Morning note, data, events, bonds and earnings 7th November 2012

Morning all,

Now compliance. Given my upbringing and current position, my sister and father both being compliance officers, I like to think im semi compliance verse with sec, fsa, hkma and mas law.
Having run a risk trading desk and like 98% of the investment banking community, many will tell you it's about managing risk, not making or loosing money. In fact, my economics teacher barred us from using the word "money". And rightfully so, when used in that context.

This brings me on to Basel 3. To start, increased cap requirement, despite the fact, most assets are trading considerably cheaper than 2007. Secondly, firms are now expected to discount credit rating agencies views and guidance.
Am I the only one or has everyone gone mental? Is the world moving closer to the McDonolds coffee warnings "caution, contains hot liquid"?
In the typical "wrong doers step forward" it seems everyone is taking one step back. No blame, no claim.
When markets, investors, mortgage holders and credit card owners are in desperate need of improved credit markets, the Basel 3 looks set to put right it's short comings some 5 years ago.
This is hugely negative growth and equity markets. What is the point in throwing billions of $ at a market, when the basic premise of lending is about to become over regulated and inefficient.
Policy makers; speak to the central banks... Or listen to bernanke, he studied the great depression which should help you in 3 years time, should you continue down this route.

Rant over. Markets overnight again saw volumes fall as the market waits thethe US presidential announcement. After a sharp sell off in Europe on monday, markets rebounded yesterday, closing just off the highs.

FTSE +0.8% avg volume; O/P: tech, financial U/P: utilities, oil&gas
CAC  +0.9% v.low volume; O/P: tech, health U/P: utilities, cons.goods
DAX  +0.7% avg volume; O/P: cons.services, health U/P: utilities, cons.goods
IBEX +0.2% v.low volume; O/P: basic materials, telco U/P: health, utilities

Comments out from Spain's Rajoy, indicated that at current levels Spain would not need to seek assistance for the ECB/EFSF, which raised some concerns that 1. the butget cuts would not be as aggressive; 2. Should CDS's start to increase, Spain would once again, need to approach the ECB.
Despite the initial sell off in the Euro, hitting 1.2770, it rebounded and is now trading back above 1.28.
In the UK, industrial production missed, coming in at -1.7% vs expected fall of -0.6%, however, manufacturing came in at 0.1% vs expected 0.4%, which although a miss, was better the the prior months number of -1.1%.
Looking at the sector maps in Europe, again we see a more defensive stance outperforming. With the Election due very soon now, wait and see seems to be the strategy.
US markets saw a small fall in volume but not as much as Europe, helped by the US$ weakening over the session.

S&P +0.8% avg volume; O/P: oil&gas, financial U/P: utilities, tech

Sentiment across the board is that, regardless of the result, equity markets should recieve a boost as talks of growth helps lift optimism. Its good to see oil&gass, basic materials and industrials outperforming.... its been a while.

Markets.
Expecting markets to open with an air of caution as eyes are glued to TV sets, where, after the announcement we should see indices move higher. Look for high growth sectors to run hard today, like that in the US. But remember, commodities like coal, are in high supply, and an increase in demand will help, but make only a splash in a pond on inventories.
Again, I want to push Japanese consumer electronic names. The sector has come under huge pressure due to weak earnings, due to both slowing growth and a strong JPY.
I still like Petrochina(857) here, with the US$ set to weaken, and sentiment turning positive on growth outlook, oil is the leveraged US$ hedge.
The financial sector is still looking rich, across the global, and with Australia housing data missing yesterday, we could see loans fall.
Indices open flat to small up, trend sideways in the first 2 hours, then we should see an afternoon rally.

Data.
11:00 S.Korea money supply
13:30 Australia foreign reserves
16:00 Spain industrial production
18:00 EU retail sales
19:00 German industrial production
20:00 US MBA mortgage apps

Events.
18:00 EU issues Autumn economic forecasts
23:15 Germany's Merkel addresses European parliment
UK Bank of England policy meeting

Bonds.
11:00 China 7yr auction
11:00 Thailand 9yr auction
11:35 Japan 6m auction
17:30 Inida 3, 6 month auction
18:30 German 5yr auction
02:00 US 10yr auction

Earnings.
Wellpoint(US), Time Warner(US), Kraft foods(US), Macy's(US), Qualcomm(US), CBS Corp(US), Whole foods market(US), Prudential fin(US), Westlake chem(US), Advance auto(US), Kohl's(US), Duke energy(US), Nordstrom(US), Energizer(US), Telefonica(SP), Hochief(GE), Delhaize(BB), BNP(FP), Bremntag(GE), Holcim(SW), Carlsberg(DK), OMV(AV), ING(NL), Ageas(UK), Muenchener Rueckversicherungs(GE), Randgold resources(UK), Burberry(UK), Vedanta(UK), Vestas wind(DK), Alstom(FP),  Kakkaku.com(JP), Chiyoda(JP), Toray ind(JP), Nippon Paper(JP), Isuzu(JP), Bridgestone(JP), Link REIT(HK), Ascendas hospital(SG), HKEx(HK), Melco(HK), GS Engineering & construction(KR), Daewoo ship & marine(KR), citic securities(CH), AAC tech(HK), Advance Info services(TH), Tata motor(IN), Cadila health(IN), Bharti Airtel(IN),

Stoddart