Stoddart's ETF model portfolio 1st November 2012

Good morning,

Fund inception: 2nd July 2012
Return: 6.7%

The funds performance over the last 2 months, has been greatly supported by the rebound in European equities. This has offset the recent profit-taking seen in the US equity market, where I have 10% exposure. The revenue weighted fund (RWL US), has outperformed the bench mark S&P index, thanks to its more defensive stance in times of negatvity.
In the fixed income market, demand for higher yielding assets, has supported my US listed high yield products, whilst the US$ weakness has supported my long gold junior miners(GDXJ US).

I will look at rebalancing to a more aggressive growth portfolio over the next fortnight, due partly to the headlines from Europe about having a Banking Union created, I am slightly more optimistic on Europe and its impact on global GDP.

ASSET CLASS	TICKER	WEIGHTING	PERFORMANCE %
EQUITY	RWL US	0.05	4.95
	SPY US	0.05	3.55
	FXI US	0.02	9.33
	EWY US	0.02	6.16
	EEM US	0.07	5.18
	BRIC LN	0.03	0.83
	VGK US	0.07	6.79
	SX7EEX GY	0.03	16.55
	EWP US	0.01	12.76
	EWI US	0.01	9.29
	EWG US	0.01	9.55
	EWQ US	0.01	5.99
	GDXJ US	0.02	26.18
DEBT	EBMMEX GY	0.05	2.15
	IBGS LN	0.05	4.24
	IBGX LN	0.15	4.36
	EMB US	0.15	5.77
	HYG US	0.15	1.90
	LQD US	0.05	4.41
		PERCENT	6.6747
		MSCI WORLD	4.9613
		PERFORMANCE	1.7134

Morning note, data, events, bonds and earnings 1st November 2012

Good morning,

Earlier this week, I used the example of an investment banker getting a new telephone, highlighting how no one likes change. I can tell you now, the same goes for changing bus routes on my way to work this morning!

God, I miss the HK bus and train infrastructure!

US markets re-open little changed, however, its good to see that volumes hit averages, despite European volumes still lower.
European markets opened at the highs and trended lower throughout the session, closing at day lows. As mentioned earlier, volumes were lower by an average of 20%. London's oil and commodity heavy bench mark, the FTSE, closed down 1.2%, impacted heavily by BG Group, which plans to sell its stake in an LNG project to CNOOC. This stock alone took 24 points of the index.

FTSE -1.2% strong volume: O/P: cons.services, utilities  U/P: oil&gas, health
CAC -0.9% v.low volume: O/P: utilities, technology  U/P: basic mat, health
DAX -0.3% avg volume: O/P: cons.services, financial U/P: health, cons.goods
IBEX +0.1% v.low volume: O/P: financial, industrial U/P: basic mat, tech

Being all saints day, many of the European markets closed, including France, Italy, Spain and Portugal, was well as the Philippines here in Asia. From the sector charts, defensives were back in favor as the Euro remains unchanged at 1.2960. As the last of the Christmas trees start going, fund managers are reminded to start locking in gains for the year, and the term risk becomes a dirty word, much to the detriment of us humble brokers.
On this note, I would expect some profit taking in sectors like financials, technology and property. Just looking at the performance of Capitamall(CT SP), yields are now considerably lower, whilst retail sales are looking to stagnate.

Markets.Expect markets to open unchanged on the open, despite a strong rally into the close yesterday across most markets in the region. A possible cause being window dressing. This should see us trend flat over the first hour or two, before seeing profit taking pushing the index easier.
At these levels, basic materials are looking cheap as GDP estimates are still looking relatively lack luster 1 year out. Despite this, governments will be looking to boost construction spending, supporting jobs growth. This should also boost other sectors, such as industrial. Oil should also see support here, time to buy Petrochina(857)
Shorts, I am looking at Singapore property names and Australia financials.

Data.07:50 Japan foreign and domestic stock & bond data
08:00 S.Korea trade balance
08:30 Australia import/export data
09:00 China PMI
12:00 Thailand CPI
13:30 RBA commodity price index
15:00 UK Nationwide house prices
16:00 Turkey manufacturing PMI
16:15 Spain manufacturing PMI
17:30 UK PMI
19:30 US challenger job cuts
20:15 US ADP employment change
20:30 US Non farm productivity/jobless claims
22:00 US ISM manufacturing/construction spending

Events.18:00 Italy's Monti meets Germany's Steinbruck
22:30 IMF regular meeting
EU bans naked CDS's

Bonds.11:45 Japan 3 month, 10 year auction

Earnings.Western refining(US), Marathon Petrolum(US), Pfizer(US), Watson Pharma(US), United Therapeutics(US), Exxon Mobil(US), Alliant tech(US), Estee Lauder(US), Visteon(US), Cigna(US), Kellogg9US), Apache(US), Avis Budget(US), Yelp(US), Las Vegas sands(US), Starbucks(US), First solar(US), AIG(US), Onyx Pharma(US), Overseas Shipholding(US), Edison(US), Linkedin(US), RDSA(UK), BSKYB(UK), Smith & Nephew(UK), Lloyds(UK), BT(UK), Eisai(JP), Mitsui Chem(JP), Calbee(JP), Fuji Media(JP), Casio(JP), Nikon(JP), Sony(JP), Sharp(JP), Ibiden(JP), Cosmo oil(JP), Hankook tire(KR), Sumsung heavy(KR), Samsung C&T(KR), Hyundai hysco(KR), S-oil(KR), Woori Fin(KR), Rosneft(RU), Arcelik(TR)

Stoddart

Morning note, data, events, bonds and earnings 31st October 2012

Good morning,

Early yesterday evening, a good friend and I were quenching our thirst with some of Japan's finer lager, shooting the breeze, as you do. And surprise surprise, the topic of Hurricane Sandy came up. Mr Gorton was in fact telling me about his sister, and of the life in NY. During this discussion, one thing became very clear, that is, regardless of what you throw at them, "they aint going nowhere". He was telling me, that regardless of the warnings and the risks, his sister wouldnt even think about leaving the city, choosing instead to rough it out regardless.
When you look at unemployment, housing stats, GDP and other economic data, you lose track of a countries "natural resources", its people. I suspect th damage will be considerably high, and will take time to rebuild, but when its done, it will be bigger and better.

With US markets closed, volumes across global indices have fallen considerably. Despite this, European equities saw some relatively strong performances, with markets up an average of 1.2%. This is despite a sharp move in Euro-Yen, after the BoJ announcement. personally, this was a great opportunity to get even shorter Jpy. Bond markets in Europe stayed relatively unchanged, but Spanish and Italian CDS's have been creeping up from the lows over the last week or so.

FTSE +1.0% v.low volume; O/P: oil&gas, basic mats  U/P: utilities, cons.goods
CAC +1.5% v.low volume; O/P: health, basic mats  U/P: telco, industrials
DAX +1.1% v.low volume; O/P: financials, cons.services  U/P: health, utilities
IBEX +1.4% v.low volume; O/P: basic mats, oil&gas  U/P: industrials, cons.services

Sector maps are a bit more telling, with basic materials outperforming, investors were looking at growth names. Added to the weaker US$ which should see commodities well supported as companies look to increase inventories and lock in lower rates.
Germany's DAX was supported by strong earnings from Deutsche Bank, pushing the financial sector to the top performer.

Markets.
Asian equity indices look set for a strong bounce. After such an aggressive sell off into the close, Japan looks set to be todays outperformer. I expect markets to trend sideways for most of the session, however, going into month end, watch out for window dressing.
Again, looking at Jiangxi Copper(358) and Chalco(2600). Also, Kobe steel in Japan had some strong earnings yesterday, so will be watching Nippon Steel closely.
With the JPY weakening once more, I still like consumer electronics, including Sharp(6753) and Sony(6758).

