Morning note, data, events, bonds and earnings 12th November 2012

Good morning,

With the Greek budget due now, protests in Athens saw about 15,000 marchers join to voice concerns on austerity measures, which are expected to to be around 9.4b Euro's in cuts.
The coalition government control 169 seats out of a total 300, meaning the bill is expected to be pushed through, however, given the slim margins and pressure from the general public, it might not be that simple. Without the budget being approved, Greece wont receive the next tranche of bailout at 31.5b Euro from the EU, ECB and IMF.

Greece is currently between a rock and a hard place, leaving it little option but to get the budget passed. The alternative is default, and making it unable to raise capital in the foreseeable future. The passing of this bill, should see equity markets firm, as Greece will now have a plan and set targets to help them get out of current levels of debt. 
The new budget should also help speed up privatisation, adding to the effort of reducing the countries debt. The Greek government have been putting this off in an attempt to keep popularity in an already fragile government and public opinion.

With the Greek's plan due to be in place (hopefully) this week, investors will now look to other struggling countries such as Italy and Spain. Rising borrow costs at the start of 2012 saw both countries struggle, as they tried to roll debt whilst budget cuts were implemented. With the approval of the EFSF, and therefore a "lender of last resort", CDS's across Europe fell to year lows. With this sell off, borrow rates in Europe also fell, leaving Spain now able to roll debt a more attractive and manageable rates.

With rates now lower, Spain once again is dragging its feet. Rajoy, desperate to hold onto power, is struggling with popularity. With a bailout comes the terms. Budget cuts and sale of state assets have caused ever increasing protests in Madrid, and now other states. With unemployment at 25%, Rajoy is extremely nervous that these cuts will see him lose popularity, and due to this, is now questioning taking funds from the EFSF. This has seen the CDS's start to firm, from 290 basis points to 377 basis points. Once again, concerns rise.

Markets.With all eyes on Europe, equity markets look set to take a more defensive tone. Volumes have been extremely strong after the US election, but these look set to ease after such a dramatic reaction.
With the passing of the Greek budget, and therefore a plan that looks set to reduce its debt, the growth outlook should improve. For here, we should see the Euro continue to firm, helping support and in some cases, boost commodity prices. The JPY should also weaken as the EURYEN finds support around Y100. The government also has highlight increasing growth, so expect to see policy that supports strong exports.
Equity indices should open slightly firmer, trending sideways in the early part of the session, before trending firmer into the close.

Data.08:30 Australia home loans, investment lending
13:30 India industrial production, CPI
15:00 Germany wholesale price index
16:00 Spain house transactions
China money supply

Events.10:30 Japan BoJ governor speaks
17:00 Spain budget minister speaks
21:00 Italy debt agency head speaks in Rome
22:00 EU's hedegaard speaks at EU parliment hearing
Merkel visits Portugal

Bonds.10:30 S.Korea 5 year auction
11:00 Thai 6 month auction
13:30 Philippines 3, 6, 12 month auction
17:00 Indonesia 3, 12 month. 5.5, 15.5 and 20.5 year auction
17:30 India 3, 12 month auction
18:30 German 6 month auction
22:00 France 3, 6 and 12 month auction

Earnings.Beazer homes(US), Northern Tier Energy(US), SAS(SS), ACS(SP), Davide Campari-Milano(IT), Pirellia(FP), Banca Popolare di Milano(IT), JGC Corp(JP), Olympus(JP), Orica(AU), Incitec Pivot(AU), Genting Singapore(SP), Hyundai Merchant(KR), SK holdings(KR), KT Corp(KR), AU ops(TW), Nestle India(IN), Rusal(RU), Rostelcom(RU), KGHM Polska Miedz(PW)

Stoddart