Good morning,
As the holiday season grinds to a halt, eyes are once again turned to the macro news, where the republicans continue to drag their feet in passing the new budget. Given the additional daily cost of interest being around US$1.25b, speed will only assist in reducing its current deficit.
With many markets off, UST's continued to firm as equity markets fell, on the back of what looks to be a stalemate on the budget. Currencies saw the Euro continue to firm, now 1.3240. The JPY continues to weaken after Abe mentioned unlimited monetary easing to support higher inflation and growth targets.
Oil and commodities rallied on the back of US$ weakness and improving sentiment towards growth, after strong housing data in the US and China released a similar report to the Beige book, indicating improving real estate, retail and mining.
US equity markets sold down overnight, as mentioned earlier, with the S&P opening at the highs and selling down in the first half. It then found support and trended sideways closing just off the lows.
S&P -0.5% v.low volume; O/P: Basic mats, telco U/P:cons.services, utilities
Sectors show some rotation into basic materials (finally), whilst defensive, telco also outperforms. Oil and gas continues to perform relatively well as crude oil firms on the back of a weaker US$ and growth estimates.
Data overnight saw S&P CaseShiller home prices increase to 146.08 in October, vs expected 145.93.
The Richmond Fed came in easier at 5 vs estimates of 8 for December. A fall in shipments and inventory levels, overshadowed strong capacity utilisation and higher prices paid.
Markets.Japan continues its strong run once more, after Abe's new cabinet will target growth and inflation, with limited concerns on printing to achieve it. Financials and tech outperforming whilst defensives lag.
In Korea, many stocks trade ex-div today which sees the Kospi down -0.5%, however, payouts based on last year should see the capitalisation fall nearer the -1.5% level.
In HK, after China data highlighting lower commercial lending, banks could come under pressure after such a strong run, despite positive real estate data. Expect heavy inflows into steel, copper, alu, paper and oil.
Markets should open at the highs and trend easier as we get profit taking into year end. Some talks of window dressing but limited given such low volumes during the holiday period.
Data.09:30 China industrial profits
11:00 Thailand capacity utilisation
12:00 Japan housing starts, construction orders, vehicle production
15:45 France producer prices
16:00 Spain mortgage data
16:30 HK trade balance/import/export
17:00 Italy business confidence
17:30 UK loans for house purchases
21:30 US initial jobless claims
23:00 US new home sales
Events.US Senate on budget timing
Bonds.18:00 Italy 6 month auction
Earnings.China Green(HK), Berjaya(MK)
Stoddart
Wednesday, 26 December 2012
Thursday, 20 December 2012
Morning note, data, events, bonds and earnings 21st December 2012
Good morning,
Go the US GDP. Over the last 2 weeks, investors have been going "gang busters" for growth names, and given last nights figure, there is certainly some justification for this more aggressive stance.
Overnight saw increased profit taking after a very strong December.
In the bond markets France and Germany saw inflows which is not surprising, as funds look for higher grade credit over the holiday period. 10 year yields:
UK 1.945% -0.8, France 1.985 -1.9, Germany 1.415% -1.4%, Italy 4.411% +2.9, Spain 5.199% -2.9, Greece 11.369% +12.1, UST 1.802 flat
In the FX market, the Euro managed to hold the 23 handle, currently trading at 1.3236. Im very impressed with the USDJPY, believing yesterday that the JPY would firm into year end. Instead we see it continue to weaken, now trading at 84.42
In Europeaan equity markets, volumes started to ease back again. Indices opened at the lows and trended firmer, with a small sell down going into the close.
FTSE -0.1% avg volume; O/P:tech, industrial U/P:utilities, basic materials
CAC +0.1% avg volume; O/P:health, basic materials U/P:utilities, tech
DAX +0.1% low volume; O/P:telco, utilities U/P:cons.services, industrials
IBEX flat v.good volume; O/P:basic materials, tech U/P:cons.services, oil & gas
Sectors highlighting rotation, with basic materials, a huge laggard on the year, finally outperforming, whilst defensive names continue to get sold down.
I still like basic materials and oil and gas at these levels as growth estimates should continue benefit from renewed optimism.
Data in Europe looked rather weak. Spain's building permits MoM increased 5.8% in October, but still leaves us down -31% YoY, but there was a sharp pick up in non residential properties.
In Italy, retail sales came in weaker at -1.0% vs estimates of flat, whilst the UK retail sales came in positive 0.1% but missed targets of +0.4%
In the US, equity markets opened at the lows and trended firmer throughout the session, closing at day highs. Also interesting to note that volumes remained around average despite the holiday season vast approaching.
S&P +0.6% avg volume; O/P:financials, basic materials U/P: tech, health
Sectors seeing finacials outperform, which is not surprising given the large pick up in volumes across all asset classes. Basic materials again yesterday outperforming.
Tech seeing a pull back after a very strong fortnight on the back of good earnings from hardware and software manufactures.
Data overnight saw US GDP come in at 3.1% vs expectations of 2.8% for the 3rd quarter. Personal consumption was quite strong at 1.6% vs expected 1.4%, and backing up these number, US existing home sales increased +5.9% MoM vs estimates +2.3% and the Philly Fed came in at 8.1 in December vs -3.0 expected.
Markets. Equity markets in Asia are all stronger after a heavy sell down in markets like Japan yesterday. Volumes are also extremely strong.
Expect profit taking today as we enter the holiday period. Profit taking in Jap autos, consumer electronics, China banks, property and autos whilst short covering in basic materials, oil and gas.
Market should open at the highs and drift easier early on before finding support and flatening off.
Data.13:00 Japan BoJ monthly economic report
15:00 German consumer confidence
15:30 Thailand foreign reserves
15:45 France production outlook
16:00 Spain PPI
17:00 Italy hourly wages
17:30 UK public sector net borrow, GDP
21:30 US Chicago Fed, Personal spending, durable goods orders
22:55 US U. of Michigan confidence
Spain trade balance
Events.15:00 German finance minister publishes report
17:30 Russia EU summit
Bonds.19:10 UK 1,3,6 month auction
Earnings.Walgreen(US), Shaw group(US), Alpha bank(GR), Natl Bk of Greece(GR), Christian Dior(FP), Oldtown(MK)
Happy friday
Stoddart
Go the US GDP. Over the last 2 weeks, investors have been going "gang busters" for growth names, and given last nights figure, there is certainly some justification for this more aggressive stance.
Overnight saw increased profit taking after a very strong December.
In the bond markets France and Germany saw inflows which is not surprising, as funds look for higher grade credit over the holiday period. 10 year yields:
UK 1.945% -0.8, France 1.985 -1.9, Germany 1.415% -1.4%, Italy 4.411% +2.9, Spain 5.199% -2.9, Greece 11.369% +12.1, UST 1.802 flat
In the FX market, the Euro managed to hold the 23 handle, currently trading at 1.3236. Im very impressed with the USDJPY, believing yesterday that the JPY would firm into year end. Instead we see it continue to weaken, now trading at 84.42
In Europeaan equity markets, volumes started to ease back again. Indices opened at the lows and trended firmer, with a small sell down going into the close.
FTSE -0.1% avg volume; O/P:tech, industrial U/P:utilities, basic materials
CAC +0.1% avg volume; O/P:health, basic materials U/P:utilities, tech
DAX +0.1% low volume; O/P:telco, utilities U/P:cons.services, industrials
IBEX flat v.good volume; O/P:basic materials, tech U/P:cons.services, oil & gas
Sectors highlighting rotation, with basic materials, a huge laggard on the year, finally outperforming, whilst defensive names continue to get sold down.
I still like basic materials and oil and gas at these levels as growth estimates should continue benefit from renewed optimism.
Data in Europe looked rather weak. Spain's building permits MoM increased 5.8% in October, but still leaves us down -31% YoY, but there was a sharp pick up in non residential properties.
In Italy, retail sales came in weaker at -1.0% vs estimates of flat, whilst the UK retail sales came in positive 0.1% but missed targets of +0.4%
In the US, equity markets opened at the lows and trended firmer throughout the session, closing at day highs. Also interesting to note that volumes remained around average despite the holiday season vast approaching.
S&P +0.6% avg volume; O/P:financials, basic materials U/P: tech, health
Sectors seeing finacials outperform, which is not surprising given the large pick up in volumes across all asset classes. Basic materials again yesterday outperforming.
Tech seeing a pull back after a very strong fortnight on the back of good earnings from hardware and software manufactures.