Data.
08:00 Australia building approvals/consumer credit
09:30 Japan labor cash earnings
13:00 Japan construction orders/housing starts
15:00 German retail sales
15:30 Thailand trade balance
16:00 Spain housing permits
17:00 HK money supply
17:00 Italy unemployment rate
18:00 EU CPI
18:00 Italy CPI
19:00 US MBA mortgage apps
20:30 US employment cost
21:45 Chicago purchasing power

Events.
16:00 Italian cabinet meet
17:30 UK Taylor testifies to UK banking standards panel

Bonds.
17:50 France 7, 10 and 23 year auction
18:30 German 30 year auction
19:00 India 3 and 12 month auction

Earnings.
Cummins(US), MAstercard(US), Omnicare(US), GM(US), Hess(US), MGM Resorts(US), Eaton(US), Phillips66(US), Visa(US), Metlife(US), First Solar(US), Tesoro(US), WABCO(US), BorgWarner(US), Murphy oil(US), Novo Nordisk(DM), ArcelorMittal(NL), Clariant(GE), Air France(FP), Deutsche Lufthansa(GE), Vossloh(GE), Barclays(UK), Total(FP), Continental(GE), Garmin(US), GlaxoSmithKline(UK), Fiat(IT), BBVA(SP), Toyota Ind(JP), Kawasaki heavy(JP), Denso(JP), Mitsui OSK(JP), Alps Elec(JP), Shiseido(JP), Daiichi Sankyo(JP), Aisin Seike(JP), Hoya(JP), Sumitomo(JP), Makita(JP), Konica Mintola(JP), Nippon sheet glass(JP), Fuji film(JP), Murata Manu(JP), TDK(JP), Toshiba(JP), panasonic(JP), Takeda pharma(JP), Sumitomo elec(JP), Seiko Epson(JP), NTT Data(JP), Mazda(JP), Capcom(JP), Yamaha(JP), Tokyo Elec(JP), Nitto denko(JP), Kyocera(JP), Chubu elec(JP), TEPCO(JP), SJM holdings(HK), Giodano(HK), UMC(TT), S-oil(KR), Shinhan fin(TT), Compal(TT), Astra intl(IJ)

Stoddart

Morning note, data, events, bonds and earnings 30th October 2012

Good morning,
With US markets closed, and disruptions across the east coast, equity volumes fall globally. In Europe, average volumes fell by around 40% greater than that of Asia which fell around 25%

FTSE -0.7% v.low volume: O/P; tech, industrials  U/P; O&G, basic materials
CAC -0.8% v.low volume: O/P; cons.goods, financials  U/P; utilities, telco
DAX -0.4% v.low volume: O/P; tech, basic mat  U/P; cons.services, financials
IBEX -0.6% v.low volume: O/P; health, tech  U/P; telo, financials

Mixed signals from the sector maps, however, it does feel like there is a more prominent defensive theme. Italy saw the biggest fall in the region, with its main index off 1.5%, after Berlusconi threatens to bring down Monti, due to a recent court case that could see him do 2 years in prison. Once again, we see that instinct of self-survival threaten the Euro, which could cause some heavy setbacks.
With the progress made so far, including a banking union due in January, Monti has held his own against major powers. After tough budget cuts, clamping down on tax evasion and trying to reduce corruption, Monti has also managed to protect many of the state assets, which were long expected to be put up for sale to help with their debt burden.
Where does this leave us? Well, once again, Berlusconi will no doubt be given a "get out of jail free card", which he shall use immediately, unless of course the Italian prisons have "bunga-bunga Tuesdays", Dom Perignon and unlimited conjugal visits.
Under pressure from other European states, Monti will be forced into this position, which should then allow European leaders to concentrate on bailout terms and ways to stimulate growth.

Another major story overnight, was the arrest of a Greek Journalist who published a list of tax evaders. This in itself is a relatively minor event, however, 1. the documents obtained by this reporter, had infact passed the hands of Christine Lagarde and Greek finance minister; 2. Give the upset caused by austerity, the pressure is set to increase.  
What is the impact? Despite freedom of the press, this could be dealt with quickly, unlike that of wikileaks. More than likely, is this could be the push needed, with public backing, to take on tax evaders. Lagarde should see this as an opportunity; support the clamp down on tax evasion.
This could, however, trigger a witch hunt, putting further pressure to restrict the use of offshore bank accounts. Already we are seeing headline of Chinese banks moving to Luxembourg to avoid UK regulation. This kind of disruption, could only further alienate EU members.
The answer is, for now, lets deal with the problem at hand. Like a banker with a new telephone, no one likes sudden change.

Markets.
With the US off today, expect volumes to continue to miss recent averages. I am also expecting some negativity which will see indices fall once more.
Honda was a big miss yesterday, Paypal job cuts highlight weak consumer spending whilst Apple management shift, shows just how sales dependent even a great giant can be.
Further noise on Libor could hit HSBC, which has been an extremely strong performer of late, as has the sector globally.
Basic materials look set to fall, again, on growth concerns. Jiangxi Copper(358) saw net income miss estimates by -13%, which given the fall in copper prices was not a surprising as that figure suggests. With the sector having a very lack luster bounce, any sell off does leave stocks looking cheap, which given governments efforts to support growth, I see as a buying opportunity. Spreads between Copper and Jiangxi Coppers share price are now at the lows, leaving the company looking cheap. Yes inventories are high, yes demand and outlook currently look weak, BUT, conditions are improving.
Oil should also see outflows, as crude oil falls. This looks like a short term move in the physical, due to Hurricane Sandy. There are still many drivers that could see oil increase back to the 95 level. BUY

Data.
07:30 Japan jobless rate
12:00 Japan vehicle production
12:30 India cash rate
16:00 Spain CPI/GDP
21:00 US Case Shiller home prices
Spain budget balance

Events.
13:30 India RBI meeting
16:00 Monti speaks at World economic forum
19:00 Portugal reports retail sales//industrial production
Japan BOJ policy meeting

Bonds.
11:00 Thai 1,3, 6 and 12 month auction
11:30 HK 1, 3 and 6 month auction
18:00 Italian 5, 10 year auction

Earnings.
Archer Daniels Midland(US), Johnson controls(US), Ford(US), DaVita(US), Avis(US), Dreamworks(US), Onyx Pharma(US), Ashland(US), US Steel(US), Valero Energy(US), Deutsche Bank(GE), Hugo Boss(GE), UBS(SF), Geberit(SF), Danske Bank(NO), Erste Bank(VI), Bayer(GE), ENI(IT), MAN(SW), BP(UK), Imperial Tobaco(UK), Ferrovial(SP), Tom Tom(NL), Fiat(IT), Seagate tech(UK), Mitsubishi motor(JP, Kobe steel(JP), Tokyo gas(JP, West Japan rail(JP), Hitachi(JP), Komatsu(JP), Japan tobaco(JP), Asahi group(JP), Ricoh(JP), Fuji heavy(JP), SIA Eng(SG), Lai Sun dev(HK), Samsung SDI(KR), KEPCO(KR), Hyundai Marine and fire(KR), Sichuan ecpress(HK), Metallurgical corp(HK), Ping An(China), China rail construction(CH), Mega fin(TT), BoCom(CH), SAIC (CH), C.Minsheng(CH), CSCL(CH), China Rail(CH), COSCO(CH), CCCC(CH), Air China(CH), Guangzhou Auto(CH), C.Shipping development(CH), Huadian power(CH), Dalian port(CH), China Eastern(CH), Quanta comp(TT), Zoomlion(CH), Tsingtao(CH), ICBC(CH), Compal(TT), petrochina(CH), CITIC sec(CH), Asustek(TT), Hon Hai(TT), Foxconn tech(HK), Shanghai Elec(CH), Chalco(CH), Taiwan cement(TT), satyam(IN), Dr Ready's (IN)

Stoddart     

Morning note, data, events, bonds and earnings 29th October 2012

Good morning,

As hurricane Sandy heads up the east coast, its path includes North Carolina, Virginia, Maryland, New Jersey, Pennsylvania, New York and Connecticut, it seems that storms this year could have a greater impact on the more northern states.
Interesting to note, that many geologists have been pushing this theory, as cold winds from the north become warmer due to global warming, and wind patterns around the world shift. Is this a one off?
Despite the relative strength in Europe on Friday, volumes dropped by an average of 20%, which always makes me nervous. The US was slightly stronger after better than expected growth, as GDP came in at 2.0 vs expected 1.8% QoQ. Although personal consumption came in slightly easier, at 2.0 vs expected 2.1, markets liked the data, and with Romney attacking Obama on growth, this number should help his campaign, especially, given the headlines over the weekend.
As the US presidential election ends the final phase, and hurricane Sandy batters the east coast, markets should and will remain nervous. China government spending was more than expected in the first 9 months and yet, revenue gains moderated. Fiscal revenue rose 10.9% vs 29.5% for the same period in 2011. With pressure on the Chinese government to further support the domestic growth, China looks like it is suffering at a great rate than expected due to falling global trade. This will cause some concerns on China's ability to meet growth estimates.

