Notes/Observations
- Continued optimism being expressed in US-China trade talks
- Hong Kong Q3 GDP data confirmed its 1st recession since 2009)
Asia:
- Japan govt said to be planning to issue more deficit-covering bonds due to downward revision in the current year’s tax revenues. MoF likely expects tax revenues to fall short of their ¥62.495T forecast by ¥1-2T due to slowing overseas growth impacting corp profits
- Debate about whether the BoJ was trying to covertly cut its equity buying, notes the central bank had not purchased ETFs since Oct 9th (longest streak of not making purchases since it started its equity buying program)
- PBOC conducted CNY200B in 1-year MLF operation at 3.25% . Confirmed that MLF injection and targeted RRR cut (announced on Sept 6th but ook effect today] was to offset tax payment
Europe/Mideast:
- ECB policy makers said to offer proposals telling Lagarde that decisions should be made by consensus not simple majority
Americas:
- White House Advisor Kudlow: Getting close to a trade deal with China; talks have been constructive and the ‘mood music’ is pretty good; Pres Trump likes what he sees but is not ready to make commitments; no agreement on Phase
- US and China struggling to complete Phase 1 trade deal; Trump administration officials said to be frustrated that China hasn’t offered enough to justify a reduction in US tariffs on Chinese goods
- AG Barr sends letter to FCC saying Huawei and ZTE cannot be trusted because they are a threat to our collective security
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.41% at 406.07, FTSE +0.08% at 7,298.15, DAX +0.36% at 13,227.89, CAC-40 +0.63% at 5,938.22, IBEX-35 +0.55% at 9,224.00, FTSE MIB +0.44% at 23,585.50, SMI +0.87% at 10,322.50, S&P 500 Futures +0.30%]
- Market Focal Points/Key Themes: European indices trading higher following mostly higher indices in Asia and slightly higher US futures. On the earnings front Stabilus up 7% following earnings and solid top and bottom line y/y growth; confirmed organic revenue growth forecast of 6% p/a. In the UK, Kier Group and Future Plc outperforming following trading updates. Other risers on earnings include Maersk and SimCorp. Leroy Seafood tanking ~14% as the company reported soft results, missing top line estimates and cutting FY harvest guidance. Likewise, Elekta diving ~13% on cuts to FY EBITA margin outlook, citing currency and delayed starts of equipment installations. Other notable decliners following earnings include Bekaert, LEG Immobilien and Vallourec and TalkTalk in the UK. The latter also affected by negative industry sentiment following national opposition party commentary that parts of British Telecom (BT) would be nationalized if the party obtains a majority in the upcoming election; However, BT shares not affected much by the pronouncement. On the M&A front Carpetright rallying ~15% on confirmation of Mediator acquiring the company for 5p/shr in cash. Likewise, Amerisur Resources up ~5% on news of takeover offer from GeoPark for £19.21/shr. Further in M&A news, Italian traded Saipem reportedly considering merging with Norwegian Subsea 7, boosting both shares. Additionally, SEB down 13% on rumors that Swedish television is preparing a report on the bank’s suspected money laundering in the Baltics. Looking ahead notable earners include JC Penney and JD.com.
Equities
- Consumer discretionary: Leroy Seafood [LSG.NO] -12.5% (earnings)
- Healthcare: Elekta [EKTAB.SE] -17% (earnings)
- Industrials: Stabilus [STM.DE] +7.5% (earnings), Kier Group [KIE.UK] +1.5% (trading update), Subsea 7 [SUBC.NO] +4.5% (potential merger), Maersk [MAERSKB.DK] +1.5% (earnings)
- Technology: SimCorp [SIM.DK] +7.5% (earnings), Future [FUTR.UK] -3.5% (earnings)
- Telecom: TalkTalk [TALK.UK] -2.5% (earnings)
Speakers
- Germany draft 2020 Federal Budget seen at €362B, +1.1% y/y and seen maintaining a balanced budget
- UK PM Johnson: Government would not seek an extension of Brexit transition period; Needed to come out of regulatory alignment with EU
- Italy Deputy Econ Min Misiani: To push on with web tax introduction in 2020 despite US threat of retaliation
- Czech Central Bank Nov Minutes: Vote was not unanimous to keep policy steady; members Holub and Benda sought a 25bps hike. Majority of members assessed risks to forecast as being anti-inflationary. All members saw signs of a deterioration in domestic economy but a few noted of some improvement overseas
- Hong Kong Govt cuts its 2019 GDP forecast from 0.0-1.0% range to -1.3%. The govt raised its inflation outlook with 2019 CPI taken from 2.6% to 2.9%. It noted that ending the violence was pivotal to a recovery in the economy
- China FX Regulator SAFE: Q3 financial FDI Net Outlows $1.18B
- IEA Oct Monthly Oil Report maintained the 2019 global oil demand growth forecast at 1.0M bpd and kept 2020 global oil demand growth at 1.2Mbpd. OPEC+ countries faced a major challenge in 2020 as demand for their crude was expected to fall sharply. Saw calm global oil market in 2020 as new supplies soar
Currencies/Fixed Income
- Quiet session for the major FX pairs while some risk-on sentiment did help soften both the JPY and CHF currencies
- USD/JPY was trading around 108.65 after White House adviser Kudlow noted that US and China were nearing a trade deal, but President Trump was not ready to sign off on it.
- EUR/USD was steady at 1.1015 area. Euro ignored the recent better German GDP data on Thursday as many German business group still urged the government to do more to support the economy.
