EU Q4 GDP Data Missing Expectations With Surprise Contractions In Both France And Italy

Notes/Observations

• Dawn of a new era as Brexit takes effect; clock will start ticking on a new deadline of December 31st, the end of an agreed transition period
• Surprising contraction in both France’ and Italy Q4 GDP data

Asia:

• Coronavirus update: 213 deaths vs 130 yesterday. More than 12,000 suspected cases. 1,476 in serious or critical condition. ALL regions of China are reporting cases
• World Health Organization (WHO) Director Tedros: declares coronavirus a Public Health Emergency of International Concern (PHEIC); this declaration of PHEIC is not a vote of no confidence in China
• Hong Kong confirmed human-to-human transmission of coronavirus; considers more border checkpoint closures
• US CDC announced the 1st instance of person-to-person spread of the coronavirus in the country (occurred in Illinois with transmission was wife to husband)
• China Jan Manufacturing PMI: 50.0 v 50.0e (6th month without a contraction)
• Japan Jan Tokyo CPI Y/Y: 0.6% v 0.7%e – Japan Dec Jobless Rate: 2.2% v 2.3%e
• Japan Dec Preliminary Industrial Production M/M: 1.3% v 0.7%e; Y/Y: -3.0% v -3.6%e
• South Korea Dec Industrial Production M/M: 3.5% v 0.7%e; Y/Y: 4.2% v 1.0%e

Brexit:

• PM Johnson said to seek a Canada-style trade deal with EU – UK Press

Americas:

• Senate Republicans increasingly confident impeachment trial could end by Friday

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.13% at 414.60, FTSE -0.57% at 7,339.85, DAX -0.06% at 13,148.65, CAC-40 -0.19% at 5,860.84, IBEX-35 -0.47% at 9,433.00, FTSE MIB -1.00% at 23,543.48, SMI +0.13% at 10,763.00, S&P 500 Futures -0.38%]
• Market Focal Points/Key Themes: European indices mostly in the red following Asia indices mixed (Shanghai closed) and lower US futures. Electrolux, Banco Sabadell and Dometic Group drop on disappointing earnings results and Stadler on FY19 sales update. BBVA, Caixabank and Signify up after earnings results. Lundin Petroleum up after beating on top and bottom line for Q4 results and raising dividend. Tod’s trading higher after FY19 sales beat expectations and Leonardo after reporting FY19 orders, revenue and profit above prior guidance. In the UK, Britvic and TalkTalk up on trading update and M&C Saatchi plunges after UK Financial Conduct Authority launches accounting probe. Aston Martin rallying as billionaire Lawrence Stroll took a stake in the company. Notable earners today include Chevron, Caterpillar, Honeywell, Colgate-Palmolive and Exxon-Mobil.

Equities

• Consumer discretionary: Aston Martin Lagonda Global Holdings [AML.UK] +25% (funding; investment), Staffline [STAF.UK] -11% (earnings)
• Financials: CaixaBank [CABK.ES] +3% (earnings), BBVA [BBVA.ES] -1% (earnings), Sabadell [SAB.ES] -10% (earnings)
• Healthcare: Bayer [BAYN.DE] +1% (EPA on glyphosate)
• Industrials: Electrolux [ELUXB.SE] -6% (earnings), ThyssenKrupp [TKA.DE] -2.5% (CEO interview)
• Technology: Signify [LIGHT.NL] +4% (earnings)

Speakers

• Ireland PM Varadkar stated that he could not see how to separate fisheries from the Brexit deal
• Scotland First Minister Sturgeon stated that she would not rule out a ‘wildcat referendum’ but prefered a legal referendum
• South Africa State utility Eskom CEO stated that he saw the increase probability of power cuts in country
• Turkey President Erdogan: Could act if Idlib promises are not kept
• Thailand Central Bank official Don stated that Q4 GDP growth might be lower than Q3. Saw 2020 GDP impacted by effects from the coronavirus
• Singapore PM Lee: Domestic economy bound to slow from effects of the coronavirus
• Hong Kong chief Exec Lam: To extend school holiday until March 2nd

Currencies/Fixed Income

• GBP/USD continued to build upon gains from Thursday’s BOE rate decision which was interpreted as a hawkish hold. Cable testing one-week highs at 1.3135. The post Brexit era to begin for the UK and the transition period could provide some headwinds to the price action.
• EUR/USD was steady despite surprising soft GDP data in the region. Euro Zone missed expectations while quarterly contractions were registered for France’ and Italy Q4 GDP data.
• USD/JPY holding above the key 108.60/70 area as the coronavirus continued to spread and possible hamper global growth expectations.

