27 Brexit concerns to be resolved
- Sweden Speaker Norlen stated that to propose Lofven as PM to Parliament on Monday, Nov 26th
- France Ecology Min De Rugy: Govt to fine-tune its energy plan and make announcement on nuclear energy on Tues, Nov 27th
- Russian Deputy Foreign Min Ryabkov: Country was not amending its military doctrine
Currencies/Fixed Income
- GBP/USD was lower by 0.3% to test below 1.2840 as doubts lingered that the UK Parliament would secure passage of the EU withdrawal bill at its first attempt . On Thursday, the GBP currency soared over 100 pips after EU-UK declaration on future relationship draft said to foresee equivalence for UK banks and have the EU recognize UK independent trade policy
- Weaker Euro Zone PMI data weighed upon the EUR/USD as the pair remained below the 1.14 level. Dealers noted that the EU data flagged growth concerns in the region. Money Market Futures dated to ECB’s December 2019 meeting now price in approx. 88% chance of 10 Bps rate h (down from 95% earlier in the week)
Economic Data
- (DE) Germany Q3 Final GDP Q/Q: -0.2% v -0.2%e; Y/Y: 1.1% v 1.1%e; GDP NSA Y/Y: % v 1.1%e
- (DE) Germany Q3 Private Consumption Q/Q: -0.3% v -0.1%e; Government Spending Q/Q: 0.2% v 0.2%e; Capital Investment Q/Q: 0.8% v 0.4%e; Construction Investment Q/Q: 0.9% v 0.4%e; Domestic Demand Q/Q: 0.8% v 0.3%e; Exports Q/Q: -0.9% v -0.3%e; Imports Q/Q: 1.3% v 0.7%e
- (CN) Weekly Shanghai copper inventories (SHFE): 133.2K v 134.7K prior
- (RU) Russia Narrow Money Supply w/e Nov 16th: 10.33T 10.30T prior
- (TW) Taiwan Oct Industrial Production Y/Y: 8.3% v 3.6%e
- (ES) Spain Oct PPI M/M: 0.0% v 0.7% prior; Y/Y: 4.5% v 5.2% prior
- (AT) Austria Sept Industrial Production M/M: +0.2% v -1.2% prior; Y/Y: 2.6% v 2.8% prior
- (FR) France Nov Preliminary Manufacturing PMI: 50.7 v 51.2e (26th month of expansion but lowest since Sept 2016); Services PMI: # v 55.0e; Composite PMI # v 53.9e
- (TW) Taiwan Oct M2 Money Supply Y/Y: 3.4% v 3.3% prior; M1 Money Supply Y/Y: 5.3% v 5.2% prior
- (DE) Germany Nov Preliminary Manufacturing PMI: 51.6 v 52.2e (47th month of expansion but lowest since Mar 2016); Services PMI: 53.3 v 54.5e prior; Composite PMI 52.2 v 53.1e
- (EU) Euro Zone Nov Preliminary Manufacturing PMI: 51.5 v 52.0e (64th month of expansion and lowest since Mar 2016); Services PMI: 53.1 v 53.6e; Composite PMI 52.4 v 53.0e
Fixed Income Issuance
- (ZA) South Africa sold total ZAR650M vs. ZAR650M indicated in 2025, 2038 and 2050 I/L bonds
Looking Ahead
- 06:00 (BR) Brazil mid-Nov IBGE Inflation IPCA-15 M/M: 0.3%e v 0.6% prior; Y/Y: 4.5%e v 4.5% prior
- 06:00 (UK) DMO to sell €3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively)
- 06:30 (IN) India Weekly Forex Reserves w/e Nov 16th: No est v $393.0B prior
- 06:30 (IS) Iceland to sell 1.5% Feb 2026 RIKB Bonds – 06:45 (US) Daily Libor Fixing
- 07:00 (CL) Chile Oct PPI M/M: No est v 2.4% prior
- 07:00(BR) Brazil Nov CNI Consumer Confidence: No est v 110.6 prior
- 07:00 (ES) ECB’s De Guindos (Spain)
- 08:00 (PL) Poland Oct M3 Money Supply M/M: 0.9%e v 0.8% prior; Y/Y: 7.8%e v 7.9% prior
- 08:10 (UK) Baltic Dry Bulk Index
- 08:30 (CA) Canada Sept Retail Sales M/M: 0.0%e v -0.1% prior; Retail Sales (Ex-auto) M/M: +0.3%e v -0.4% prior
- 08:30 (CA) Canada Oct CPI M/M: +0.1%e v -0.4% prior; Y/Y: 2.2%e v 2.2% prior; CPI Core- Common Y/Y: 1.9%e v 1.9% prior; Core- Median Y/Y: 2.0%e v 2.0% prior; CPI Core- Trim Y/Y: 2.1%e v 2.1% prior; Consumer Price Index: 134.0e v 133.7 prior
- 08:30 (US) Weekly USDA Net Export Sales data
- 09:00 (BE) Belgium Nov Business Confidence: -2.0e v -1.1 prior
- 09:00 (MX) Mexico Q3 Final GDP Q/Q: 0.9%e v 0.9% prelim; Y/Y: 2.6%e v 2.6% prior; GDP Nominal Y/Y: 7.8%e v 8.3% prior
- 09:00 (MX) Mexico Sept Economic Activity Index (Monthly GDP) Y/Y: 2.8%e v 1.7% prior
- 09:45 (US) Nov Preliminary Markit Manufacturing PMI: 55.7e v 55.7 prior; Services PMI: 55.0e v 54.8 prior; Composite PMI: No est v 54.9 prior
- 10:00 (MX) Mexico Q3 Current Account Balance: -$4.4Be v -$3.9B prior
- 11:00 (EU) Potential sovereign ratings after European close (South Africa Sovereign Debt to be rated by S&P; Hungary Sovereign Debt to Be Rated by Moody’s
- 14:00 (AR) Argentina Oct Trade Balance: $0.4Be v $0.3B prior
- 14:00 (AR) Argentina Sept Economic Activity Index (Monthly GDP) M/M: No est v 1.3% prior; Y/Y: -4.6%e v -1.6% prior
