Focus On Upcoming Fed Chair Speech, G20

Notes/Observations

• Focus remains on upcoming G20 and if consensus will be reached on issues and if US and China will be able to ease trade tensions
• Fed Chair Powell due to speak in NY later today, ahead of Thursday’s release of the FOMC minutes

Asia:

• China Ambassador to US Cui stated that he did not believe anyone in Beijing was thinking seriously about pulling back from US Treasury debt market if trade dispute worsened

Europe:

• UK PM May said to have backed down in Brexit disagreement with Parliament, which would allow the Brexit deal to be amended before vote on Dec 11th

Americas:

• President Trump may cancel meeting with Russia’s Putin at G20 over Ukraine. Reiterates view that FED rate policies were hurting the economy; I’m not even a little bit happy with my selection of Chair Powell

Energy:

• Weekly API Oil Inventories: Crude: +3.5M v -1.5M prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.1% at 357.6, FTSE -0.1% at 7007, DAX +0.0% at 11313, CAC-40 +0.3% at 4995, IBEX-35 +0.4% at 9120, FTSE MIB -0.2% at 19110, SMI +0.1% at 8907, S&P 500 Futures +0.1%]
• Market Focal Points/Key Themes: European Indices trade mixed this morning following a higher session in Asia and slightly higher US futures. On the corporate front shares of Schoeller Bleckmann, Adler Real Estate and On the Beach Group trade higher on earnings with Vapiano and Brewin Dolphin a notable decliner following results and outlook. Following a host of investor days Danish Energy name Orsted trades lower while Axa trades higher after raising mid term ROE target. Kering trades lower following the investigation of Gucci CEO and former CEO in alleged €1B tax evasion; Bayer rises after launching a cost cutting program. Looking ahead earnings include retail names Tiffany’s, Burlington Stores, Dick’s Sporting Goods as well as Canadian name Royal Bank of Canada.

Equities

• Consumer discretionary: Kering [KNE.FR] +1% (reportedly Gucci CEO Bizzarri and predecessor Di Barco under investigation in alleged €1B tax evasion case), Vapiano [VAO.DE] -4.5% (earnings; cuts outlook)
• Energy: Orsted [ORSTED.DK] -2.5% (investor day)
• Financials: LondonMetric [LMP.UK] -0.5% (earnings), Societe Generale [GLE.FR] +0.5% (investor slides comments on medium-term targets and acquisitions), Axa SA [CS.FR] +1.5% (investor day; FY18 targets raised; medium-term outlook affirmed)
• Healthcare: Shire [SHP.UK] -2% (ex-Chairman of Takeda Pharmaceuticals reportedly opposes takeover transaction), Bayer [BAYN.DE] +1.5% (Reportedly plans to launch a cost cutting program which would include job reductions and streamlining organization)
• Industrials: Continental [CON.DE] -5.5% (CFO comments on potential headwinds persistence in near future), RPC Group [RPC.UK] +0.5% (earnings), Knorr-Bremse AG [KBX.DE] +1% (earnings; affirms outlook)
• Telecom: Telecom Italia [TIT.IT] -1.5% (Italian senate propositions on company’s future)

Speakers

• EU Commission to open disciplinary action against Italy over its debt before Christmas (Dec 19th said to be the date).- Italy budget deficit target must be closer t 2.0% for EU. Eurogroup might discuss matter in January. Both Italian Dep PMs (Salvini and Di Maio) are involved with EU discussions
• EU’s Dombrovskis: Italy needed ‘significant correction’ of 2019 fiscal budget
• Italy PM Conte: Dealing with the EU won’t be easy; to push forward with reform. Social stability was more important
• Italy Fin Min Tria reiterates that dialogue is needed with EU to seek budget solution. Economic slowdown gives reason for anti-cyclical cycle. Italy will reduce debt with economic growth. Reiterates that Govt forecasts was based upon correct numbers (analysis)
• UK Chancellor of the Exchequer Hammond (Fin Min): PM May’s Brexit deal is far better than a no-deal exit; have to prepare for no-deal to minimize disruptions
• Germany Fin Min Scholz: Want reform package for Euro Zone to include turning ESM into a European Monetary Stabilization Fund (EMF). Want a minimum taxation for companies and introduce FTT at EU level. Confident of global digital tax by mid-2020
• France PM Philippe: Gasoline tax to rise as planned on Jan 1st
• Russia Central Bank Gov Nabiullina: Domestic economy growing around potential
• Russia Fin Min Siluanov: Moderately tight policy creates predictability
• Russia Energy Min Novak: Nov MTD oil production approx 40K bpd below Oct levels (**Reminder: Russia Oct oil production was seen at 11.41M bpd (record level)

Currencies/Fixed Income

• USD remained on firm footing and buoyed by Fed expectations, trade tensions support safe haven bids. Market participants looking ahead to the planned Trump-Xi meeting at the upcoming g G-20 summit this weekend in Argentina
• EUR/USD staying below the 1.13 level as the Italian budget situation remained in focus
• Various polls on Parliament sentiment indicate that PM May’s deal will be defeated in Parliament. GBP/USD managing to get a small gain in the session to test 1.2775.