Data overnight saw US GDP come in at 3.1% vs expectations of 2.8% for the 3rd quarter. Personal consumption was quite strong at 1.6% vs expected 1.4%, and backing up these number, US existing home sales increased +5.9% MoM vs estimates +2.3% and the Philly Fed came in at 8.1 in December vs -3.0 expected.
Markets. Equity markets in Asia are all stronger after a heavy sell down in markets like Japan yesterday. Volumes are also extremely strong.
Expect profit taking today as we enter the holiday period. Profit taking in Jap autos, consumer electronics, China banks, property and autos whilst short covering in basic materials, oil and gas.
Market should open at the highs and drift easier early on before finding support and flatening off.
Data.13:00 Japan BoJ monthly economic report
15:00 German consumer confidence
15:30 Thailand foreign reserves
15:45 France production outlook
16:00 Spain PPI
17:00 Italy hourly wages
17:30 UK public sector net borrow, GDP
21:30 US Chicago Fed, Personal spending, durable goods orders
22:55 US U. of Michigan confidence
Spain trade balance
Events.15:00 German finance minister publishes report
17:30 Russia EU summit
Bonds.19:10 UK 1,3,6 month auction
Earnings.Walgreen(US), Shaw group(US), Alpha bank(GR), Natl Bk of Greece(GR), Christian Dior(FP), Oldtown(MK)
Happy friday
Stoddart
Wednesday, 19 December 2012
Morning note, data, events, bonds and earnings 20th December 2012
Good morning,
After such a strong run over the past 10 or so days, markets finally take a breather overnight. With the holiday period ow so near, I would expect to see volumes ease, as many "shut up shop" and prepare for those wonderful 12 hour plus flights back to see relatives.
Like every year, upgrades have to be turned down, in order to spend the 12 hours in cattle class, whilst Cathey's new reclining seats p1ss off anybody over 5ft 1in. It gets better. Thanks to many airlines looking to increase profitability, breakfast is microwaved seafood congee, dinner is battery chicken in some kind of brown slime and the highlight of the whole journey is sneaking off for a quadruple Black label and Ritz crackers.
Anything more than a quadruple will require the stewards informing the Air Marshall, in order to save the booze for themselves. FYI, the Air Marshall is always the guy that never takes off his jacket and is lucky enough to sit in First Class, next to the pilots door... lucky sod.
And to top it off, airlines increase prices between 50-200% for this privilege. Happy traveling.
Now back to markets. Currencies saw the Euro give back some of the recent gains against the greenback after hitting highs yesterday of 1.33, its now trading at 1.32. The JPY is still trading just off the highs at 84.26 as government spending is expected to increase, allocating a portion of that to encourage export driven growth.
Bond markets in Europe saw some heavy inflows, in particular Southern States. Greece had a whopper of a day, will yields firming 126bps after they were raised by S&P to -B moving them out of the selective default bracket, plus investors are looking for higher yielding assets. UST's also firmed as funds put unused capital into interest bearing assets over the holiday period.
10 year yields:
UK 1.95% +0.2, France 2.00% -2.9, Germany 1.43% +1.9, Italy 4.38% -6.0, Spain 5.23% -4.7, Greece 11.25% -126, UST 1.80% -1.6
Equity markets in Europe again saw strong volumes, again in countries with higher debt levels or countries with exposure to them. Markets opened strong, trending firmer throughout the session, but with the US opening easier, European markets sold down into the close ending the day close to where they opened.
FTSE +0.4% v.good volume; O/P:financial, tech U/P:cons.goods, basic materials
CAC +0.4% v.good volume; O/P:tech, financial U/P:health, telco
DAX +0.2% good volume; O/P:tech, industrial U/P:health, cons.goods
IBEX +1.2% vv.good volume; O/P:tech, oil&gas U/P:basic materials, telco
Sectors clearly highlight tech as the outperforming sector across the region, with huge outpformance of hardware produces, inline with that of the US on Tuesday.
Despite my expectations of sector rotation, basic materials and oil & gas continue to underperform, however, with sentiment positive future growth, buying these sectors here should set you up well for 2013, when we see analysts increase GDP estimates.
Data overnight saw the Eurozone current a/c increase to 7.2B, whilst Italian industrial output missed at flat vs expected +1.0% for October (Seasonally adjusted).
In the UK, the BoE minutes was 8-1 vote for rates unchanged.
The EU announced construction output, which fell -1.6% in October (seasonally adjusted).
In the US, equity markets opened unchanged and trended easier throughout the session, closing at day lows, however, volume remained around the 10 day average.
S&P -0.8% avg volume; O/P:tech, basic materials U/P:telco, health
The sectors in the US do seem to be getting rotation, with basic materials in the top 2 performers. Tech continued it run on the back of strong earnings from Oracle, whilst hardware producers are also running, possible on the back of the new Windows operating system.
Telco and health, both of which are considered defensive, seeing outflows as investors look for high growth sectors.
Data overnight saw MBA mortgage apps last week fall -12.3%, however the previous week was strong, up 6.2%.
Housing starts came in slightly easier in November, 861k vs expected 872. Building permits increased to 899k, beating expectations of 875k.
Markets. After such a strong run, Asian indices are mirroring the US overnight, with Japan selling down sharply in the first 30mins. Sector performances favor utilities and basic materials, whilst the consumer goods and services are giving back some of the recent gains.
I continue to like the oil & gas and basic materials as a sector. We should see sentiment continue to improve with investors searching for higher growth names and sectors.
In HK, profit taking in Banks, property and autos should be expected. These have been huge outperforms for 2H12. Inflows should be seen into basic materials such as Steels and Alu.
Markets should all sell down, but we should find support and see them continue to trend firmer as the JPY weakens further and the Euro gets its bounce.
Data.10:00 China leading index
15:00 Germany PPI
15:00 Japan convenience store sales
16:00 Spain Total housing permits
17:00 Italy retail sales
17:30 UK retail sales
21:30 US GDP, personal consumption, jobless claims
23:00 US Philly Fed, existing home sales
Greek current account, Spain budget
Events.19:15 EU Alumunia conference on Spain bank aid
22:00 UK BoE publishes remarks by Robert Jenkins
WTO general council meeting
BOJ holds monetary policy
Earnings.11:00 Thailand 2 year auction
12:00 Malaysia 6 month auction
02:00 US 5 year auction
Earnings.KB home(US), Rite Aid(US), Darden rest(US), ConAgra food(US), American Greetings(US), CarMax(US), Discover financial(US), Carnival(US), Micron tech(US), Carnival(UK), Far east hospitality(SG)
Stoddart
After such a strong run over the past 10 or so days, markets finally take a breather overnight. With the holiday period ow so near, I would expect to see volumes ease, as many "shut up shop" and prepare for those wonderful 12 hour plus flights back to see relatives.
Like every year, upgrades have to be turned down, in order to spend the 12 hours in cattle class, whilst Cathey's new reclining seats p1ss off anybody over 5ft 1in. It gets better. Thanks to many airlines looking to increase profitability, breakfast is microwaved seafood congee, dinner is battery chicken in some kind of brown slime and the highlight of the whole journey is sneaking off for a quadruple Black label and Ritz crackers.
Anything more than a quadruple will require the stewards informing the Air Marshall, in order to save the booze for themselves. FYI, the Air Marshall is always the guy that never takes off his jacket and is lucky enough to sit in First Class, next to the pilots door... lucky sod.
And to top it off, airlines increase prices between 50-200% for this privilege. Happy traveling.
Now back to markets. Currencies saw the Euro give back some of the recent gains against the greenback after hitting highs yesterday of 1.33, its now trading at 1.32. The JPY is still trading just off the highs at 84.26 as government spending is expected to increase, allocating a portion of that to encourage export driven growth.
Bond markets in Europe saw some heavy inflows, in particular Southern States. Greece had a whopper of a day, will yields firming 126bps after they were raised by S&P to -B moving them out of the selective default bracket, plus investors are looking for higher yielding assets. UST's also firmed as funds put unused capital into interest bearing assets over the holiday period.
10 year yields:
UK 1.95% +0.2, France 2.00% -2.9, Germany 1.43% +1.9, Italy 4.38% -6.0, Spain 5.23% -4.7, Greece 11.25% -126, UST 1.80% -1.6
Equity markets in Europe again saw strong volumes, again in countries with higher debt levels or countries with exposure to them. Markets opened strong, trending firmer throughout the session, but with the US opening easier, European markets sold down into the close ending the day close to where they opened.