Economic Data

• (FR) France Q4 Preliminary GDP Q/Q: -0.1% v +0.2%e; Y/Y: 0.8% v 1.2%e (1st quarterly contraction since Q2 2016)
• (DE) Germany Dec Retail Sales M/M: -3.3% v -0.5%e; Y/Y: 0.8% v 4.5%e
• (FI) Finland Nov Final Trade Balance: -€0.1B v -€0.1B prelim
• (NO) Norway Dec Credit Indicator Growth Y/Y: 5.1% v 5.4%
• (TR) Turkey Dec Trade Balance: -$4.3B v -$4.3Be
• (TH) Thailand Dec Current Account Balance: $4.1B v $3.6Be; Overall Balance of Payments (BOP): -$0.8B v +$0.9B prior; Trade Account Balance: $1.9B v $2.0B prior Exports Y/Y: -1.7% v -7.7% prior; Imports Y/Y: +1.8% v -13.9% prior
• (CH) Swiss Dec Real Retail Sales Y/Y: 0.1% v 0.5% prior
• (FR) France Jan Preliminary CPI M/M: -0.4% v -0.5%e; Y/Y: 1.5% v 1.5%e
• (FR) France Jan Preliminary CPI EU Harmonized M/M: -0.5% v -0.5%e; Y/Y: 1.6% v 1.7%e
• (FR) France Dec Consumer Spending M/M: -0.3% v 0.0%e; Y/Y: 2.0% v 1.5%e
• (FR) France Dec PPI M/M: 0.0% v 1.1% prior; Y/Y: +0.3% v -0.7% prior
• (ES) Spain Q4 Preliminary GDP Q/Q: 0.5% v 0.4%e; Y/Y: 1.8% v 1.7%e
• (ES) Spain Jan Preliminary CPI M/M: -1.0% v -1.1%e; Y/Y: 1.1% v 1.0%e
• (ES) Spain Jan Preliminary CPI EU Harmonized M/M: -1.4% v -1.5%e; Y/Y: 1.1% v 1.1%e
• (RU) Russia Narrow Money Supply w/e Jan 24th (RUB): No est v 10.78T prior
• (HU) Hungary Nov Final Trade Balance: €0.5B v €0.5B prelim
• (HU) Hungary Nov Average Gross Wages Y/Y: 13.9% v 11.2%e
• (ES) Spain Nov Current Account Balance: €3.4B v €2.8B prior
• (IT) Italy Q4 Preliminary GDP Q/Q: -0.3% v +0.1%e; Y/Y: 0.0% v 0.3%e
• (NO) Norway Jan Unemployment Rate: 2.4% v 2.4%e
• (NO) Norway Central Bank (Norges) Feb Bank Daily FX Purchases (NOK): -500M v -500M prior
• (CZ) Czech Dec M2 Money Supply Y/Y: 7.1% v 7.6% prior
• (IS) Iceland Dec Final Trade Balance (ISK): -10.7B v -8.3B prelim
• (UK) Dec Net Consumer Credit: £1.2B v £0.9Be; Net Lending: £4.6B v £4.1Be
• (UK) Dec Mortgage Approvals: 67.2K v 65.6Ke (highest since July 2017)
• (UK) Dec M4 Money Supply M/M: 0.1% v 0.8% prior; Y/Y: 3.8% v 4.5% prior; M4 Ex IOFCs Annualized: 3.9% v 4.6% prior
• (PT) Portugal Jan Preliminary CPI M/M: -0.9% v -0.1% prior; Y/Y: 0.8% v 0.4% prior
• (PT) Portugal Jan Preliminary CPI EU Harmonized M/M: -0.8% v -0.3% prior; Y/Y: 0.8% v 0.4% prior
• (EU) Euro Zone Q4 Advance GDP Q/Q: 0.1% v 0.2%e; Y/Y: 1.0% v 1.1%e
• (EU) Euro Zone Jan Advance CPI estimate: 1.4% v 1.4%e; CPI Core Y/Y: 1.1% v 1.2%e; CPI M/M: -1.0% v -0.9%e
• (IT) Italy Dec Hourly Wages M/M: 0.0% v 0.1% prior; Y/Y: 0.6% v 0.8% prior
• (GR) Greece Oct Retail Sales Value Y/Y: 3.1% v 7.2% prior; Retail Sales Volume Y/Y: 4.1% v 6.6% prior

