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)