Markets.
With such a strong run in Asia of late, markets look set to give back some of these gains. I suspect this will be after month end "window dressing", as funds look set to lock in gains as we approach holiday season, which is well known for easing volumes, due to lack of interest/commitment from fund managers to risk the years performance, going into the final furlong.
With hurricane Sandy already causing contingency plans with exchanges, offices and power stations; expect some short selling in related companies. Insurance companies will also come under pressure as there are very few that dont have exposure to the east coast. Despite the news, oil remains at 2 month lows, which looks cheap, given the GDP figure and possible supply issues not just in the US but also, Nigeria and Iran.
I expect rotation out of property, which has seen very strong returns in the last 6 months, as global interest rates look set to remain low, whilst dividend yields of companies such as Suntec,, Capitamalls, Wheelock and Henderson, are around 2-6%. Investors will choose to lock in capital gains, rather than hold the yield.
Other areas, like IPP should also see outflows, however, with China winter here and factories busy with orders pre CNY, this should give us an opportunity to accumulate.
Banks have also seen inflows as governments globally look to ease credit markets, however, there has been little noise on bad/non-performing loans. Ow how quick we are to forget. Australian property prices are still looking toppy, watch for a slow down and possible impact on the financial sector.
Markets open unchanged and trend slightly easier today. Expect lighter volumes and currencies to also give back some of the recent gains. This is a good time to short the JPY vs Euro.

Data.
07:50 Japan retail sales
08:00 UK hometrack housing survey
15:00 German CPI
16:00 Spain retail sales
17:30 UK net lending, money supply
20:30 US personal income/spending
22:30 US Dallas fed
Also due, China leading index

Events.
19:00 Spain's Rajoy meets Italy's Monti
IMF meet in Egypt to discuss loan

Bonds.
12:30 Taiwan 6 month and 20 year auction
13:30 Philippines 3, 6 and 12 month auction
18:00 Italian 6 month auction
18:35 German 12 month auction
21:00 France 3, 6 and 12 month auction
23:00 US 3 and 6 month auction

Earnings.
Burger King(US), Gardner Denver(US), Harris Corp(US), Linde(GE), TNT Express(NL), Assa Abloy(SW), Deutsche Boerse(GE), Misubishi Tanabe Pharma(JP), Honda(JP), Renesas elec(JP), Keyence(JP), Aquarius Plat(AU), Hankook Tire(KR), SK Holdings(KR), Hyundai development(KR), China tel(CH), New China Life(CH), Formosa plastic(TW), China Citic(CH), AU ops(TT), Manila elec(PH), Poly real estate(CH), Sany heavy(CH), Sinopec shanghai chem(CH), Jiangxi copper(CH), Shanghai Pharma(CH), BYD(CH), Baoshan I&S(CH), CBM(CH), China Steel(TW), First tractor(IJ), Uni-president(TW), Bakrie tel(IJ), Bharat heavy(IN), Colgate-palmolive(IN), Baidu(CH), Budimex(PW)

Stoddart

Morning note, data, events, bonds and earnings 25th October 2012

Morning,

Equity markets once again, remain lack luster, as the FED indicates that rates will remain low and asset purchases will continue as far out as 4th Quarter 2013.
European markets, which were closed when the FOMC announced rates, saw a limited rebound, after such a sharp sell off on Tuesday. Volumes, however, did leave a number of concerns, as they continue to fall.

FTSE +0.1% avg volume; O/P: tech, cons.goods U/P: telco, utilities
CAC  +0.6% low volume: O/P: tech, industrials U/P: financial, telco
DAX +0.3% avg volume; O/P: tech, cons.goods U/P: utilities, cons.services
IBEX +0.6% low volume; O/P: health, tech U/P: oil&gas, telco

After some rather aggressive selling at the start of the week, yesterday saw strong inflows back into tech with names like SAP, up 4.2%. The tech sector continues to be one of the best performing this year, as demand for consumer electronics remains buoyant. I expect some window dressing into month end for tech stocks, but would use this as an opportunity to reduce, as we enter the US general election.
The financial sector, which over the last month, has been the top performing sector, is finally starting to lose steam. As interbank lending looks set to improve and governments aim to improve the credit market, investors have looked at the banks on improving revenues and margins, where low rates and reduced competition compared to 2006/7, should support the sector. This many be the case but little has actually changed, and the recent strength looks set to correct back, as the market looks for clarity from Spain and the ECB, that a soft bailout will take place, and the terms placed on it.
Data in Europe came in slightly weaker, with the German business climate of 100 vs expectations of 101.6. PMI's in Italy and for the Eurozone came through inline, whilst in the UK, the CBI was weaker with busniess optimism coming in at -12 vs the expected fall of -2.

In the US, I was expecting to see some relative strength, but I was denied this bounce as volumes eased and the market sentiment remained weak. With the S&P breaking the 50 day moving average, technical traders saw this as a signal to not just reduce holdings, but also look at taking a near term short position, as recent sector performers such as technology and financials, are starting to look rich. Despite this, finanacials was one of the better performing sectors, but as mentioned earlier, are starting to lose steam. Time to short.

S&P -0.3% avg volume; O/P: health, financials  U/P: utilities, oil&gas

Data in the US saw a sharp drop in mortgage apps, down -12% vs last week, down -4.2%. Despite this data, September new home sales came in slighlty stronger at 389k vs expected 385k, however this number was over-shaddowed by the FOMC announcement at 2am Singapore time, which although rates remained at 0.25%, they did highlight expectations that asset purchase programs are to last until 4Q 2013, longer than the market was looking for. This triggered some negativity that growth is still slowing, prompting further action required by FED.

Markets.
Asia was relatively strong yesterday, given the sell off's in other regions. I expect some rather aggressive selling on the open. For the short term trades, this should provide a good opportunity to pick up stocks, particularly basic materials, oil & gas and construction materials.
We should also see the JPY firm, which we should look to be shorting into. With Europe close to a resolution for Spain, which should trigger inflows to French, Spanish and Italian debt, the Euro should continue to firm over the next 6-12 months.
Expect markets to open at the lows and trade sideways in the first hour, before trending firmer into the close.

Data.
10:00 China leading index
13:00 Singapore industrial production
15:00 Spain industrial production
16:30 HK import/export data
16:30 UK GDP
17:00 Italian retail sales
20:30 US Chicago fed
20:30 US durable goods, jobless claims
22:00 US pending home sales
23:00 US Kansas fed

Events.
15:30 Portugal weekly cabinet meeting
17:15 UK's FSA at UK parlimentary banking standards
19:00 EU's Van Rompuy meets UK's Cameron

Bonds.
11:00 China 10year auction
17:30 German 10 year auction
01:00 US 5 year auction

Earnings.
Coca-cola(US), Nobel energy(US), ITT ed(US), Sherwin-williams(US), McKesson(US), Biogen(US), Watsco(US), National oilwell(US), P&G(US), Percision castparts(US), Aetna(US), Zimmer holdings(US), Sprint nextel(US), Colgate-palmolive(US), Janus(US), ConocoPhilips(US), Freanklin Resources(US), Apple(US), Amazon(US), Coinstar(US), Chubb(US), Expedia(US), United continental(US), ABB(SW), Credit Suisse(CH), BASF(GE), Novartis(CH), Ranstad(NL), Skandiaviska Enskilda(SW), DNB(NO), Solvay(NL), Astrazeneca(UK), Sandvik(NO), Banco Santander(SP), Debenhams(UK), Shire(UK), Hitachi metals(JP, Advantest(JP), Canon(JP), CapitaMalls(SP), Mapletree Commercial(SP), Neptune orient(SP), Suntec REIT(SP), COSCO (HK), C.Unicom(HK), Korea Air(KR), Taiwan mobile(TT), Samsung Engineering(KR), Korea Zinc(KR), China oilfield services(HK), AU Ops(TT), BBMG (HK), Bank of China(HK), TSMC(TT), Maanshan Iron(HK), CSR(HK), ZTE(HK), DAtang power(HK), Holcim(IJ), Astra agro(IJ),

Stoddart

Morning note, data, events, bonds and earnings 23rd October 2012

Good morning,

Its another dark but warm Tuesday morning on the shores of Singapore. The navy and coast guards warm their boats along the little stretch next to Ports Authority of Singapore's vast container dock, and yet, although this is nothing new, it has a feeling of a great machine firing up for the day ahead.
Given the number of ships docking here lately, including 2 rather massive cruise ships last, it will be a busy day.