Economic Data
- (NL) Netherlands Sept Retail Sales Y/Y: 2.8% v 4.0% prior
- (FI) Finland Sept Current Account Balance: €0.5B v €0.3B prior
- (PE) Peru Sept Economic Activity Index (Monthly GDP) Y/Y: 2.2% v 3.4% prior
- (PE) Peru Oct Unemployment Rate: 6.4% v 5.8% prior
- (NO) Norway Oct Trade Balance (NOK): +5.9B v -1.4B prior
- (TR) Turkey Aug Unemployment Rate: 14.0% v 13.9% prior
- (DK) Denmark Oct PPI M/M: 0.4% v 0.0% prior; Y/Y: -3.0% v -2.5% prior
- (CN) Weekly Shanghai copper inventories (SHFE): 135.5K v 148.7K prior
- (RU) Russia Narrow Money Supply w/e Nov 8th (RUB): 10.58T v 10.55T prior
- (AT) Austria Oct CPI M/M: 0.2% v 0.5% prior; Y/Y: 1.1% v 1.2% prior
- (TR) Turkey Oct Central Gov’t Budget Balance (HUF): -14.9B v -17.7B prior
- (HK) Hong Kong Q3 Final GDP Q/Q: -3.2% v -3.2%e; Y/Y: -2.9% v -2.9%e
- (IT) Italy Sept Total Trade Balance: €2.8B v €2.6B prior; Trade Balance EU: €1.3B v €0.3B prior
- (IT) Italy Sept General Government Debt: €2.439B v €2.463T prior
- (EU) Euro Zone Oct Final CPI Y/Y: 0.7% v 0.7%e; CPI Core Y/Y: 1.1% v 1.1%e; CPI M/M: 0.1% v 0.2%e
- (EU) Euro Zone Sept Trade Balance (Seasonally Adj): €18.7B v €18.7Be; Trade Balance NSA (unadj): €18.7B v €14.7B prior
- (IT) Italy Oct Final CPI M/M: -0.1% v 0.0% prelim; Y/Y: 0.2% v 0.3% prelim; CPI Index (ex- tobacco): 102.4 v 102.5e
- (IT) Italy Oct Final CPI EU Harmonized M/M: 0.2% v 0.2% prelim; Y/Y: 0.2% v 0.2% prelim
Fixed Income Issuance
- (IN) India sold total INR160B vs. INR160B indicated in 2024, 2033, 2043 and 2049 bonds
- (ZA) South Africa sold total ZAR1.04B vs. ZAR1.04B indicated in 2025, 2038 and 2046 I/L bonds
Looking Ahead
- (BE) Belgium Debt Agency (BDA) size announcement for upcoming OLO auction for Monday, Nov 18th
- 06:00 (IE) Ireland Sept Trade Balance: No est v €4.7B prior
- 06:00 (UK) DMO to sell €6.5B in 1-month, 3-month and 6-month bills (£0.5B, £3.0B and £3.0B respectively)
- 06:30 (TR) Turkey Central Bank TCMB Survey of Expectations: Next 12 Month Outlook: No est v 11.2% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces upcoming bill issuance (held on Wed)
- 07:30 (IN) India Weekly Forex Reserve w/e Nov 8th: No est v $446.2B prior
- 07:00 (IL) Israel Oct CPI M/M: +0.5%e v -0.2% prior; Y/Y: 0.5%e v 0.3% prior
- 08:00 (PL) Poland Oct CPI Core M/M: 0.4%e v 0.2% prior; Y/Y: 2.4%e v 2.4% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance
- 08:30 (US) Nov Empire Manufacturing: 6.0e v 4.0 prior
- 08:30 (US) Oct Advance Retail Sales M/M: +0.2%e v -0.3% prior; Retail Sales (ex-auto) M/M: 0.4%e v 0.4% prior; Retail Sales Ex Auto and Gas: 0.3%e v 0.0% prior; Retail Sales (Control Group): 0.3%e v 0.0% prior
- 08:30 (US) Oct Import Price Index M/M: -0.2%e v +0.2% prior; Y/Y: -1.9%e v -1.6% prior; Import Price Index (ex Petroleum) M/M: -0.1%e v -0.1% prior
- 08:30 (US) Oct Export Price Index M/M: -0.1%e v -0.2% prior; Y/Y: No est v -1.6% prior
- 08:30 (CA) Canada Sept Int’l Securities Transactions (CAD): No est v 5.0B prior
- 08:30 (CA) Bank of Canada (BOC) Lane speaks on Digital Currency Panel
- 09:00 (CA) Canada Oct Existing Home Sales M/M: 1.3%e v 0.6% pior
- 09:00 (BE) Belgium Sept Trade Balance: No est v €0.0B prior
- 09:15 (US) Oct Industrial Production M/M: -0.4%e v -0.4% prior; Capacity Utilization: 77.0%e v 77.5% prior; Manufacturing Production: -0.7%e v -0.5% prior
- 10:00 (US) Sept Business Inventories: 0.1%e v 0.0% prior
- 11:00 (CO) Colombia Q3 GDP Q/Q: 0.9%e v 1.4% prior; Y/Y: 3.3%e v 3.0% prior
- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Spain sovereign rating; S&P on Netherlands and Iceland sovereign ratings; Fitch on Ireland sovereign rating; Canadian rating agency DBRS on Italy, Finland and Cyprus sovereign ratings)
- 13:00 (US) Weekly Baker Hughes Rig Count
- 14:00 (C)) Colombia Sept Economic Activity Index (Monthly GDP) Y/Y: 3.3%e v 3.4% prior
- (CO) Colombia Central Bank Economist Survey