FTSE +0.4% v.good volume; O/P:financial, tech U/P:cons.goods, basic materials
CAC +0.4% v.good volume; O/P:tech, financial U/P:health, telco
DAX +0.2% good volume; O/P:tech, industrial U/P:health, cons.goods
IBEX +1.2% vv.good volume; O/P:tech, oil&gas U/P:basic materials, telco
Sectors clearly highlight tech as the outperforming sector across the region, with huge outpformance of hardware produces, inline with that of the US on Tuesday.
Despite my expectations of sector rotation, basic materials and oil & gas continue to underperform, however, with sentiment positive future growth, buying these sectors here should set you up well for 2013, when we see analysts increase GDP estimates.
Data overnight saw the Eurozone current a/c increase to 7.2B, whilst Italian industrial output missed at flat vs expected +1.0% for October (Seasonally adjusted).
In the UK, the BoE minutes was 8-1 vote for rates unchanged.
The EU announced construction output, which fell -1.6% in October (seasonally adjusted).
In the US, equity markets opened unchanged and trended easier throughout the session, closing at day lows, however, volume remained around the 10 day average.
S&P -0.8% avg volume; O/P:tech, basic materials U/P:telco, health
The sectors in the US do seem to be getting rotation, with basic materials in the top 2 performers. Tech continued it run on the back of strong earnings from Oracle, whilst hardware producers are also running, possible on the back of the new Windows operating system.
Telco and health, both of which are considered defensive, seeing outflows as investors look for high growth sectors.
Data overnight saw MBA mortgage apps last week fall -12.3%, however the previous week was strong, up 6.2%.
Housing starts came in slightly easier in November, 861k vs expected 872. Building permits increased to 899k, beating expectations of 875k.
Markets. After such a strong run, Asian indices are mirroring the US overnight, with Japan selling down sharply in the first 30mins. Sector performances favor utilities and basic materials, whilst the consumer goods and services are giving back some of the recent gains.
I continue to like the oil & gas and basic materials as a sector. We should see sentiment continue to improve with investors searching for higher growth names and sectors.
In HK, profit taking in Banks, property and autos should be expected. These have been huge outperforms for 2H12. Inflows should be seen into basic materials such as Steels and Alu.
Markets should all sell down, but we should find support and see them continue to trend firmer as the JPY weakens further and the Euro gets its bounce.
Data.10:00 China leading index
15:00 Germany PPI
15:00 Japan convenience store sales
16:00 Spain Total housing permits
17:00 Italy retail sales
17:30 UK retail sales
21:30 US GDP, personal consumption, jobless claims
23:00 US Philly Fed, existing home sales
Greek current account, Spain budget
Events.19:15 EU Alumunia conference on Spain bank aid
22:00 UK BoE publishes remarks by Robert Jenkins
WTO general council meeting
BOJ holds monetary policy
Earnings.11:00 Thailand 2 year auction
12:00 Malaysia 6 month auction
02:00 US 5 year auction
Earnings.KB home(US), Rite Aid(US), Darden rest(US), ConAgra food(US), American Greetings(US), CarMax(US), Discover financial(US), Carnival(US), Micron tech(US), Carnival(UK), Far east hospitality(SG)
Stoddart
Tuesday, 18 December 2012
Morning note, data, events, bonds and earnings 19th December 2012
Good morning,
It seems many were to keen to reduce positions into the holiday season and are now finding themselves having to get involved in order to maintain performance.
With this new risk on approach, equity markets are seeing considerable increases in volume across the board, and with major bonds yielding less than 2%, investors see greater returns in equities at current levels.
Overnight bond markets received a boost after S&P raised its rating on Greek bonds, due to it buying back its bonds and confirmation that it will receive the next tranche of its bailout. 10 year yields in Europe and the US looked like this:
Greece 12.51% -16, UK 1.95% +6.4, Germany 1.41% +3.8, France 2.03% +3, Italy 4.42% -11.2, Spain 5.28% -12, US 1.81% +4
Currency markets saw the Euro continue its rally against the Greenback and is currently trading at 1.3228 as outflows from US debt moved across the pond to higher yielding sovereign debt such as Spain and Italy.
The JPY continues to weaken, now back above the 84 level at 84.40, which is encouraging inflows into the exporters.
Sterling also benefited from US$ outflows but to a lesser degree than the Euro, currently trading at 1.6250.
Due to the US$ weakness, oil received a $2 bounce, WTI currently at 87.96. Gold was actually weaker overnight despite the US$ as investors looked for yielding assets over US$ hedge, in part due to expectations that growth estimates will now be raised by analysts.
Equity markets overnight in Europe all saw strong volume increases, mostly in southern European states and France, which has a large exposure to Greece.
After opening at the lows, indices trended firmer throughout the session, closing at day highs once again.
FTSE +0.4% good volume; O/P:tech, basic materials U/P:telco, cons.goods
CAC +0.3% v.good volume; O/P:tech, industrials U/P:telco, oil&gas
DAX +0.6% good volume; O/P:cons.services, financial U/P:tech, health
IBEX +1.6% vv.good volume; O/P:tech, cons.services U/P:health, telco
In keeping with "risk on", the sectors show weakness in heath and telco. Both sectors have been extremely strong from May through October but with optimism that we will start seeing growth, investors look for high beta names and sectors.
At these levels, I would be looking to increase exposure to oil and gas, where crude prices have moved very little despite the weaker US$, and increased demand should happen as governments in Asia look to increase spending.
Data in Europe saw UK inflation come in slightly weaker. the RPI was flat vs expected +0.2 MoM which will certainly make many happy as fridges are stocked for Christmas.
The Italian current a/c should also keep the rest of the EU happy with a -245m in October vs Septembers -2581m.
In the US, similar to Europe, we saw markets open at the lows and trend firmer throughout the session, closing at day highs.
S&P +1.2% good volume; O/P:tech, oil & gas U/P:telco, cons.goods
After such at run into Thanks giving, weakness in consumer goods was expected. Finally someone has the same idea as me, with oil and gas being the second best performer. Tech saw a huge boost as heavy weight Apple rallies 2.9% along with other hardware producers HP, Dell and EMC.
Data in the US saw a slightly higher deficit than expected at -107b, vs expected -103b. Whilst the NHBA index came in as expected, 47, which is slightly firmer than Novembers 46.
Markets.
Given the strong rebound in USDJPY and euro overnight, its not surprising that equity markets are all firmer. Japan is seeing good size inflows, with insurance and exporters outperforming on the back of Abe's comments about increasing government spending.
This is from an earlier chat with a client.......
07:48:12 MARK STODDART : "Chatting to a good friend who knows Japan well, he seems to think its still time to load up.
With the new guys looking to increase spending, capital will be looking to do a number of things.
1. increase the birth rate,so expect a policy similar to that of the UK, where the government will give out child bonds.
2. Given the falling birth rate, near term growth will come from increasing exports. A weaker yen and adjustment in taxes for larger exportors should help increase their pricing point overseas. I would avoid the consumer electronic plays and looker closer at autos at current levels
3. Increase infrastructure spending. I would look at hitachi, steel and cement plays to get exposure here as iron and coal prices should remain weak as China growth is unlikely to get back above 8 in the near term"
I expect markets to remain strong in the morning, but we should see some outflows as investors book gains. For example, Dai itchi(8750 JT) is up over 10% in 3 days.
Data.12:30 Japan all industry activity
13:00 Japan leading, coincident index
16:00 Singapore COE....can it get any higher???
17:00 EU current a/c, expect this to be strong given data yesterday
17:00 Italy industrial orders
18:00 EU construction output
20:00 US MBA mortgage apps
21:30 US housing starts, building permits
Events.17:30 UK BoE minutes
22:00 EU Russia summit
BoJ policy meeting, WTO general council meeting
Bonds.11:00 Thailand 5,29 year auction
11:35 Japan 3 month auction
17:30 India 3,6 month auction
02:00 US 7year auction
Earnings.Cracle(US), General mills(US), FedEx(US), Jabil Circuit(US), Navistar(US), Alpha bank(GR), Eurobank Ergasias(GR), Universal Robina(PH)
Stoddart
It seems many were to keen to reduce positions into the holiday season and are now finding themselves having to get involved in order to maintain performance.