Equity markets over night seemed lacking in support. European markets opened easier, but soon moved into positive territory in the first half of the session. This came to end in the later stages of the session, as the US opened, leaving Europe trending easier after lunch and closing at day lows.
Volumes fell by an average of 20%, with little increase going into the close, which is worrying, given I would expect some short covering with this kind of price action.
Despite weakness in equity markets, the Euro rallied against the greenback, whilst European debt markets remained relatively unchanged.

FTSE -0.2% low volume; O/P: cons.goods, financial  U/P: industrial, O&G
CAC -0.6% low volume; O/P: cons.services, financial  U/P: cons.goods, basic mat
DAX -0.7% low volume; O/P: financial, industrial  U/P: tech, cons.services
IBEX -0.5% low volume; O/P: O&G, tech  U/P: telco, basic materials

Despite the market closing lower and volumes easing, the sector performance shows investors looking at higher growth sectors. Financials continue their run, as the outlook for credit growth improves, due to the new banking union, expected on 1st Jan.

US markets, as mentioned earlier, opened unchanged but trended lower throughout the session, before seeing a short bounce into the close, leaving them flat on the day. Yesterdays earnings came in relatively strong, with VF Corp and Caterpillar slightly beating and Peabody Energy beating estimates by 49%. Then after the close Yahoo beat estimates by 37% and Texas Inst by 13%.
All US indices seemed to mirror the US$ index, which given its aims to export its way out of its current debt mountain, the US$ weakness will have an increasing impact on demand for its products.

S&P flat avg volume; O/P: tech, basic materials  U/P: O&G, telco

Once again tech outperforming, in particular hardware, with Apple up 4% trailed by EMC and HP, up +1.9% and +1.6% respectively. With crude oil selling down below the $90 level, it is now at major supports and with the Euro maintaining its strength, I expect the $89 mark to hold as inflows to hedge against the US$ increase.

Worth noting that the S&P actually broke the 200 day moving average last night, which on average volumes will have the technical analysis camp, pushing for a short position. With the US elections coming up, volumes should start easing, so expect a pick up in volatility on both and index and single stock level. Near term short looks to be the position, however, after the election sentiment should be improved. I would not want to be short for long, however, nothing in the fundamentals has changed.
Data over night saw a huge fall in Spanish mortgages on houses, down -28.5%, which to be honest, no one was expecting this number to be good. 2011 Eurozone debt to GDP number came in at 87.3%, which although high, is little changed from the previous year, plus its for 2011!

Markets.HK closed today. Expect other markets to show relative weakness on the open, in line with that of the US. Finanacial stocks seem to want to outperform, I'm looking to short into this strength.
Oil stocks in HK/China still look rich. Longer term play I like as a US$ hedge and improving GDP however, in the near term(3 months) e should see them give back some of the recent gains.
Insurance seems to be a hot sector and will continue, as earnings growth is maintained. Optimism on the A'share market should also support its investments domestically. BUY
Australia, I still want to short the banks as housing markets look increasingly toppy. We could see a push for greater previsions, so watch the transaction data for falling sales.
Markets to open at the lows early session, then trend slightly firmer as the US$ continues to weaken, before leveling off and trading sideways. Expect a drop in volumes.

Data.13:00 Japan small business sentiment
13:00 Singapore CPI
14:45 France production outlook
15:30 Netherlands consumer spending
19:30 Turkey industrial confidence/capacity utilization
22:00 Eurozone confidence
22:00 US Richmond FED

Events.EU parliament Mersch ECB nomination
Spain short sell ban ends
16:00 WTO dispute settlement body meets

Bonds.13:30 Philippines 7yr auction
16:30 Spain 3, 6 month auction
17:00 Indonesian 1, 6, 10, 20 year auction
23:30 US 4 week auction

Earnings.Virgin Media(US), Lexmark(US), RadioShack(US), AK Steel(US), United Tech(US), Whirlpool(US), Coach(US), Harley-Davidson(US), Xerox(US), 3M(US), UPS(US), Aflac(US), Polycom(US), Hanesbrands(US), Illumina(US), Flagstar Bancorp(US), Amgen(US), Norfolk Southern(US), Facebook(US), KPN(NL), Norsk Hydro(NO), Swedbank(US), Mobistar(SP), Schindler(GE), Enagas(SP), Whitbread(UK), ARM(UK), Kone(FI), Stora Enso(FI), STMicro(NL), OSIM(SP)

Stoddart

Morning note, data, events, bonds and earnings 22nd October 2012

Morning,

The major headline this weekend was the confirmation that on the 1st January, the European banking union will be created. Great. But once again, we have a number of counties adding to the pressure of this new initiative with Merkel quoting "quality takes precedence over speed". The ECB is to be given power to intervene in 6000 eurozone banks, with the aim of easing credit markets, as banks have been reluctant to lend to each other, and government debt markets in Spain and Italy have seen rates recently above the 5% mark, With recent stress tests highlighting the problems faced by domestic banks, this should help ease the burden on domestic credit markets, as the ECB will now act as the "lender of last resort".
European leaders are hoping that improved credit markets will encourage increased lending and improve lending rates, which in turn should increase consumer spending and therefore the jobs market. They do however have concerns that for lower quality lending, the ECB could end up with the high risk assets whilst regional banks and be more selective, choosing to only take on high quality credit.   
Although the risks are apparent, its good to see Europe working towards a common goal, and with Spain needing nearly 60bn Euros, the market will take this news with welcome relief.
With US elections just around the corner, I expect investors to continue on a defensive course. The recent run in growth and higher beta is largely in part due to a less negative outlook on GDP, not a expectation of strong growth. There are a number of sectors which are yet to se these inflow, including consumer electronics. This is a sector I would be looking at for short/near term gains as sector rotation finds its way there.
With such a strong run in coals over the last month, its time to switch out of the sector. With such high inventories, the fundamentals havent changed, and margins will remain low. I expect steel and Alu to outperform, more on technicals than improved demand, but with negativity so high on the sector, there is a high chance that short positions will get caught, triggering a squeeze.

Markets.
In the US on friday, markets were hit by a number of missed earnings including McDonald's, mostly due to slowing domestic growth. There will be some negativity in the market ahead of the US durable goods numbers due Thursday, and US house prices due Wednesday.
Commodities look set for a sharp down over the next few days as the USD will firm against the Euro looks set to retest the 200 day moving average once again. Its time to buy Euro on weakness.
Markets today should trend weaker in the first hour, hitting day lows but soon find support and trend sideways, maybe even trend slightly firmer on the short cover.
After such  strong run, expect selling in Petrochina(857) and SNP(386), which due to their weighting in the index, will leave HK underperforming the region.

Data.
07:50 Japan import/export
13:00 Japan department store sales
15:00 Spain mortgage data
16:30 HK CPI
Also Greek current a/c

Events.
07:50 Japan BOJ minutes
14:00 German finance minister publishes monthly report
21:00 ECB Constancio testifies to UK lords panel
IADI general meeting

Bonds.
09:30 Korea 1 and 20 year auction
11:00 Thailand 1, 3 and 6 month auction
21:00 France 3, 6 and 12 month auction
23:30 US 3, 6 month auction

Earnings.
Peabody(US), VF Corp(US), Hasbro(US), Caterpiller(US), Western Digital(US), Freeport McMoRan(US), Yahoo(US), Wynn resorts(US), Philips(NL), Svenska Handelsbaken(SW) Electrolux(SW), Scandia(SS), Raffles medical(SG), China Mobile(CH), LG House & Health(KR), Acer(TT), ZhuZhou CSR(CH), Cairn India(IN), Bajaj Auto(IN), L&T(IN), Mahindra & Mahindra(IN), Power grid of India(IN)   

Morning note, data, events, bonds and earnings 19th October 2012

Good morning,

After such a strong bounce on Wednesday, equity markets traded flat to down overnight, however, all put through good volumes.
Spain's bond auction saw the nation increase borrowing more than expected. This had the opposite effect and 10yr yields fell to new lows of 5.3%.
European equity markets saw German and France both stay in positive territory, but both lagged on Wednesday and were playing catch up. Strong earnings from Bankinter and Nokia(!) helped boost the market, as did investors increasing risk, with sectors such as basic mterials and industrials outperforming. Financials continued to hold up we with DB closing at day highs, up over 40% since July!!

