Good morning,
Despite offering my services, the Bank of England has chosen a Canadian, Mark Carney as the Governor. I can only assume there was a mix up of the surnames.
The BoE was rumored some time ago to be looking at an "outsider" to take the top spot, just like that of the England football team, many years before.
The Canadian was one of the options commentators had penciled for the position. Currently serving as Chairman on the G20 stability board, and having worked at Goldman, Canadian department of finance and Bank of Canada, he has been credited with protecting Canada against much of the 2008 crisis.
With a strong understanding of global finance and crisis management, this should be taken in a positive light by global markets, and his education at Oxford should also mean he has a number of allies on the benches within the house of Parliament. There will be some questioning about ties with Goldman, similar of that of Hank Paulson, how came under scrutiny in the financial crisis, that saw financial institutions get a number of favors, not shown to other industries.
Other stories overnight include Europe and its aim to assist Greece. There are talks of the ECB fund, which currently holds Greek debt, giving back profits made from holding its bonds. It certainly feel's like the Christmas spirit is starting to shine. Of course, the ECB declined to comment on possible plans. Finance ministers meet today to discuss Greece's funding issues, for the third time.
Preparation is underway in the US to start designing a budget, where investors are nervous that the Republican's could potential stonewall cuts in a number of their "friendly" sectors.
Markets overnight saw currencies remain stable, with the Euro still trading around 1.2970, and Jpy firming slightly at 82.10. Sterling remained unchanged on the BoE announcement, trading at 1.6025 and holding on to its strong rally last friday.
In the bond market, Spanish and Italian yields continue to fall, with 10yr yields at 5.58 and 4.74% respectively.
Equity markets, which finally feel like they have caught up with currency markets, started to flap a little over night, with volumes falling and markets trending easier.
FTSE -0.6% low volume; O/P: cons. goods, tech U/P: financial, health
CAC -0.8% v.low volume; O/P: health, basic material U/P: financial, industrial
DAX -0.2% v.low volume; O/P: cons.service, cons.good U/P: industrial, utilities
IBEX -0.4% low volume; O/P: cons.services, industrial U/P: tech, basic mat
Sectors here highlight some rotation, which after such a strong performance of financial's over the last 3 months, was expected. Its good to see investors looking at basic materials (finally), which should benefit from improved optimism on growth and reflect the weaker US$. Dont get me wrong, inventories are still high, but so were the sugar mountains in the UK/Europe many years ago. Basic materials still look oversold at these levels.
In the US, the hype over Black Friday is starting to feel like 8pm on boxing day, its done. Sales increased but partly due to increased stores from the major names like Walmart, however, it could show credit easing at a consumer level as credit card usage hits the roof in favor of new TV's, DVD players and other types of must have gadgets.
SPX -0.2% avg volume; O/P: utilities, tech U/P: telco, oil & gas
Sector performance looks quite defensive. A rebound in Apple helping support the tech sector, but telco's seeing outflows as investors look to move to a more neutral stance into year end. Like Christmas decorations, this seems to be happening earlier and earlier these days.
Data overnight saw both the Chicago fed and Dallas fed come in weaker than expected. Chicago activity came in at -0.56, whilst the Dallas manufacturing came in at -2.8, vs expected 2.5. New orders were actually strong MoM, with an increase of 0.4, and there was also an increase in inventories of +4.1. This however, was weighed down by a large fall in production and capacity utilisation.
Markets.Expect Asia to open relatively flat to slightly easier. Yesterdays sell down, which saw HK trend easier throughout the session, closing just off day lows, means much of the move overnight should be priced in. With currencies trading unchanged, this should see equity markets trend firmer through the session.
Would look to be buying coal, oil and steels. Selling banks, HK+CH property names. Auto's like DF(489) also looking toppy, be short with caution, there is a big squeeze going on.
HUGE data day, watch for volatility to increase in the currencies today.
Data.08:00 Australia house affordability
08:30 Australia balance of payments
09:00 Philippines trade balance
09:30 China industrial profits
11:00 Japan small business confidence
15:00 German import pirces
15:45 France consumer confidence
16:30 HK trade balance
17:00 Italy wages
17:30 UK government spending, trade balance, index of sevices
18:00 EU OECD economic outlook
21:30 US durable goods, cap goods
22:00 US Case-shiller
23:00 US Richmond Fed, consumer confidence
23:00 US house price index
Spain budget, Thailand trade balance
Events.16:00 US Fed's Fisher speaks in Germany
16:30 Italy Grilli, Ghizzoni, Cucchiani Speak in Milan
16:30 EU court ruling on ESM validity
18:00 OECD publishes economic outlook
19:30 US Fed's Lockhart speaks on financial stability
EU Ashton at EU-central Asia meeting
Bonds.11:00 Thailand 1,3,6 month auction
11:45 Japan 2yr auction
17:00 Netherlands 3yr auction
17:30 Spain 2.5,6 month auction
18:00 Italy 2,5,14 year auction
00:30 US 4 week auction
02:00 US 2yr auction
Earnings.ADT(US), PVH(US), Remy Cointreau(FP), Severn Trent(UK), Vienna Ins(AV), Britvic(UK), Raiffenisen Bank(AV), Skyworth(HK), Far East Cons(HK), Yue Yuen(HK), China Gas(HK), Luk Fook(HK), Bosideng(HK), Dynam Japan(JP), ITC (HK), Vitasoy(HK), Quam(HK), Focus Media(HK), Kernel(PW), Liberty Bank(RU)
Stoddart
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