With this new risk on approach, equity markets are seeing considerable increases in volume across the board, and with major bonds yielding less than 2%, investors see greater returns in equities at current levels.
Overnight bond markets received a boost after S&P raised its rating on Greek bonds, due to it buying back its bonds and confirmation that it will receive the next tranche of its bailout. 10 year yields in Europe and the US looked like this:
Greece 12.51% -16, UK 1.95% +6.4, Germany 1.41% +3.8, France 2.03% +3, Italy 4.42% -11.2, Spain 5.28% -12, US 1.81% +4
Currency markets saw the Euro continue its rally against the Greenback and is currently trading at 1.3228 as outflows from US debt moved across the pond to higher yielding sovereign debt such as Spain and Italy.
The JPY continues to weaken, now back above the 84 level at 84.40, which is encouraging inflows into the exporters.
Sterling also benefited from US$ outflows but to a lesser degree than the Euro, currently trading at 1.6250.
Due to the US$ weakness, oil received a $2 bounce, WTI currently at 87.96. Gold was actually weaker overnight despite the US$ as investors looked for yielding assets over US$ hedge, in part due to expectations that growth estimates will now be raised by analysts.
Equity markets overnight in Europe all saw strong volume increases, mostly in southern European states and France, which has a large exposure to Greece.
After opening at the lows, indices trended firmer throughout the session, closing at day highs once again.
FTSE +0.4% good volume; O/P:tech, basic materials U/P:telco, cons.goods
CAC +0.3% v.good volume; O/P:tech, industrials U/P:telco, oil&gas
DAX +0.6% good volume; O/P:cons.services, financial U/P:tech, health
IBEX +1.6% vv.good volume; O/P:tech, cons.services U/P:health, telco
In keeping with "risk on", the sectors show weakness in heath and telco. Both sectors have been extremely strong from May through October but with optimism that we will start seeing growth, investors look for high beta names and sectors.
At these levels, I would be looking to increase exposure to oil and gas, where crude prices have moved very little despite the weaker US$, and increased demand should happen as governments in Asia look to increase spending.
Data in Europe saw UK inflation come in slightly weaker. the RPI was flat vs expected +0.2 MoM which will certainly make many happy as fridges are stocked for Christmas.
The Italian current a/c should also keep the rest of the EU happy with a -245m in October vs Septembers -2581m.
In the US, similar to Europe, we saw markets open at the lows and trend firmer throughout the session, closing at day highs.
S&P +1.2% good volume; O/P:tech, oil & gas U/P:telco, cons.goods
After such at run into Thanks giving, weakness in consumer goods was expected. Finally someone has the same idea as me, with oil and gas being the second best performer. Tech saw a huge boost as heavy weight Apple rallies 2.9% along with other hardware producers HP, Dell and EMC.
Data in the US saw a slightly higher deficit than expected at -107b, vs expected -103b. Whilst the NHBA index came in as expected, 47, which is slightly firmer than Novembers 46.
Markets.
Given the strong rebound in USDJPY and euro overnight, its not surprising that equity markets are all firmer. Japan is seeing good size inflows, with insurance and exporters outperforming on the back of Abe's comments about increasing government spending.
This is from an earlier chat with a client.......
07:48:12 MARK STODDART : "Chatting to a good friend who knows Japan well, he seems to think its still time to load up.
With the new guys looking to increase spending, capital will be looking to do a number of things.
1. increase the birth rate,so expect a policy similar to that of the UK, where the government will give out child bonds.
2. Given the falling birth rate, near term growth will come from increasing exports. A weaker yen and adjustment in taxes for larger exportors should help increase their pricing point overseas. I would avoid the consumer electronic plays and looker closer at autos at current levels
3. Increase infrastructure spending. I would look at hitachi, steel and cement plays to get exposure here as iron and coal prices should remain weak as China growth is unlikely to get back above 8 in the near term"
I expect markets to remain strong in the morning, but we should see some outflows as investors book gains. For example, Dai itchi(8750 JT) is up over 10% in 3 days.
Data.12:30 Japan all industry activity
13:00 Japan leading, coincident index
16:00 Singapore COE....can it get any higher???
17:00 EU current a/c, expect this to be strong given data yesterday
17:00 Italy industrial orders
18:00 EU construction output
20:00 US MBA mortgage apps
21:30 US housing starts, building permits
Events.17:30 UK BoE minutes
22:00 EU Russia summit
BoJ policy meeting, WTO general council meeting
Bonds.11:00 Thailand 5,29 year auction
11:35 Japan 3 month auction
17:30 India 3,6 month auction
02:00 US 7year auction
Earnings.Cracle(US), General mills(US), FedEx(US), Jabil Circuit(US), Navistar(US), Alpha bank(GR), Eurobank Ergasias(GR), Universal Robina(PH)
Stoddart
Morning note, data, events, bonds and earnings 18th December 2012
Good morning,
Markets across the globe appear to be relatively optimistic on 2013, much to the relief of many policy makers in both Europe and the US.
Japan continues to concentrate on growth, with Abe planning a large budget that aims to push the country out of deflation, whilst in the US, hopes of a tighter budget being passed, eases fears of a stalemate.
According to the press, China has increased its holdings in US treasuries to 5 month highs, which should relieve ongoing pressure about China's currency being too weak. I suspect given the falling exports and rising wage costs, Chinese politicians will what to try and increase is export power to help achieve its current growth estimates, and direct subsidies are becoming less of an option with the WTO on its back.
In bond markets, the US 10yr yields rose to 1.766% as outflows appeared to be movign back into equities, similar to that in Europe.
Greece 12.66%, France 2.00%, Germany 1.37%, Italy 4.55%, Spain 5.39%, UK 1.88%
In the FX market, The Euro continued to firm against the Greenback, currently at 1.3163, as the European debt and equity markets continue to see inflows, as talks of additional infrastructure aside from the Banking Union, aims to prepare Europe for any other hiccups. Forward thinking, I'm shocked.
The JPY firmed overnight against the US$ after a rather strong friday session, currently at 83.88. My target of Y85 by year end still looks a tad aggressive but with equity markets seeing inflows, we see the JPY weaken as growth estimates ex-Japan increase.
The AUD is now at major resistance levels, but with sentiment towards China improving, so does Australian export estimates.
Equity markets in Europe were relatively flat on the session however, many benefited from strong volume pick up. After opening weaker and seling down, most found support around midday and rallied from there, closing just off day highs.
FTSE -0.2% avg volume; O/P: basic materials, tech U/P: industrials, telco
CAC -0.1% v.good volume; O/P: tech, industrials U/P: oil&gas, telco
DAX +0.1% low volume; O/P: cons.services, cons.goods U/P: health, telco
IBEX +0.2% avg volume: O/P: cons.services, basic mats U/P: health, telco
Sectors highlight some major rotation. At the start of the 2H12, inflows were seen in telco, health and financials, what we are seeing now are investors moving to a more neutral weighted portfolio or in some cases, going overweight growth. As mentioned before, I believe growth estimates are too weak as negative sentiment drove analysts to with increased downside. We will see a reversal of this.
In the US, bond outflows helped support equity markets, with the S&P trending firmer throughout the day and closing at the highs.
S&P +1.2% avg volume; O/P:financials, cons.services U/P:telco, cons.goods
Inflows once again aimed at the financial sector as investors are encouraged by the budget proposals and inturn, credit markets easing. This is despite a number of increased regulation due including activities the bank may undertake.
Basic materials and oil&gas were both weaker performers overnight, bucking the trend in Europe. I expect we see upstream plays start outperforming as crude starts moving higher inline with the growth estimates and the weaker US$.
Markets.Japan is firmer by +0.6% despite the Yen firing. Inflows favoring telco and basic materials, whist utilities and tech are weaker. In Korea, oil&gas and basic materials are leading the pack, whilst the autos are coming under some heavy selling pressure.
I expect to see markets continue their strength however, moving into the end of the week should see increased outflows from equities and into bonds as investors look to benefit from the interest over the holiday period.
I continue to like basic materials and oils at these levels. Consumer goods in particular electronics look rich here. Samsung(005930 KS) I would be looking to short at these levels, despite the fact Christmas sales are expected to be strong.