FTSE +0.2% good volume; O/P: basic materials, telco U/P: cons.goods, tech
CAC +0.2% v.good volume; O/P: tech, health  U/P: cons.goods, cons.services
DAX +0.6% v.good volume; O/P: cons.services, industrial  U/P: utilities, telco
IBEX -0.3% v.good volume: O/P: tech, basic mat  U/P: industrial, financial

Data yesterday saw Spain's trade balance com in higher than expected, -3145.1m vs expected -2500m. With the aim of seeing Spain reduce its debs by increase exports, we wan to see this number improving to a positive.
UK retail ex fuel sales came in strong at +0.6% vs expected +0.3%, lets hope we see this number continue to improve as UK retailers have been struggling for some time as discretionary spending remains low.
In the US as string of strong earnings from Capital One, SanDisc, Verizon, Keycorp, PPG ind and Morgan Stanley help support equity markets. Google missed its estimated earnings by 15% leaving tech stocks down and the Nasdaq -1%. We have been use to seeing tech outperform over teh last 6 months, its now time to rotate out back into other sectors such as industrials.

S&P -0.2% good volume; O/P: telco, utilities  U/P: tech, cons.goods

Sector performanc ehere indicates a more risk off approach, however, basic materials was the 3rd best performing sector, highlighting negativity towards growth is starting to ease and investors expect GDP to start improving.
US data overnight saw jobless claims increase at a fast rate than expected to 388k vs prior month 339k. The market was looking for 365k. With the elections coming up, jobs are a major issues and I think Obama could really have done with that coming out better.
But this data was soon overshadowed by the Phily Fed, which came in at 5.7 vs expected 1.0. Whilst the headline looks strong, we did see the employment index and new orders drop, leaving this number looking seasonal. We did, however, see a small increase in inventories and prices paid, but we need to see this increase further and encourage jobs growth.

Markets.
Equity markets today look set to give up some of the recent gains. I still continue to like the consumer electronics names in Japan, with so much negativity on the sector, we should see a short squeeze, added to th e weaker yen supporting overseas sales.
Basic materials should continue to run, although coal will see outflows due to is recent performance, steel and cements seem to be to hot spot for those flows to head into.
I still want to short financials due to the HUGE run they have had. Yes margins are improving as are deal flows but with the overhang of the Libor claims, I want to short HSBC. Australian banks will also struggle with a rather toppy housing market, and minimal previsions.
I expect markets to open flat for the first hour and trend easier to the close.

Data.
12:30 Japan all industry activity
13:00 Japan leading index
14:00 Germn Producer prices
15:30 Thai reserves
16:00 EU current a/c
16:00 Italian industrial orders
16:30 UK public sector net borrowing
22:00 US existing home sales
also due, China FDI

Events.
16:00 EU leaders conclude summit
Portugal's Coelho attends EU council meeting

Bonds.
18:00 UK 1, 3 and 6 month auction

Earnings.
Schlumberger(US), GE(US), Honeywell(US), McDonalds(US), Shaw grp(US), Ziggo(NL), Elisa(FI), Alpha bank(GR), Capitamall(SG), China State construction(CH), Hana fin(TT), LG Dis(KR), Kumho pet(KR), LG Chem(KR), Bursa Malaysia(MK), Powerchip(TT), DiGi(MK), Bk of Moscow(RU), Turkcell(TU), Bank Forum(RU), Philip morris(CZ)

Happy friday
Stoddart

Morning note, data, events, bonds and earnings 18th October 2012

Good morning,

Strong earnings and positive macro data overnight helped lift equity markets and saw bond yields fall. Currencies also saw the US$ EUR testing Septembers highs of 1.3140, which supported commodity rices such as gold, currently trading at 1750.

In Europe, Moody's kept Spain's debt rating unchanged, meaning it is still investment grade quality. This saw bond yields fall with the 10yr falling from 5.71 to the 5.40 level, and closing at 6 month lows. Spain's 5yr CDS has now sold down 80bps in the last 2 sessions and is now trading back at early 2011 levels....finally.
The bond market helped boost equities, where we saw extremely strong volumes overnight across all markets, with Spain and France both seeing 80% increases over daily averages. Strong performances in financials and a inflows into basic materials helping drive markets higher.

FTSE +0.7%  strong volume; O/P: basic materials, O&G  U/P: health, utilities
CAC +0.8% v.strong volume; O/P: financial, industrial  U/P: health, cons. goods
DAX +0.3% strong volume; O/P: cons. services, industrials  U/P: tech, health
IBEX +2.4% v.strong volume; O/P: tech, financial  U/P: health, cons.service

Sectors highlight investors increasing risk, which seems aggressive going into a major US election and with little increased clarity from Europe. Yes, Spain has agreed to help from the EFSF, but this time delay once again shows the inpact of a single nation on the EU. Its time to come down tough, and implement policies that already expect these issues. Time delays are only increasing the debt burden.
Data in Europe was strong overnight. UK jobless claims came in better at -4k vs expected 0. UK weekly earnings also came in slightly better at 1.7% vs expected 1.6%.
The EU construction output was also better, at 0.7% for August MoM, vs July's number of -0.3%. Although coming from a low base, this is a big turn around and should see sentiment towards property improve. European homes sales should be watched closely.
Germany cut its economic growth forecast to 1% from 1.6% for 2013. Although a reduction was expected, German has been one of the major powers behind Euro policy, this slowdown could see further pressure from the public against support to the Euro. Its a risk, but with data improving, fears maybe short lived.

US markets traded flat to slightly higher overnight as strong earnings and improving macro helped boost oil & gas and basic materials. Earnings from CSX, Intel, BoNY, US Bancorp, Pepsi and Halliburton all beating expectations. Unfortunatly both Stanley, Black & Decker, and Texton missed.

SPX +0.4% strong volume; O/P: utilities, financials  U/P: tech, health

Data overnight in the US saw a weak mortgage apps number for the week, with a decline of -4.2%. This was however, completely over shadowed by the housing starts, which came in at +15% vs expected just +2.7%. Building permits also increased at 11.6% vs expected 1.1% MoM. This helped push the US home builders ETF (XHB US) to a 52 week high and closing 25.88. It was trading at $17.00 at the start of the year.

Markets.
I expect markets today to trade inline with Europe and the US. Inflows into basic materials and O&G. We have seen these sectors run already but this move could trigger a squeeze int he less liquid names. I would be looking to short these sectors into the move, as we have yet to see major policy adjustments in China and inventories are already sufficient.
Equity markets should open and trade high in the first hour, hitting day highs before trending easier as investors look in the recnet gains over both the week and fortnight. I expect funds to take an underweight equities approach into the US election.
With a short squeeze coming, I expect to see some of the consumer goods names run. This should alos be aided by the weakening US$. Sony(6758) is my pick in the sector for a near term positive movement.

Data.
07:50 Japan foreign buying
08:30 RBA FX transactions
09:30 China property prices, govt intervention so lmtd impact.
10:00 China real GDP, govt has highlighted 7.5% target, survey 7.4%
10:00 China industrial production
15.30 Netherlands unemployment
16:30 UK retail sales
17:00 Italian current a/c
19:00 Turkey repo rate
20:30 US jobless claims
22:00 Philadelphia Fed, leading indicators
Also due, Spain house prices + trade balance

Events.
15:30 Portugal cabinet meeting
15:30 EU Van Rompuy meets labour, employer leaders
16:00 Bk of Spain bad loans data

Bonds.
11:00 Thai 2 year auction
11:45 Japan 3 month, 20 year auction
16:30 Spain 3, 4 and 10 year auction
16:50 France 2, 3, 4, 5 year auction
17:30 UK 7 year auction
01:00 US 30 year tips

Earnings.
Boston Scientific(US), PPG Ind(US), Philip Morris(US), MS(US), Verizon(US), Alliance data(US), Advanced micro devices(US), Union Pacific(US), B&G foods(US), Sandisk(US), Goodle(US), Etrade(US), Microsoft(US), Blackstone(US), Bankinter(IT), Akzo Nobel(NL), Svenska Cellulsa(SW), Nokia(FI), Modern Times(SW), Telenet(BB), Singapore exchange(SG), Bank of Queensland(AU), China State Consruction(CH), Kepple(SG), Mapletree log(SG), KT&G(KR), Bursa Malaysia(MK), VST Ind(HK), Hindustan Zinc(IN), Jindal Steel(IN), Ambuja cement(IN), ACC (IN)

Stoddart

Morning note, data, events, bonds and earnigns 17th October 2012

Good morning,

Europe was extremely strong overnight as Spain is now open to talks about a bailout. The issue here was that the EFSF would not disclose terms attached to the funds it offered, causing concerns that heavy austerity would hurt Spain's outlook, and the parties popularity. With protests already taking place in Madrid, there was also the fear that this could spread, should the government be seen to giving in too quickly.
This news was highly expected but as you can see by the reaction, nervous investors would rather wait for clarity, than risk a potential EFSF failure. This sentiment, will see investors wishing to remain super liquid, where unwind periods are low and exposure will be targeted towards the large, higher free float companies.
Europe