Fixed Income Issuance

• (IN) India sold total INR140B vs. INR140B indicated in 2021, 2026, 2029, 2039 and 2059 bonds
• (ZA) South Africa sold total ZAR1.04B vs. ZAR1.04B indicated in 2025, 2038 and 2046 I/L bonds

Looking Ahead

• 06:00 (IT) ECB’s Panetta (Italy)
• 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 Dec Eight Infrastructure (key) Industries: No est v -1.5% prior
• 06:30 (IN) India Weekly Forex Reserve w/e Jan 24th No est v $462.2B prior
• 06:30 (IS) Iceland to sell 2021 Bonds
• 07:00 (BR) Brazil Dec National Unemployment Rate: 11.0%e v 11.2% prior
• 07:00 (ZA) South Africa Dec Trade Balance (ZAR): 12.0Be v 6.1B prior
• 07:00 (IN) India Overall 2019 GDP Annual Estimate Y/Y: No est v 5.0% prelim (7.2% in 2018)
• 07:00 (CL) Chile Dec Manufacturing Production Y/Y: 0.2%e v 3.2% prior; Industrial Production Y/Y: -1.0%e v -1.8% prior; Total Copper Production: No est v 504.4K tons prior
• 07:00 (CL) Chile Dec Unemployment Rate: 7.2%e v 6.9% prior
• 07:00 (CL) Chile Dec Retail Sales Y/Y: -5.4%e v -9.8% prior; Commercial Activity Y/Y: No est v -5.3% prior
• 07:00 (BR) Brazil Dec PPI Manufacturing M/M: No est v 0.7% prior; Y/Y: No est v 2.8% prior
• 07:30 (BR) Brazil Dec Primary Budget Balance (BRL): -13.1Be v -15.3B prior; Nominal Budget Balance: -42.0Be v -53.2B prior; Net Debt to GDP Ratio: No est v 54.8% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:30 (US) Employment Cost Index: 0.7%e v 0.7% prior
• 08:30 (US) Dec Personal Income: 0.3%e v 0.5% prior; Personal Spending: 0.3%e v 0.4% prior; Real Personal Spending (PCE): 0.1%e v 0.3% prior –
• 08:30 (US) Dec PCE Deflator M/M: 0.2%e v 0.2% prior; Y/Y: 1.6%e v 1.5% prior
• 08:30 (US) Dec PCE Core Deflator M/M: 0.1%e v 0.1% prior; Y/Y: 1.6%e v 1.6% prior
• 08:30 (CA) Canada Nov GDP M/M: 0.0%e v -0.1% prior; Y/Y: 1.4%e v 1.2% prior
• 08:30 (CA) Canada Dec Industrial Product Price M/M: No est v 0.1% prior; Raw Materials Price Index M/M: No est v 1.5% prior
• 09:45 (US) Jan Chicago Purchase Managers Index (PMI): 49.0e v 48.9 prior
• 10:00 (US) Jan Final University of Michigan Confidence: 99.1e v 99.1 prelim
• 10:00 (CO) Colombia Dec National Unemployment Rate: No est v 9.3% prior; Urban Unemployment Rate: 11.0%e v 10.4% prior
• 10:00 (MX) Mexico Dec Net Outstanding Loans (MXN): No est v 4.713T prior
• 11:00 (EU) Potential sovereign ratings after European close
• 13:00 (US) Weekly Baker Hughes Rig Count
• (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 4.25%
• 19:00 (KR) South Korea Jan Trade Balance: $0.7Be v $2.0B prior; Exports Y/Y: -8.1%e v -5.2% prior; Imports Y/Y: -6.6%e v -0.7% prior