Morning note, data, events, bonds and earnings 6th November 2012

Good morning,

Will the election actually make much of a difference?
Will....
- business owners increase its staff by 50% over the next quarter due to policy?
- US debt suddenly disappear like a David Blane magic trick?
- banks start increasing liquidity, easing real interest rates
- property sales and prices increase, encouraging increased credit
In the near term, the simple answer is no.

Global markets all saw volumes ease yesterday by an average of 25%. As Greece put together a new austerity package, European markets remain cautious. With tax cuts of 13.5 billion euro, the opposition is set to be high, causing concerns once more of a Greek bankruptcy and impact on the Euro.
Seen as the first domino, the market is nervous that issues in Greece could trigger similar issues in Italy and Spain, where both nations are currently experiencing high unemployment and possibly in need of a bailout.

FTSE -0.5% v.low volume; O/P: health, tech U/P: basic materials, financials
CAC  -1.3% v.low volume; O/P: tech, cons.goods U/P: health, utilities
DAX  -0.5% v.low volume; O/P: health, financial U/P: cons.services, telco
IBEX -1.9% v.low volume; O/P: basic materials, health U/P: financial, telco

The sector performance gives us little guidance. UK financial's came under pressure on the HSBC headlines of greater previsions for US fines. The financial sector has also had an extremely strong run over the last 3 months, so profit taking and rotation was expected.
European equity markets have had a strong performance since June, with year end approaching, you might see outflows as investors de-risk.

With the Euro trading at 1.28 vs the greenback, it has now broken the 200 day moving average, which many technical traders saw as a major support level. As mentioned earlier, Greece once again is leaning on the currency and uprisings against austerity is set to increase, despite the increasing press on tax evasion.
European data saw Spain unemployment hit 128k, vs expected 110k. European Sentix confidence came in at -18.8, vs expected -21.0.

US markets trended sideways last night before a short rally into the close, with a strong rebound in HP(-1.8%), Apple(+1.4%), Dell(2.2%) and Seagates(2.9%) supporting.

S&P +0.2% v.low volume; O/P: tech, oil&gas U/P: utilities, telco

US ISM non-manufacturing came in at 54.2 vs expected 54.5. With all eyes on the election, there is little to ready into the ISM number.

Markets.
Expect volumes to fall, whilst equity markets trade relatively flat. With the strong bounce in crude, expect oils to outperform. Financials should weigh heavy on the HSI, after HSBC increasing provisions due to money laundering lawsuits in the US.
Expect outflows in railways and China property, both of which have performed extremely well over the last 2 months.
Currencies, it looks like the US$ is set to firm further into the election. I would be looking to short it here vs Eur. We would also be looking to short the JPY here, as I expect outflows from the debt market, back in to Europe for 2013.
Could see HK open unchanged and trend easier today, whilst others should remain relatively flat. 

Data.
08:30 Australia house prices
09:00 Philippines CPI
11:30 Australia RBA interest rate, 25bps cut expected
13:00 Japan coincident and leading index
16:00 UK Halifax house prices
16:15 Spain PMI
16:45-17:00 French, Italian, German and European PMI
17:30 UK industrial/manufacturing production
18:00 Eurozone PPI
19:00 German factory orders
23:00 JOLT's job openings

Events.
17:00 Portugal treasury secretary meets bank CEO's
G20 trade and investment meeting
Asian-Europe summit

Bonds.
11:00 Thailand 1,3 and 6 month auction
13:30 Philippines 5 year auction
18:30 UK 10 year auction
19:00 EFSF 3 month auction
India 5-9yr, 10-14yr, 20+yr auction

Earnings.
Marathon oil(US), Emerson Elec(US), DIRECTV(US), Fossil(US), AOL(US), Liberty Media(US), Georgia gulf(US), Fraport(GE), Adecco(UK), Koninklijke DSM(NL), Lanxess(GE), Hannover Rueckversicherung(GE), BMW(GE), Intercontinental hotels(UK), Associated British Foods(UK), M&S(UK), Babcock Intl(UK), Duerr(GE), Nippon Shakubai(JP), Dena(JP), Symex(JP), SATS(SG), Thai oil(TH), SK Tel(KR), Mega fin(TT), PLDT(PH), Reliance Infra(IN), Hindalco(IN), Tata power(IN), Richter Gedeon(HU), Telefonica Czech(CZ), Bank Handlowy(PW)

Stoddart