UKX +1.1% good volume, O/P: tech, financial  U/P: telco, cons. services
CAC +2.4% low volume, O/P: financial, health  U/P: cons. goods, cons. services
DAX +1.6% good volume, O/P: financial, basic materials  U/P: cons. goods, telco
IBEX +3.4% low volume, O/P: financial, oil&gas  U/P: industrial, health

Data in Europe was mixed. European new car registrations came in at -10.8% for September, putting even great pressure on France, German, Spain and Italy, which all have heavy exposure to the auto industry. Consolidation within the industry has already been talked about and with current sales so low, this could speed up the process.
Italy's trade balance came in at -598m Euro, due to a large decrease in exports of mining and quarryin, and oil related products. The was, however, an increase in textiles, clothing and leather. With the Euro weak vs major currencies, Europe is looking to export its way out of current debt, we should continue to watch the export data and look for a shift in geographic manufacturing hubs. With Asia and Turkey becoming increasingly expensive, Europe could increase its strength in the sector.
UK PPI was slightly weaker and CPI inline, both numbers having little impact on the market. AS did the EU CPI at 0.7% vs expected 0.7%.
European trade balance came in at 6.0 billion vs expected 10 billion. Spain, Netherlands and the UK seeing the biggest fall in trade not just MoM but also over 2 months (July and August).
US markets opened at the lows and trended firmer for the first half, before trading sideways in a tight range. Strong earnings from Goldmans, Coca Cola, J&J and Mattel helping support the macro data.
SPX +1.0% avg volume, O/P: basic materials, tech  U/P: utilities, telco
Interesting to note that growth sectors were strong, whilst the more defensive were the underperformers yesterday. We also see the financial sector slowing after such a strong run over the last month. With Libor claims hanging over them, we could see increased provisions putting pressure again on balance sheets.
US data saw CPI inline at 0.6% vs expected 0.5%, whilst ex food and energy was flat. Industrial production came in at 0.4% vs expected 0.2%, with utilisation unchanged in September at 78.3%.
The NAHB housing market index came in as expected at 41.

Markets.
Australia currently trading just under 1% firmer as sectors follow the US with basic materials outperforming. Expect inflows to continue but with inventory levels so high, its hard to see margins improving. A number of stories came out about investors now expecting increased stimulus in China under the new regime. This is helping boost the commodity space, as is the weaker US$, however, without clear information on how they plan to do this, it feels a little premature. I am looking to short into this move.
Equity markets trend firm in the first hour/session but see profit taking later in the day.

Data.
08.30 Singapore exports
14:00 Japan machine tool orders
15:30 Thailand interest rates
16:30 UK BoE minutes, jobless claims, earnings
17:00 EU construction output
18:00 German economic forecasts
20:30 US housing starts and building permits

Events.
15:00 Swiss government meeting
Volcker testifies at UK parliment

Bonds.
10:00 China 1 year auction
11:35 Japan 1 year auction
17:30 German 2 year auction
17:30 Portugal 3, 6 and 12 month auction

Earnings.
Halliburton(US), US Bancorp(US), Abott Lab(US), Blackrock(US), Stanley Black and decker(US), BONY(US), Knight Cap(US), Pepsi(US), BoAML(US), AMEx(US), eBay(US), Crown(US), ASML(NL), Yaskawa Elec(JP), Far East Global(HK), AREIT(SG), Keppel land(SG), HCL(IN), E-mart(SK), Public Bank(ML), VTB(RU), Turk Tele(TU)

Stoddart 

Morning note, data, events, bonds and earnings 15th October 2012

Morning,

Volumes in the US on Friday remained strong, trading around the recent average, as markets traded around flat. Again, we see a more defensive stance with tech and consumer goods the top performing sectors, however, utilities and telcoms were among the weaker. This leads us to believe there is still some repositioning going on, as we approach the November 6th US presidential election.

With headlines over the weekend, again, questioning growth, sentiment is still relatively weak. Europe has seen a rebound in the Euro, but Spain and Italy continue to drag their feet, causing the Euro rally to grind very quickly to a halt. This is also reflected in the bond market where Spanish and Italian yields have steadily started to rise. We need the EFSF to quickly agree terms with states needing aid.

Another major headline is the individuals claiming against libor manipulation. Many thought this could be a possiblity but now, its reality. This will be a major case for the banks and could see banks ha ve to increase provisions. A large number of banks have been fined, which technically speaking implies they are guilty of malpractice. Should a single homeowner be able to claim damages, this would open the window to nearly everyone with a mortgage. Although total loses would be hard to calculate, and would take considerable time to calculate rates without the fictitious prices in place, mortgages owners will have been impacted by higher interbank rates. This could have the similar repercussion as the mini-bond lawsuit.

Markets.
Australia currently trading flat, with consumer goods and financials outperforming. With global growth concerns increasing, basic materials is the worst performing sector. At these levels, the knock on effect of a slow down will hit the banking sector, especially with house prices still relatively high, leaving the possibility of 1. further rate cuts, 2. increased bad loan provisions, 3. lower credit growth. On this basis, time to short the Australian banks.  
With the issues involving Libor, Standard Chart and HSBC will both come under pressure today, holding the HSI index lower. I expect markets to open up near the day highs and trend easier as investors reduce risk going into the US elections. Defensive names will continue to outperform.

Events.
09:20 Japan BOJ deputy governor speach
15:00 Portugal cabinet meeting
15:30 EU foreign ministers meeting
17:00 Bank of Italy public finance release
Asian and European finance ministers meet in BKK
Portugal budget announcement

Bonds.
09:30 Korea 3,6 month and 10 year auction
13:30 Philippines 3, 6 and 12 month auction
17:30 Dutch 3, 6 month auction
21:00 French 3, 6 and 12 month auction
23:30 US 3 and 6 month auction

Earnings
Gannett(US), Charles Schwab(US), Citi(US), Packaging corp of America(US), Blyth(US), Kuehne + nagel(GE), KREIT(SP), M1(SP), Yuanta(TW)

Stoddart

Morning note, data and earnings 12th October 2012

Morning,

The Euro loves that 200 day moving average, helping it rebound from the mid 1.28's back above the 1.29. Next stop, retest the 1.30. European equity markets had a strong performance overnight, as financial stocks continue to outperform. Volumes were mixed, most inline but easing in Spain after its recent downgrade.

DAX: +1.1% avg volume; O/P financials, cons. services  U/P industrial, health
CAC: +1.4% low volume; O/P financials, cons. goods  U/P industrial, telco
IBEX: +0.9% v.low volume; O/P financials, utilities  U/P health, cons. services
UKX: +0.9% v.low volume; O/P financials, basic mat  U/P health, utilities

European data saw German CPI come through inline at flat/0%, whilst French CPI was slightly weaker, -0.3% vs -0.1%. Spanish CPI 1.0% vs expected 1.1% so little impact from that number.  
Todays data is far more important, with EU and Indian industrial. Worth noting, France industrial productin numbers, out earlier this week, were better than expected and with European trade falling less than expected in the southern region, this number could surprise to the upside as exports improve on the weaker Euro.

US price action last night was weak, opening around the highs and trending easier, despite the fact the S&P is trading at a major technical support. I would have liked to see volumes increase at this support level, especially given the US$ weakened against major currencies, leaving me with some concerns over the strength of the support level.

US data was stronger than expected. Import prices were slightly higher at at 1.1% vs the survey of 0.7%, the trade balance roughly inline at -$44.2b vs expect -$44.0... whats $200m between friends? 
The jobs data was the most talked about, with continued claims of 339k vs expected 370k. With politicians and central banks worried about job creation and the unemployment rate above 8%, this will ease some concerns. Its certainly caught the attention of the press, with every headline and note today making it the top subject. We need to see follow-through.

S&P: flat avg volume; O/P basic material, financials  U/P telco, cons. services

Markets
Asian markets open higher as the US$ remains weaker against the Euro and AU$. Jpy weaker against the greenback which should provide some much needed relief for the exporters, I have started to look at Sony(6758) at these levels.
Expect markets to open around the highs and trend easier throughout the day. After a strong performance in Europe, I expect some profit taking into the weekend, despite the possible upside surprise in the industrial production numbers.
HK was strong into the close, with stocks like Foxconn(2038) seeing heavy buying into the close. Oils also seeing inflows, which I expect to see investors increase shorts over the next week. All this should leave HK weaker by close of business today, I expect down around 50bps.