Data.09:30 China property prices
10:00 China FDI
13:30 Japan dept store sales
13:30 India reverse repo rate, cash reserve ratio
16:30 HK unemployment
17:30 UK house prices, PPI, CPI, RPI
18:00 Italy current account
19:00 Ireland GDP
21:30 US current a/c balance
23:00 US NHBA housing index
Events.15:00 EU Rompuy meets NATO
18:00 UK BoE publishes paper on supervision of market infra
18:00 EU Rehn briefs press on sustainability report
22:30 US senate hearing on trading venues
US - China joint commission on commerce and trade
Bonds.09:30 Korea 2yr auction
11:00 Thailand 1,3,6 month auction
11:30 HK 3,6 month auction
11:35 Japan 1,20 year auction
17:30 Spain 3,6 month auction
18:00 Greece 3 month auction
00:30 US 4 week auction
Earnings.Diamond foods(US), FactSet research(US), Jefferies(US), Oracle(US), TUI(GE)
Stoddart
Markets across the globe appear to be relatively optimistic on 2013, much to the relief of many policy makers in both Europe and the US.
Japan continues to concentrate on growth, with Abe planning a large budget that aims to push the country out of deflation, whilst in the US, hopes of a tighter budget being passed, eases fears of a stalemate.
According to the press, China has increased its holdings in US treasuries to 5 month highs, which should relieve ongoing pressure about China's currency being too weak. I suspect given the falling exports and rising wage costs, Chinese politicians will what to try and increase is export power to help achieve its current growth estimates, and direct subsidies are becoming less of an option with the WTO on its back.
In bond markets, the US 10yr yields rose to 1.766% as outflows appeared to be movign back into equities, similar to that in Europe.
Greece 12.66%, France 2.00%, Germany 1.37%, Italy 4.55%, Spain 5.39%, UK 1.88%
In the FX market, The Euro continued to firm against the Greenback, currently at 1.3163, as the European debt and equity markets continue to see inflows, as talks of additional infrastructure aside from the Banking Union, aims to prepare Europe for any other hiccups. Forward thinking, I'm shocked.
The JPY firmed overnight against the US$ after a rather strong friday session, currently at 83.88. My target of Y85 by year end still looks a tad aggressive but with equity markets seeing inflows, we see the JPY weaken as growth estimates ex-Japan increase.
The AUD is now at major resistance levels, but with sentiment towards China improving, so does Australian export estimates.
Equity markets in Europe were relatively flat on the session however, many benefited from strong volume pick up. After opening weaker and seling down, most found support around midday and rallied from there, closing just off day highs.
FTSE -0.2% avg volume; O/P: basic materials, tech U/P: industrials, telco
CAC -0.1% v.good volume; O/P: tech, industrials U/P: oil&gas, telco
DAX +0.1% low volume; O/P: cons.services, cons.goods U/P: health, telco
IBEX +0.2% avg volume: O/P: cons.services, basic mats U/P: health, telco
Sectors highlight some major rotation. At the start of the 2H12, inflows were seen in telco, health and financials, what we are seeing now are investors moving to a more neutral weighted portfolio or in some cases, going overweight growth. As mentioned before, I believe growth estimates are too weak as negative sentiment drove analysts to with increased downside. We will see a reversal of this.
In the US, bond outflows helped support equity markets, with the S&P trending firmer throughout the day and closing at the highs.
S&P +1.2% avg volume; O/P:financials, cons.services U/P:telco, cons.goods
Inflows once again aimed at the financial sector as investors are encouraged by the budget proposals and inturn, credit markets easing. This is despite a number of increased regulation due including activities the bank may undertake.
Basic materials and oil&gas were both weaker performers overnight, bucking the trend in Europe. I expect we see upstream plays start outperforming as crude starts moving higher inline with the growth estimates and the weaker US$.
Markets.Japan is firmer by +0.6% despite the Yen firing. Inflows favoring telco and basic materials, whist utilities and tech are weaker. In Korea, oil&gas and basic materials are leading the pack, whilst the autos are coming under some heavy selling pressure.
I expect to see markets continue their strength however, moving into the end of the week should see increased outflows from equities and into bonds as investors look to benefit from the interest over the holiday period.
I continue to like basic materials and oils at these levels. Consumer goods in particular electronics look rich here. Samsung(005930 KS) I would be looking to short at these levels, despite the fact Christmas sales are expected to be strong.
Data.09:30 China property prices
10:00 China FDI
13:30 Japan dept store sales
13:30 India reverse repo rate, cash reserve ratio
16:30 HK unemployment
17:30 UK house prices, PPI, CPI, RPI
18:00 Italy current account
19:00 Ireland GDP
21:30 US current a/c balance
23:00 US NHBA housing index
Events.15:00 EU Rompuy meets NATO
18:00 UK BoE publishes paper on supervision of market infra
18:00 EU Rehn briefs press on sustainability report
22:30 US senate hearing on trading venues
US - China joint commission on commerce and trade
Bonds.09:30 Korea 2yr auction
11:00 Thailand 1,3,6 month auction
11:30 HK 3,6 month auction
11:35 Japan 1,20 year auction
17:30 Spain 3,6 month auction
18:00 Greece 3 month auction
00:30 US 4 week auction
Earnings.Diamond foods(US), FactSet research(US), Jefferies(US), Oracle(US), TUI(GE)
Stoddart
Wednesday, 12 December 2012
Morning note, data, events, bonds and earnings 13th December 2012
Good Morning,
We all know that the US are focused heavily on employment, or lack of, so lasts nights rates on hold and comments from Bernanke were no surprise. Operation Twist is set to be replaced by outright bond purchases, which its expected to concentrate on the 5yr part of the market, having a similar impact to the Twist, but not going out at as far.
The Euro continued its strong run, getting as high at 1.31 but since pulling back slightly to 1.3070. Helped by confirmation that Greek bond buyback meets the criteria set out the the EU, Greece is now set to receive the next payment of from the EFSF.
The Japanese Yen weakened further, currently 83.30, which is currently helping exporters. With rates globally set to remain low in the near to medium term, there seems to be limited interest in the "carry trade".
Bond markets saw southern European states continue to outperform, whilst UK, Germany and France all yields increased around 2bps. 10year yields;
UK 1.82%, France 1.96%, Germany 1.33%, Italy 4.63%, Spain 5.32%, Greece 12.84%
Equity markets all benefited from strong volume overnight, up around 15% on average. Again, southern European states outperforming, where Spain was also boosted by strong earnings from Inditex, owners of Zara.
FTSE 0.4% avg volume; O/P: oil&gas, basic materials U/P: tech, cons.goods
CAC flat good volume; O/P: telco, tech U/P: cons.goods, utilities
DAX +0.3% avg volume; O/P: cons.services, telco U/P: health, tech
IBEX +0.8% v.good volume; O/P: tech, basic materials U/P: oil & gas, health
Sectors highlight some strong sector rotation into basic materials and oil & gas. Many investors have been under weight or short both in 2012 as global growth remains low to negative. Added to this, construction spending has remained light, as developers, banks and governments are already struggling with current inventory levels. Only yesterday, German sold off 800 properties to Lone Star.
After a strong run in tech and telco, we see these sectors underperforming as investors take profits into year end. There is lots of press on "risk on" trades, however, the performance is more likely to be repositioning to a more neutral stance.
Data in Europe saw German CPI come in at -0.1% in November, as expected, whilst France came in slightly easier at -0.2% vs expected flat.
Spain's house transactions came in at 12.8% for October, vs Septembers number of just 0.9%, highlighting that prices should stabilise, helping banks offload current inventory levels. NB, Spanish banks are currently offering 100% mortgages on properties it has on it books.
In the UK, Jobless claims fell -3k vs expected 7.0k, whilst earnings came through in line for October at 1.8%.
Slightly worrying was the EU industrial production numbers, coming in at -1.4% vs expected flat (seasonally adjusted). Biggest drops were Netherlands, German and a number of countries in Eastern Europe.
In the US, equity markets staged a strong rally mid session, which was short lived and sold back down to close at day lows.
S&P flat avg volume; O/P: telco, financial U/P: tech, cons.services
After a strong rally in tech names on the back of DRAM chips, technology stocks gave back some of their gains. Like Europe, basic materials and oil & gas were both outperformers, closing positive on the day, whilst telco and financials run once again.
Data in the US saw MBA mortgage apps increase +6.2% on the week, which along with strong sales over Thanks Giving, could highlight improving credit markets. We also had import prices which fell -1.6% vs expected -1.0%.
Markets.Asian markets all open firmer as the US$ continues to firm against the JPY, helping push autos and other heavy export dependent companies.