Economic Data

• (DE) Germany Dec GfK Consumer Confidence: 10.4 v 10.5e
• (SA) South Africa Q3 BER Consumer Confidence: 7 v 15e
• (FI) Finland Oct House Price Index M/M: -1.0% v +0.9% prior; Y/Y: 0.4% v 1.4% prior
• (HU) Hungary Oct Unemployment Rate: 3.7% v 3.8%e
• (SE) Sweden Nov Consumer Confidence: 97.5 v 99.5e; Manufacturing Confidence: 116.2 v 114.4e; Economic Tendency Survey: 106.7 v 107.0e
• (SE) Sweden Oct Retail Sales M/M: -1.1% v +0.3%e; Y/Y: -0.1% v +2.0%e
• (EU) Euro Zone Oct M3 Money Supply Y/Y: 3.9% v 3.5%e
• (CH) Swiss Nov Credit Suisse Expectations Survey: -42.3 v -39.1 prior
• (IT) Italy Oct PPI M/M: 1.8% v 0.4% prior; Y/Y: 7.1% v 5.6% prior
• (AT) Austria Nov Manufacturing PMI: 54.9 v 53.8 prior (34th month of expansion)

Fixed Income Issuance

• (IN) India sold total INR150B vs. INR150B in 3-month, 6-month and 12-month bills
• (SE) Sweden sold SEK1.5B vs. SEK1.5B indicated in 0.75% Nov 2029 bonds; Avg Yield: 0.7087% v 0.8112% prior
• (IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month Bills; Avg Yield: 0.163% v 0.159% prior; Bid-to-cover: 1.60x v1.60x prior

Looking Ahead

• 05:30 (EU) ECB allotment in 3-month LTRO (€1.5Be)
• 05:30 (DE) Germany to sell €2.0B in 0.25% Aug 2028 bund
• 06:00 (IR) Ireland Oct Retail Sales M/M: No est v 1.5% prior; Y/Y: No est v 6.5% prior
• 06:00 (BR) Brazil Oct PPI Manufacturing M/M: No est v 2.5% prior; Y/Y: No est v 16.7% prior
• 06:45 (US) Daily Libor Fixing
• 07:00 (RU) Russia to sell combined RUB10B in 2020 and 2024 OFZ bonds
• 07:00 (US) MBA Mortgage Applications w/e Nov 23rd: No est v -0.1% prior
• 07:05 (FR) ECB’s Coeure (France) in Frankfurt
• 08:00 (ES) ECB’s De Guindos (Spain) at conference
• 08:10 (UK) Baltic Dry Bulk Index
• 08:30 (US) Q3 Preliminary GDP Annualized (2nd reading) Q/Q: 3.5%e v 3.5% advance; Personal Consumption: 3.9%e v 4.0% advance
• 08:30 (US) Q3 Preliminary GDP Price Index: 1.7%e v 1.7% advance; Core PCE Q/Q: 1.6%e v 1.6% advance
• 08:30 (US) Oct Advance Goods Trade Balance: -$77.0Be v -$76.3B prior (revised from -$76.0B)
• 08:30 (US) Oct Preliminary Wholesale Inventories M/M: 0.4%e v 0.4% prior; Retail Inventories M/M: No est v 0.2% prior
• 09:30 (BR) Weekly Brazil Currency Flow data
• 10:00 (US) Oct New Home Sales: 575Ke v 553K prior
• 10:00 (US) Nov Richmond Fed Manufacturing Index: 15e v 15 prior
• 10:00 (CO) Colombia Oct National Unemployment Rate: No est v 9.5% prior; Urban Unemployment Rate: 9.6%e v 10.5% prior
• 10:20 (BE) ECB’s Praet (Belgium, chief economist)
• 10:30 (US) Weekly DOE Crude Oil Inventories
• 11:30 (BR) Brazil Oct Total Outstanding Loans (BRL): No est v 3.169T prior; M/M: 0.5%e v 0.4% prior; Personal Loan Default Rate: No est v 4.9% prior
• 11:30 (UK) Bank of England (BOE) Financial Stability Report and Stress test results
• 11:45 (UK) BOE Gov Carney
• 12:00 (US) Fed Chair Powell in NY
• 12:00 (CA) Canada to sell Dec 2050 Inflation-linked bonds
• 13:30 (MX) Mexico Central Bank (Banxico) Quarterly Inflation Report (QIR)