Data.
09:30 AU credit card balances
13:30 Indian industrial production
14:45 French current a/c
15:30 Dutch trade balance
16:00 Italian CPI
17:00 EU industrial production
20:30 US PPI
21:00 Mexican industrial prodution
21:55 U. of Michigan confidence

Earnings: JPM and w.fargo
Stoddart

Morning note, data, events, bonds and earnings 11th October 2012

Morning,

Once again, we see investors moving to a defensive stance. Over the last few weeks, headlines have pointed towards possible hiccups including Spain and Italy dragging its feet, talks of a 2013 US recession, conflicts in Japan/China, Turkey/Syria and Iraqi domestic disputes.

Last night, the Fed highlighted modest growth, as housing and auto sales improved, despite little change in the labor market. This is in keeping with the Economist report, which shows a 11.4% raise in F-series Ford trucks YoY.

Consumer spending remained flat, which could be attributed to tight credit markets, as well as weaker jobs and sentiment. Manufacturing shows that the market is improving, but we are yet to see this in wholesales building out inventory, mainly again due to tight credit markets.

Markets remain nervous on these numbers, as well as the MBA mortgage applications falling 1.2%, leaving US equities trending easier all session. Jobs growth will be of the highest concern with unemployment rates around 8%. I'm sure the republicans will be highlighting this into the presidential elections on the 6th November.

S&P: -0.6% avg volume, O/P: Financials, cons. services; U/P: O&G, basic mat

A strong performance in the financial sector, helps support the S&P. With JP Morgan and Wells Fargo due to report strong numbers on Friday, the sector continues to outperform the broader index. Given the announcement that the Fed will start buying mortgage based securities, balance sheets will certainly be improved. Earnings are also supported by improved margins, as banks keep "real interest rates" high, whilst interbank rates remain low.

After market, Fitch maintain ratings on a number of the financials, including BoAML, Barclays, BNP, Citi, CS, GS, RBS, DB, MS, SG and UBS.

European markets had a similar session, closing just off the lows. The price action however, did not reflect the European data. Both Greece and France showed strong industrial production numbers, growing at 2.5% and 1.5% respectively. Italy was weaker, with production falling -5.2%, this was better than the -9% expected. I think this highlights sentiment perfectly, the market is far to bearish on southern European growth. The jobs market will start improving.

DAX:-0.4% low volume; O/P: health, financials  U/P: tech, cons. services
FTSE: -0.6% avg volume; O/P: utilities, financials  U/P: tech, industrials
CAC: -0.5% avg volume; O/P: telco, industrials  U/P: tech, basic materials
IBEX: -1.0% avg volume; O/P: utilities, tech  U/P: financials, telco

After S&P cut Spain's debt rating to BBB-, just one level above junk. 10 year yields moved very little, currently at 5.76%, after a sharp rise back in early September. The Euro, however, did weaken 1 figure, from 1.2980 to 1.2880 vs the greenback. Now trading at major technical supports, I expect the Euro to remain steady here, before retesting the 1.30 level into the US presidential election, which should also coincide with Spain agreeing terms for borrowing funds from the EFSF.

Asian markets have opened all weaker. Volumes are mixed but both Japan and HK have seen sharp increases, whilst Australia is looking slightly weaker. Given the strong performance of its banks, I expect some short selling in this sector which should see the ASX200 underperform the region.

Bank of Korea cut rates 25bps, as expected, which had little effect on the Korea Won, currently at 1115. The Won has been strengthening since May, from 1180 to 1109 low just 3days ago, now we are seeing it starting to weaken, which will only be a blessing to exporters, who have been struggling with slowing global consumer discretionary spending over the last quarter.

NKY: -0.2% strong volume; O/P: O&G, tech   U/P: cons. services, financials
HSI: +0.1% v.strong volume: O&G, basic mat  U/P: utilites, tech
KOSPI: -0.34% weak volume: O/P: financials, telco  U/P: tech, health
TAIEX: -1.57% avg volume: O/P: utilites, teclo  U/P: industrials, O&G
SHCOMP: -0.5% strong volume: O/P: O&G, utilites  U/P: tech, cons. goods

For the second day, oil continues to outperform. With tensions in oil producing states, crude prices have seen a strong rebound over the last week. After weak numbers from HTC, the tech sector continues to come under pressure as heavy weight Hon Hai sells down -2.8%.

HK flat, as heavy weights include HSBC, China financials and oil stocks. Oils will continue to run in the near term, but with investors looking to reduce risk, mid-cap and basic materials will give up some of Septembers gains. We should also see short covering in alu and steel, as outflows from coal and cement rotate.
With the S&P looking to test major technical trading levels, I suspect markets will remain weak and we should see volumes fall. I see little inflows and sentiment is that, we can can wait until after the US election. This will throw up some opportunities as volatility increases, so watch for short, sharp moves on low volume as a time to buy, I would avoid shorting on strength as we will see aggressive window dressing into month end.

Data. (in Singapore time, GMT+7)
13:00 Japan confidence
14:00 German CPI
14:45 French CPI
15:00 Spain CPI
15:00 Turkey current a/c
16:00 ECB monthly report
20:30 US import prices, trade balance, jobless claims
Greece unemployment - possible upside surprise here after a strong industrial production number yesterday.
China foreign reserves, new loans and money supply.
US monthly budget statement

Evernts.
13:45 Financial stability board meets
22:00 Merkel meets EU commission
G7 meeting in Tokyo - China still not present.

Bonds.
11:35 Japan 3 month + 30 year auction
01:00 US 30 year auction

Earnings.
Fastenal(US), JB Hunt Transport(US), Safeway(US), WH Smith(UK), LaCie(FR), Medicrea Intl(FR), Wilex(GE), Fast retailing(JP), Taiwan Mobile(TT), Top Glove(MK), Tisco Fin(Thai)

Stoddart

Morning note, data, events, bonds and earnings 10th October 2012

Morning,

Sentiment is once again falling. I am surprised at the pick up of noise, stating that the US will go into a technical recession in 2013. The recent numbers are mixed. Germany posted a strong current a/c number of 16.3b Euro in August, after exports increased 2.4% vs expected -0.6%. However, industrial production numbers for the same period showed it slowing -0.5% MoM (seasonally adjusted).
In the UK, industrial and manufacturing production was off -0.5% and -1.2% respectively. With numbers this low, jobs data will not be good. 

So were is the production going?
US industrial production for August was -1.2% vs expected flat
Spain was down -3.2% YoY in August, which was less than the expected -5.5%.
Portugal industrial production in August MoM was up 6.7%
Taiwan remains strong, despite its dependence on consumer goods, at 1.89% YoY vs expected -0.6%.
Greece industrial production is off just -0.6% MoM
Turkey also seems to be seeing a slow down. Industrial production is falling -1.5% YoY vs expected 2.6%. With such a large proportion of garments now being made there, clearly falling consumer discretionary spending is hitting orders.
Norway has also seen some strong industrial production numbers. MoM +0.3% in August after a rather weak July, -4.5%

With unemployment so high in southern Europe, it is interesting to see industrial production increasing, where central Europe seems to be slowing.
China expectedly remains strong, despite the Yuan now at 52 week lows. South Korea, which is heavily consumer goods focused, is however, slowing whilst Taiwan holds up.
With the US$ so strong, we should see European exports increase. We will also see more inflows from MNC's that are looking to hedge its costs through overseas operations. We now need to see follow-through in the jobs data, which with Spain at 25%, has a long way to go.

Could such a weak sentiment towards the Euro, help it export its way out of trouble?

Markets.
Asian markets today are weaker across the board, most on stronger volumes.
Shanghai -0.43% strong volume; O/P health, tech  U/P utilities, basic materials
Japan -1.7% strong volume; O/P utilities, O&G  U/P industrials, health
Korea -1.2% low volume; O/P O&G, cons. goods  U/P utilities, tech
HSCEI +0.2%   O/P tech, utilities  U/P telco, basic materials
O/P(outperformers) are defensives today whilst basic materials like Jiangxi Copper(358) and China Coal Energy(1898 both giving up some of the recent gains.
HK listed oil stocks feel particularly strong today as crude prices push higher overnight and China looks to shorten product oil price change period.  
Rail seeing inflows today, as investors look for government supported forward earnings.
I expect equity markets to remain weak as we head into the US presidential election in November. There is limited upside for increasing beta at these levels and infact, locking in recent gains would be suggested. Should you want protection, looking at the put/call ratio, calls are still cheap but are richer from the lows saw back in July.
Currencies, we should the Eur and JPY remain steady at these levels. Inflows into higher yielding European debt will continue and looking at the industrial production data, I would be looking to pick up Spanish and Italian government debt at these levels. Portugal and Greece, despite strong numbers, have too much risk.