I expect markets to trend easier in the first 2 hours before finding support and trading sideways.
I continue to like upstream oil & gas, coal and Alu.
Outflows should be seen in banks, China autos and China housing.
Data. 12:00 Tokyo condo sales
16:00 Spain CPI
16:00 Philippine interest rates
16:30 HK industrial production, PPI
17:00 ECB monthly report
17:00 Italy CPI
21:30 US retail sales, PPI and jobless claims
Events.13:00 US financial stability oversight council meeting
15:30 Italian politicians meet on EU summit
17:00 EU ministers meet on Greece, Cyprus
Bonds.11:35 Japan 3 month, 5 year auction
12:00 Malaysia 1,5 year auction
12:30 Taiwan 6 month, 10 year auction
17:30 Spain 3,5,28 year auction
18:00 Italy 3,14 year auction
02:00 US 30 year auction
Earnings.Restoration hardware(US), Hovnanian(US), Pier 1 Imports(US), Ciena(US), Adobe(US), VeriFone(US), Aurubis(GR), Sportsdirect(UK), Betfair(UK), Ascendas hospitality(SP), Far East hospitality(SP), Gamuda(MK)
Stoddart
We all know that the US are focused heavily on employment, or lack of, so lasts nights rates on hold and comments from Bernanke were no surprise. Operation Twist is set to be replaced by outright bond purchases, which its expected to concentrate on the 5yr part of the market, having a similar impact to the Twist, but not going out at as far.
The Euro continued its strong run, getting as high at 1.31 but since pulling back slightly to 1.3070. Helped by confirmation that Greek bond buyback meets the criteria set out the the EU, Greece is now set to receive the next payment of from the EFSF.
The Japanese Yen weakened further, currently 83.30, which is currently helping exporters. With rates globally set to remain low in the near to medium term, there seems to be limited interest in the "carry trade".
Bond markets saw southern European states continue to outperform, whilst UK, Germany and France all yields increased around 2bps. 10year yields;
UK 1.82%, France 1.96%, Germany 1.33%, Italy 4.63%, Spain 5.32%, Greece 12.84%
Equity markets all benefited from strong volume overnight, up around 15% on average. Again, southern European states outperforming, where Spain was also boosted by strong earnings from Inditex, owners of Zara.
FTSE 0.4% avg volume; O/P: oil&gas, basic materials U/P: tech, cons.goods
CAC flat good volume; O/P: telco, tech U/P: cons.goods, utilities
DAX +0.3% avg volume; O/P: cons.services, telco U/P: health, tech
IBEX +0.8% v.good volume; O/P: tech, basic materials U/P: oil & gas, health
Sectors highlight some strong sector rotation into basic materials and oil & gas. Many investors have been under weight or short both in 2012 as global growth remains low to negative. Added to this, construction spending has remained light, as developers, banks and governments are already struggling with current inventory levels. Only yesterday, German sold off 800 properties to Lone Star.
After a strong run in tech and telco, we see these sectors underperforming as investors take profits into year end. There is lots of press on "risk on" trades, however, the performance is more likely to be repositioning to a more neutral stance.
Data in Europe saw German CPI come in at -0.1% in November, as expected, whilst France came in slightly easier at -0.2% vs expected flat.
Spain's house transactions came in at 12.8% for October, vs Septembers number of just 0.9%, highlighting that prices should stabilise, helping banks offload current inventory levels. NB, Spanish banks are currently offering 100% mortgages on properties it has on it books.
In the UK, Jobless claims fell -3k vs expected 7.0k, whilst earnings came through in line for October at 1.8%.
Slightly worrying was the EU industrial production numbers, coming in at -1.4% vs expected flat (seasonally adjusted). Biggest drops were Netherlands, German and a number of countries in Eastern Europe.
In the US, equity markets staged a strong rally mid session, which was short lived and sold back down to close at day lows.
S&P flat avg volume; O/P: telco, financial U/P: tech, cons.services
After a strong rally in tech names on the back of DRAM chips, technology stocks gave back some of their gains. Like Europe, basic materials and oil & gas were both outperformers, closing positive on the day, whilst telco and financials run once again.
Data in the US saw MBA mortgage apps increase +6.2% on the week, which along with strong sales over Thanks Giving, could highlight improving credit markets. We also had import prices which fell -1.6% vs expected -1.0%.
Markets.Asian markets all open firmer as the US$ continues to firm against the JPY, helping push autos and other heavy export dependent companies.
I expect markets to trend easier in the first 2 hours before finding support and trading sideways.
I continue to like upstream oil & gas, coal and Alu.
Outflows should be seen in banks, China autos and China housing.
Data. 12:00 Tokyo condo sales
16:00 Spain CPI
16:00 Philippine interest rates
16:30 HK industrial production, PPI
17:00 ECB monthly report
17:00 Italy CPI
21:30 US retail sales, PPI and jobless claims
Events.13:00 US financial stability oversight council meeting
15:30 Italian politicians meet on EU summit
17:00 EU ministers meet on Greece, Cyprus
Bonds.11:35 Japan 3 month, 5 year auction
12:00 Malaysia 1,5 year auction
12:30 Taiwan 6 month, 10 year auction
17:30 Spain 3,5,28 year auction
18:00 Italy 3,14 year auction
02:00 US 30 year auction
Earnings.Restoration hardware(US), Hovnanian(US), Pier 1 Imports(US), Ciena(US), Adobe(US), VeriFone(US), Aurubis(GR), Sportsdirect(UK), Betfair(UK), Ascendas hospitality(SP), Far East hospitality(SP), Gamuda(MK)
Stoddart
Tuesday, 11 December 2012
Morning note, data, events, bonds and earnings 12th December 2012
Good morning all,
One of the many things I love about this industry is, that you are continually seeing the news headlines. Including some more obscure ones, such as this:
50 Shades Under the Tree Means Holiday Surge for Sales of Sex Toys: Retail
Now being the trader that I am, should you wish to get exposure to this industry, the only name I can think of is ASC AU, or alternatively you could look at buying rubber futures.
Overnight saw continued strength in the equity markets as the Euro pushed through the 1.30 level where it remains currently. Despite the weakness in the US$, oil eased slightly back below at 86, now trading 85.81.
European bonds saw Greece continue to firm with 10 yr yields now trading at 12.67%. Spain and Italy continued to see yields fall with current 10yr yields at 5.42% and 4.7% respectively. Spreads between French/German and southern European states continue to tighten and as expected, we are seeing rotation into higher yielding assets as sentiment in Europe improves and investors look to reduce exposure to US debt as budget talks continue.
In Europe, equity markets saw a strong rebound after the sell off in Italian financials on Monday. Opening at around the flat level, indices trended firmer throughout the session closing at day highs. Volumes also remained close to average, which going into year end is quite interesting given normally we see risk appetite pull back in December.
FTSE +0.1% low volume: O/P:basic mats, utilities U/P:cons.goods, industrials
CAC +0.9% avg volume: O/P:telco, utilities U/P: tech, financials
DAX +0.8% avg volume: O/P:utilities, cons.services U/P:health, financials
IBEX +1.5% good volume: O/P:health, cons.services U/P:tech, industrials
Sectors overnight all look relatively defensive. We are seeing some rotation into basic materials in all indicies however, it with the market now moving to a more neutral stance on Europe, and growth looking limited until the latter stages of 2013 at best, investors are looking at defensive, yielding assets as opposed to cyclical.
Given growth estimates are so downbeat, I expect rotation into higher cyclical industrials in the early parts of 2013 and polices and budget data becomes known, and analysts become more upbeat.
In the US, equity markets were strong on the back of wholesale inventories and job openings. After opening slightly firmer, we saw an initial spike higher,followed by markets flattening off and trading sideways for the rest of the session. Volumes were quite strong, up 13% on average.
The High/low index also remained strong with 30 companies in the S&P making 52 week new highs and no new lows.
S&P +0.7% good volume; O/P: tech, telco U/P:utilities, cons.services
Heavy weight Apple was up 2.1% overnight helping the tech sector, which also saw a strong rebound in semiconductors as DRAM prices continue to firm. Intel +2.8%
Basic materials also saw inflows, as did oil and gas but I was expecting a stronger rebound in that sector as investors look to short cover and in some cases move to a more overweight position, especially in upstream oil plays.
Data in the US, saw whole sale inventories increase 0.6% vs expected 0.4% highlighting optimism in the recovery, whilst the Jolts job openings came in at 3675 vs estimates 3600.
