Notes/Observations
- Continued optimism over US-China trade talks as meeting continue this week in Washington
- US markets closed for Presidents day holiday
Asia:
- China Jan Vehicle Sales Y/Y: -15.8% v -13.0% prior (7th straight decline)
- Former BoJ Deputy Gov Iwata: Further rate cuts could bring some financial institutions ‘under’; Japan must ramp up fiscal spending with debt bank rolled by BoJ
Europe:
- ECB’s Villeroy (France): Reiterated the timing of rate hike depends on length of current slowdown. Stated that ECB would scrutinize the flow of economic data [when asked about whether recent data lowered the chances for a rate hike after the summer
- ECB’s Rehn (Finland): recent data pointed to a weakening economy in the euro zone, cited greater uncertainties outside the euro zone. Reiterated interest rates would remain at the current level until monetary policy goals had been met. Had no comment on market developments [when asked about shift in market rate hike expectations]. To discuss in coming meetings what to do about TLTROs
- France and other European countries said to be ready to give Britain legally binding assurances that the Irish backstop is temporary (follow up: President Macron’s Office denied reports that President Macron had offered concessions on the Irish backstop to end Brexit stalemate)
- Spain GESOP Poll: Socialists Party lead in polls but well short of a majority; Socialist Party would win between 115-117 seats; Conservative Popular Party would win 75-77 seats; Right Vox would win 43-46 seats; Centre right Ciudadanos would win 44-47 seats (Note: 1st poll since elections were called). Reminder: on Feb 15th Spain PM Sanchez called for for general (snap) elections for April 28th (in-line with press speculation)
- Nigeria Independent National Electoral Commission (Inec) delayed its presidential and parliamentary elections for a week (from Sat Feb 16th until Feb 23rd)
Americas:
- Over the weekend, US President Trump was briefed by advisers on trade talks with China; Trump called the talks ‘very productive’ following the meeting
- Commerce Dept sent report to White House on 25% automobile tariff, contents were not disclosed. (Note: The presentation of the US Dep of Commerce investigative report regarding chapter 232 now gave President Trump 90 days to make final decision
Macro
- (UK) United Kingdom: PM May will be returning to Brussels this week to meet European Commission President Juncker and all of the 27 other EU heads of state. She is still hoping to win concessions on the Irish backstop. The next key date is February 27, when parliament will vote on the government’s withdrawal plan, or alternatives if May has failed to win any concessions. It is also possible, although not certain, that parliament could vote to rule out a no-deal Brexit scenario.
- (DE) Germany: The US remains Germany’s main export destination, with exports amounting to €113B last year, while Germany imported just €65B from the US over the same period. The UK was Germany’s fourth largest export destination, after the US, France & China with exports amounting to €82B. It is all evidence to suggest that an escalation of trade tensions with the US, but also Brexit could hit Germany’s export oriented economy.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.03% at 368.84, FTSE -0.29% at 7,215.40, DAX -0.30% at 11,265.72, CAC-40 -0.02% at 5,151.91, IBEX-35 +0.32% at 9,152.35, FTSE MIB +0.25% at 20,262.50, SMI +0.36% 9,265.40, S&P 500 Futures -0.09%]
- Market Focal Points/Key Themes: Equities European Indices trade mixed this morning with the U.K. FTSE trading slightly lower on potential Brexit plan amendments and slightly lower U.S. futures this morning. The New York Stock Exchange and the Nasdaq will be closed this Monday in observance of the federal holiday. On the corporate front shares of Wirecard trade 13% higher on Bafin bans short-selling positions in company’s stock; Reckitt Benckiser, Petra Diamonds both rise as an a strong earnings and new CEO appointment. Meanwhile auto giant Daimler declines after China car sales data, with Faureci, Victoria PLC and Casino Guichard-Perrachon among other notable names declining on earnings, trading updates and analyst downgrades. Elsewhere Vinci shares rebound slightly after large contract award.
- Consumer discretionary: Casino Guichard-Perrachon SA [CO.FR] -2.5% (analyst action), McColl’s Retail Group [MCLS.UK] +7.5% (earnings), Pendragon [PDG.UK] +0.5% (new CEO)
- Healthcare: Reckitt Benckiser [RB.UK] +4.5% (earnings)
- Industrials: Vinci [DG.FR] -1% (awarded significant contract), Faurecia [EO.FR] -0.5% (earnings), Daimler [DAI.DE] -1% (China car sales), Victoria PLC [VCP.UK] -14% (trading update)
- Technology: Wirecard [WDI.DE] +12% (Bafin bans short-selling positions)
- Materials: Petra Diamonds [PDL.UK] +8% (earnings; new CEO)
Speakers
- Ireland Foreign Min Coveney reiterated stance that EU would not renegotiate the Withdrawal Agreement; everyone was working hard to avoid a no-deal Brexit
- UK said not able to resign trade agreement with Japan by March
- Small group of UK Labour party officials said to be leaving the party
- Swiss Govt stated that a referendum on Federal Tax Act Reform and AHV financing to be held on May 19th
- Iran Supreme Leader Khamenei stated that European signatories of nuclear deal were deceiving the country
- Singapore Fin Min Heng Swee Keat unveiled the 2019/20 budget proposal; budget deficit seen at S$3.5B or 0.7% to GDP. To spend S$4.6B over three year in the economy. To set aside S$6.1B for Merdeka Generation Package to cover costs of package to support the elderly
Currencies/Fixed Income
Economic Data
- (CZ) Czech Dec Export Price Index Y/Y: 3.1% v 4.0% prior; Import Price Index Y/Y: 2.4% v 4.2% prior
- (CH) Swiss Total Sight Deposits w/e Feb 15th (CHF): 576.3B v 576.2B prior; Domestic Sight Deposits: 492.7B v 486.8B prior
- (NG) Nigeria Jan oil production at 1.66M bpd vs. 1.78M bpd m/m
Looking Ahead
- (UK) EU Brexit Negotiator Barnier to meet UK Brexit Sec Barclay in Brussels
- Saudi Arabia Oil Output & Exports for Dec.: JODI
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month Bills
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (TR) Turkey to sell Floating Bonds
- 06:00 (IL) Israel to sell bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming issuance
- 08:00 (UK) Baltic Dry Bulk Index
- 09:00 (FR) France Debt Agency (AFT) to sell combined €3.5-4.7B in 3-month. 6-month and 12-month Bills
- 11:15 (EU) ECB’s Enria (SSM chief)