Data. (singapore time, GMT+8 hours)
14:00 German wholesale price
14:00 Japan machine orders
14:45 French industrial, manufacturing production
16:00 Italian industrial production
19:00 US mortgage apps
21:00 Mexico trade balance
22:00 US jobs, wholesale inventories
02:00 US Beige book
Also due Greek industrial production

Events.
15:00 EU parliament debates banking union   
Spain’s Rajoy meets France’s Hollande

Bonds.
11:00 China 7 year auction        11:35 Japan 2 month auction
17:00 Italy 3, 12 month auction   17:30 India 3, 6 month auction
17:35 German 5 year auction       23:30 US 4 week auction
01:00 US 10 year auction

Earnings.
hevron(US), Host hotels(US), Costco(US), ADTRAN(US), OCZ Tech(US), The Progressive Corp(US), ESR(FR), CFC ind(GE), Avanti Comm(UK), Gemfields(UK), Hummingbird Resources(UK), IndusInd Bank(IN), Sintex Ind(IN)

The week ahead, data, events, bonds and earnings

Good Morning,
Please see attached for this weeks print out.
Thanks

Key data this week:
Monday: Watch out for German Industrial production
Tuesday: UK trade balance
Wednesday: IT, FR industrial prod, US wholesale inventories, beige book
Thursday: US jobs and trade balance
Friday: US PPI

Stoddart
Attachment below:
Week ahead 8th October 2012

Morning note 7th October 2012

Morning all,
Apols for the delay in getting this out.

I like the fact volumes are holding up in Europe. With leaders, once again dragging their feet, I was really expecting inflows to slow. This was helped on Friday by a strong performance by the financials with BNP and SG both up nearly 4%. With the US elections coming up in November, Spain and Italy questioning bail out terms, and no direct strategy to improve growth, volumes will fall.

Press over the weekend feels like sentiment is falling away. There talks of a number of countries falling into a technical recession in 2013. This is not surprising, given some of the aggressive budget cuts and politicians doing little to ease concerns.

There are continued coverage over Japan and China's dispute over land ownership. This is not helped by the US sending out the new Osprey aircraft to Okinawa. Tensions are also building between Turkey and Syria, whilst Iraq saw the worst month for violence since 2010.

With policies designed to help ease the debt burden, with the US buying bonds and now mortgages, Europe set to become the lender of last resort to both governments and financial institutions, we are still yet to see anything directly related to encouraging growth.

With central banks so fixated on balancing budgets, politicians are looking to increase taxes, rather than cut public spending, or even redirecting public spending. Clearly, politicians such as Merkel and Hollande have great focus on self-preservation and votes. During Hollande's election campaign we was keen to keep votes but not increasing spending cuts.... now we see how he plans to reduct the deficit, through tax. This will only hit growth over the next 10+ years, with lower R&D, investment and onshore capital.
With the macro data showing global markets under continued pressure, fighting sentiment and growth, investors will look to new data for signs of improvement. The key is improved liquidity. Real interest rates still remain high. For example in the UK, where BoE rates are 0.5%, mortgage rates are currently offered at around 3.5%. Credit markets remain tight and with growth still slow, banks have a limited interest in lending to home buyers.... once bitten, twice shy.

What to look for? Governments are already trying to free up credit markets. The recent announcement to buy mortgages was something they were desperate not to do back in 2008. Products are too complicated; pricing is made difficult due credit/risk and mark-to-market of the property. Still, 4 years on and the banks are now reluctant to lend, leaving the government to step up and try to defrost the credit markets. 
With the recent announcements, we should see credit improving. The buying of mortgage securities by the Government, should encourage competition to increase in the mortgage markets. It should also improve corporate credit facilities, so we should see an increase in inventories.

The US wholesale inventory number is one I will be watching closely, as will US earnings. With improving credit, we should see lower interest rate payments, so earnings data and consumer spending should also we watched closely. Earnings should improve before the unemployment rate.

Where from here? Markets should give back some of the recent gains. The current inflows into the equity markets will now be replaced with rotation, as under-weight positions are covered.
Talks of a technical recession will continue, but the outcome of a market having to quarters of negative growth, will be discounted due to the EFSF and US stimulus packages. Defensives will remain in favor, but with data set to improve in 1H2013, I would be looking at a more aggressive growth strategy.
In currencies, we should continue to see the Euro rally. With bond yields in Italy and Spain still trading above 5%, despite being able to borrow from the EFSF, investors will be looking to take advantage of the improving credit.

With capital inflows into Europe, and the current level of the Euro encouraging exports, Gold, silver and to a lesser degree oil, should also see in flows, as investors hedge against a weakening Euro. The AU$ should see some support here, despite easing rates, however, with such large inventories, its hard to see the AU$ getting back up to 1.08 level.

Japan is desperate for the Yen to fall. With imports making up a large part of its GDP, companies are being forced to increase overseas production or in some cases, close operations. A weaker Yen would help support domestic jobs and increased exports. Unfortunately it is doubtful we get back to the 2006 levels, purely due to huge overseas loans in that period, but within the next 6 months the JPY should be trading nearer the 83.00 level.

Key data this week:
Monday: Watch out for German Industrial production
Tuesday: UK trade balance  
Wednesday: IT, FR industrial prod, US wholesale inventories, beige book
Thursday: US jobs and trade balance
Friday: US PPI
Stoddart
 

Morning note, data, events, bonds and earnings 3rd October 2012

Good morning

I start the morning run down on a sad note. ING closed the last of the old Baring's equity business yesterday. It is certainly the end of an era.

Markets overnight saw volumes ease as investor sentiment weakens, despite stronger New York ISM and Eurozone PMI.

In bonds markets, we saw Spanish yields continue to fall, now at 5.60% and Italy looking to break the 5% level. These are still running after the Spanish bank stress test showed the 100m Euro set aside by the EFSF is enough to cover its current short fall. Spain will take the capital injection, it has to. But there could be some delay over terms. The ECB will move quickly to ease these fears.  

Equity markets again saw defensives outperform. The recent run in basic materials came to an end, despite the Euro holding above 1.29 against the green back. Again, this is in keeping with an increasing equity exposure, but with a defensive stance.

I would like to turn your attention to a news story out of Nigeria. Late last night, tensions started to raise in the north east, where extremists(suspected to come from Niger), started attacking a local town. This might seem far way from most of us over the world, but the impact quite certainly escalate. The group, called Boko Haram, have been attacking communication masts also, which is strange, given many like to get the word out. This is picking up pace and could impact business in not just Nigeria, but also Africa.

Current oil reserves are estimated at between 16-22 billion barrels, with production levels of 2.4m per day targeted by the government. A large concentration of that coming from Niger delta. Given these possible threats, and the US$ weakening, I would be looking to reduce exposure to oil companies in the region, and long crude at these levels.

Markets.

Asian markets mixed as markets such as HK and India re-open. Japan sold off early open, but has since recovered and is trading up on the day. I was a little keen yesterday, wanting to buy the AU$ after the RBA cut rates 25bps, its now trading at 1.023 and I still want to buy it. 

Outperforming sectors are defensives such as utilities. The financial sector is looking extremely rich here with NAB not far off a 52week high. I would be looking to short here, as the over supply of basic materials will see earnings in Australia slow, and the housing sales stagnate.

Data   (BST+7hours)

15:00 Turkey CPI, PPI

15:15 Spain PMI

15:45 Italy PMI

15:50 France PMI

15:55 German PMI

16:00 EU PMI

16:30 UK PMI

17:00 Eurozone retail sales

20:15 ADP employment change

22:00 US ISM

Events - WTO council meeting

Bonds

11:35 Japan 3 month auction

17:30 India 3+12 month auction

Earnings

Tecso(UK), Monsanto(US), Sportingbet(UK), Family Dollar Stores(US), OCZ Tech(US), Centrotherm Photovoltaics(GE), Sareum(UK), Gold Oil(UK), Gemfields(UK), Avanti Comm(UK), Lawson(JP), Sollers(RU), RiTe Uglihevik(RU)

Stoddart