US trade balance came in at $42.2b vs estimates of $42.7b.
Markets.Asian markets are following in the foot steps of the US, with indices up around 50bps. I expect to see them ease back early in the session before finding support and trending sideways.
Consumer goods, especially in Japan, saw a strong pull back yesterday and are now rebounding. Given the JPY is continuing to weaken and currently trading at 82.60, we should see continued inflows into this sector. Power companies also look cheap at currently levels however, given the review of nuclear power, the market is pricing in possible negative news. BUY
In HK, with such strong performances of China banks and property, I expect some profit taking at current levels, and infact I would be looking to go short these 2 sectors despite government intervention.
I would be looking at increasing exposure to A'shares over H, and on a sector level, long coal, oil&gas and with Chalco(2600) due to be kicked out of the index, it is an opportunity to pick an industry leader at discounted levels.
Data.11:00 S.Korea money supply
13:30 India industrial production
15:00 German CPI
15:45 France CPI
16:00 Spain property transactions (possible upside surprise)
17:30 UK jobless claims and earnings
18:00 EU industrial production
20:00 US MBA mortgage apps
21:30 US import prices
01:30 FOMC rates/budget
Events.12:30 RBA's Stevens speaks at Bank of Thailand
21:30 EU ministers meet on banking supervision
OPEC meeting in Austria
Bonds.11:00 Thailand 9, 15 year auction
11:35 Japan 2month auction
17:30 India 3, 12 month auction
18:00 Italy 12 month auction
00:30 US 10 year auction
Earnings.Joy Global(US), Costco(US), Restoration hardware(US), Inditex(SP), Imagination group(GB), Darty(GB), Alpha Bank(GR), Eurobank Engasis(GR)
Stoddart
One of the many things I love about this industry is, that you are continually seeing the news headlines. Including some more obscure ones, such as this:
50 Shades Under the Tree Means Holiday Surge for Sales of Sex Toys: Retail
Now being the trader that I am, should you wish to get exposure to this industry, the only name I can think of is ASC AU, or alternatively you could look at buying rubber futures.
Overnight saw continued strength in the equity markets as the Euro pushed through the 1.30 level where it remains currently. Despite the weakness in the US$, oil eased slightly back below at 86, now trading 85.81.
European bonds saw Greece continue to firm with 10 yr yields now trading at 12.67%. Spain and Italy continued to see yields fall with current 10yr yields at 5.42% and 4.7% respectively. Spreads between French/German and southern European states continue to tighten and as expected, we are seeing rotation into higher yielding assets as sentiment in Europe improves and investors look to reduce exposure to US debt as budget talks continue.
In Europe, equity markets saw a strong rebound after the sell off in Italian financials on Monday. Opening at around the flat level, indices trended firmer throughout the session closing at day highs. Volumes also remained close to average, which going into year end is quite interesting given normally we see risk appetite pull back in December.
FTSE +0.1% low volume: O/P:basic mats, utilities U/P:cons.goods, industrials
CAC +0.9% avg volume: O/P:telco, utilities U/P: tech, financials
DAX +0.8% avg volume: O/P:utilities, cons.services U/P:health, financials
IBEX +1.5% good volume: O/P:health, cons.services U/P:tech, industrials
Sectors overnight all look relatively defensive. We are seeing some rotation into basic materials in all indicies however, it with the market now moving to a more neutral stance on Europe, and growth looking limited until the latter stages of 2013 at best, investors are looking at defensive, yielding assets as opposed to cyclical.
Given growth estimates are so downbeat, I expect rotation into higher cyclical industrials in the early parts of 2013 and polices and budget data becomes known, and analysts become more upbeat.
In the US, equity markets were strong on the back of wholesale inventories and job openings. After opening slightly firmer, we saw an initial spike higher,followed by markets flattening off and trading sideways for the rest of the session. Volumes were quite strong, up 13% on average.
The High/low index also remained strong with 30 companies in the S&P making 52 week new highs and no new lows.
S&P +0.7% good volume; O/P: tech, telco U/P:utilities, cons.services
Heavy weight Apple was up 2.1% overnight helping the tech sector, which also saw a strong rebound in semiconductors as DRAM prices continue to firm. Intel +2.8%
Basic materials also saw inflows, as did oil and gas but I was expecting a stronger rebound in that sector as investors look to short cover and in some cases move to a more overweight position, especially in upstream oil plays.
Data in the US, saw whole sale inventories increase 0.6% vs expected 0.4% highlighting optimism in the recovery, whilst the Jolts job openings came in at 3675 vs estimates 3600.
US trade balance came in at $42.2b vs estimates of $42.7b.
Markets.Asian markets are following in the foot steps of the US, with indices up around 50bps. I expect to see them ease back early in the session before finding support and trending sideways.
Consumer goods, especially in Japan, saw a strong pull back yesterday and are now rebounding. Given the JPY is continuing to weaken and currently trading at 82.60, we should see continued inflows into this sector. Power companies also look cheap at currently levels however, given the review of nuclear power, the market is pricing in possible negative news. BUY
In HK, with such strong performances of China banks and property, I expect some profit taking at current levels, and infact I would be looking to go short these 2 sectors despite government intervention.
I would be looking at increasing exposure to A'shares over H, and on a sector level, long coal, oil&gas and with Chalco(2600) due to be kicked out of the index, it is an opportunity to pick an industry leader at discounted levels.
Data.11:00 S.Korea money supply
13:30 India industrial production
15:00 German CPI
15:45 France CPI
16:00 Spain property transactions (possible upside surprise)
17:30 UK jobless claims and earnings
18:00 EU industrial production
20:00 US MBA mortgage apps
21:30 US import prices
01:30 FOMC rates/budget
Events.12:30 RBA's Stevens speaks at Bank of Thailand
21:30 EU ministers meet on banking supervision
OPEC meeting in Austria
Bonds.11:00 Thailand 9, 15 year auction
11:35 Japan 2month auction
17:30 India 3, 12 month auction
18:00 Italy 12 month auction
00:30 US 10 year auction
Earnings.Joy Global(US), Costco(US), Restoration hardware(US), Inditex(SP), Imagination group(GB), Darty(GB), Alpha Bank(GR), Eurobank Engasis(GR)
Stoddart
Monday, 10 December 2012
Morning note, data, events, bonds and earnings 11th December 2012
Good morning,
Market volumes appear to be slowing down and Europe is seeing outflows as we go into year end.
After speaking to a number of Prime Brokerage desks, banks are looking to reduce risk substantially, leaving many funds in need to find other financing desks willing to lend. Naturally, this will see a number funds having to close out positions. This was expected but it does mean, volumes are set to ease as credit to hedge funds tighten.
Overnight Greek yields continued to fall, now trading at 13.24%, from 16% just last month. Italy and Spain are rising slightly, now 4.8% and 5.52%.
The Euro firmed after last weeks aggressive sell down, yesterday firming 40pips at 1.2937. I expect this run to continue. The JPY remains steady at 82.38 despite headlines that Japan is now in a technical recession. Government officials have warned investors about "reading too much into the data".
In Europe, equity markets sold down aggressively on the open but firmed throughout the session closing just off the highs. Italy came under some heavy fire as banks were heavily sold down. Intesa Sanpaolo -5.2%, Banco Pop -5.7%.
FTSE +0.1% v.low volume; O/P: health, oil&gas U/P: industrials, financial
CAC +0.2% avg volume; O/P: tech, oil&gas U/P: financial, utilities
DAX +0.2% avg volume; O/P: health, basic mats U/P: cons. services, utilities
IBEX -0.6% good volume; O/P: basic mats, industrial U/P: tech, financial
Sector maps highlight a sell down in the financial sector, which given its performance over the last 6 months, was expected. Good to see oil and gas outperforming. As mentioned into November end, we will see sector rotation, and with the US$ weakening against majors and government policy set to support GDP, oil is the perfect US$ & growth play. Upstream is also looking cheap at these levels.
Data overnight saw mixed results across the region. German trade balance was strong at Eur15.8b, with exports increasing 0.3% vs estimates -0.3%, and imports 2.5% vs expected 0.4%.
French industrial production missed at -0.7% vs expected +0.2% and manufacturing production -0.9% vs expected -0.1%. This does not bode well for Hollande's aim of GDP supporting government spending. More downgrades to come??
Turkey, where growth over the last 2 years has been extremely strong, saw GDP miss estimates at 1.6% vs expectations of +2.5%. Given its strength in consumer goods such as apparel, be cautious on European retail sales.
Italy's industrial production fell -1.1% vs estimates of just -0.3% which certainly wont help the existing political problems, however GDP came in as expected at -0.2% (seasonally adjusted).
Greek industrial production was strong!!! up 2.0% YoY vs last month -7.3%, which will certain ease some concerns with EU leaders.
In the US, equity markets opened slightly firmer and traded sideways throughout the session, closing just off flat on the close. Volumes were on average 10% lower.
S&P flat low volume; O/P: basic mats, tech U/P: cons.services, telco
Basic materials finally seeing inflows and tech performing with software leading the sector as Microsoft launches its new windows operating system, and i must say, it looks very good, hence names like Nokia running (up over 40%) in 2 months.
Markets.Asia has opened slightly weaker, down roughly 0.2%. In Japan, utilities and financials are leading us weaker whilst oil and gas outperforms.
Electricity names look attractive here such as 9502 and 9503, down around 6% today.
Market should trend easier early session but find support after the first hour and then trade range bound. HK is looking extremely rich here and with HSBC headlines on the fine, we should see weakness again today. A'shares discount looks attractive vs H'share at these levels.
Data.09:00 Philippines exports
14:30 France non-farm payrolls
15:00 German wholesale prices
18:00 German Zew survey
20:30 US NFIB small business optimism
23:00 US wholesale inventories, Jolt jobs
China money supply expected today.
Indian import/export expected
Events.17:00 EU general affairs ministers meet in Brussels
17:30 UK Osborne's Autumn statement
19:15 World bank president holds press conference
20:00 Greece buyback ends
WTO general council meets
Bonds.
11:00 Thailand 1,3,6 month auction
17:30 Spain 1,2 yr auction
18:00 Greece 1,6 month auction
18:30 UK 10yr auction
00:30 US 1 month auction
Earnings.Peregrine Pharm(US), Teavana(US), KIT(US), Dollar Gerneral(US), ThyssenKrupp(GE), Ashtead group(UK), Victrex(UK), Inditex(SP)
Stoddart
Market volumes appear to be slowing down and Europe is seeing outflows as we go into year end.
After speaking to a number of Prime Brokerage desks, banks are looking to reduce risk substantially, leaving many funds in need to find other financing desks willing to lend. Naturally, this will see a number funds having to close out positions. This was expected but it does mean, volumes are set to ease as credit to hedge funds tighten.
Overnight Greek yields continued to fall, now trading at 13.24%, from 16% just last month. Italy and Spain are rising slightly, now 4.8% and 5.52%.
The Euro firmed after last weeks aggressive sell down, yesterday firming 40pips at 1.2937. I expect this run to continue. The JPY remains steady at 82.38 despite headlines that Japan is now in a technical recession. Government officials have warned investors about "reading too much into the data".
In Europe, equity markets sold down aggressively on the open but firmed throughout the session closing just off the highs. Italy came under some heavy fire as banks were heavily sold down. Intesa Sanpaolo -5.2%, Banco Pop -5.7%.
FTSE +0.1% v.low volume; O/P: health, oil&gas U/P: industrials, financial
CAC +0.2% avg volume; O/P: tech, oil&gas U/P: financial, utilities
DAX +0.2% avg volume; O/P: health, basic mats U/P: cons. services, utilities
IBEX -0.6% good volume; O/P: basic mats, industrial U/P: tech, financial
Sector maps highlight a sell down in the financial sector, which given its performance over the last 6 months, was expected. Good to see oil and gas outperforming. As mentioned into November end, we will see sector rotation, and with the US$ weakening against majors and government policy set to support GDP, oil is the perfect US$ & growth play. Upstream is also looking cheap at these levels.
Data overnight saw mixed results across the region. German trade balance was strong at Eur15.8b, with exports increasing 0.3% vs estimates -0.3%, and imports 2.5% vs expected 0.4%.
French industrial production missed at -0.7% vs expected +0.2% and manufacturing production -0.9% vs expected -0.1%. This does not bode well for Hollande's aim of GDP supporting government spending. More downgrades to come??
Turkey, where growth over the last 2 years has been extremely strong, saw GDP miss estimates at 1.6% vs expectations of +2.5%. Given its strength in consumer goods such as apparel, be cautious on European retail sales.
Italy's industrial production fell -1.1% vs estimates of just -0.3% which certainly wont help the existing political problems, however GDP came in as expected at -0.2% (seasonally adjusted).
Greek industrial production was strong!!! up 2.0% YoY vs last month -7.3%, which will certain ease some concerns with EU leaders.
In the US, equity markets opened slightly firmer and traded sideways throughout the session, closing just off flat on the close. Volumes were on average 10% lower.
S&P flat low volume; O/P: basic mats, tech U/P: cons.services, telco
Basic materials finally seeing inflows and tech performing with software leading the sector as Microsoft launches its new windows operating system, and i must say, it looks very good, hence names like Nokia running (up over 40%) in 2 months.
Markets.Asia has opened slightly weaker, down roughly 0.2%. In Japan, utilities and financials are leading us weaker whilst oil and gas outperforms.
Electricity names look attractive here such as 9502 and 9503, down around 6% today.
Market should trend easier early session but find support after the first hour and then trade range bound. HK is looking extremely rich here and with HSBC headlines on the fine, we should see weakness again today. A'shares discount looks attractive vs H'share at these levels.
Data.09:00 Philippines exports
14:30 France non-farm payrolls
15:00 German wholesale prices
18:00 German Zew survey
20:30 US NFIB small business optimism
23:00 US wholesale inventories, Jolt jobs
China money supply expected today.
Indian import/export expected
Events.17:00 EU general affairs ministers meet in Brussels
17:30 UK Osborne's Autumn statement
19:15 World bank president holds press conference
20:00 Greece buyback ends
WTO general council meets
Bonds.
11:00 Thailand 1,3,6 month auction
17:30 Spain 1,2 yr auction
18:00 Greece 1,6 month auction
18:30 UK 10yr auction
00:30 US 1 month auction
Earnings.Peregrine Pharm(US), Teavana(US), KIT(US), Dollar Gerneral(US), ThyssenKrupp(GE), Ashtead group(UK), Victrex(UK), Inditex(SP)
Stoddart
Sunday, 9 December 2012
Morning note, data, events, bonds and earnings 10th December 2012
Good Morning,
Press over the weekend should have give the markets some positive sentiment, as China factory output and retail sales came in slightly better, see below:
CPI 2.0% vs expected 2.1%
PPI -2.2% vs expected -2.0%
Industrial production 10.1% vs expected 9.8%
FAI 20.7% vs expected 20.9%
Retail sales 14.9% vs expected 14.6%
Other headlines in the press should also help support Europe, with officials commenting "Greece is close to reaching targets for buying back its existing debt". Current yields continue to fall, currently 13.85% whilst German yields remain unchanged. Expect investors to continue to look a the spread, as further policies continue to support the Southern European states.
The UK continue down a similar route to that of the US, chasing multi-nationals that are avoiding taxes through overseas holding companies and structures. Already we have seen a number of companies publicise they will be reviewing tax procedures, I assume so that the politicians will loosen the noose and potential fines for their existing practices.
Other news, was driven by Friday's data. Greece GDP came in at -6.9% vs expected QoQ unchanged at -7.2%.
The UK industrial production and manufacturing came in surprisingly weak, ind production was -0.8% vs expected +0.8% MoM, Manufacturing -1.3% vs expected -0.2% MoM.
In the US, markets enjoyed some optimism on the back of stronger jobs data. change in non-farm payrolls increased to 146k, vs estimates of 85k in November, helping ease the unemployment rate down to 7.7% vs expected 7.9%. Wages and hourly earnings came in as expected at 34.4 or +1.7%.
The only number to disappoint was the Uni of Michigan confidence indicator which came in at 74.5 vs expected 82.0.
Markets. Despite the optimism and strong data/headlines, the correction in the Euro regardless of bond inflows leaves me nervous that a pull back in equities is due, however, the JPY remains steady, so would could see Asian markets outperform as investors look at improving exports helping to increase growth.
With pull back in EURUSD, gold seems unaffected still trading above the $1700 level, whilst oil sold of $2 back to 86 last week.
Over the last month, I have received a number of requests from clients for physical gold. 2 reasons, 1. Possible regulation on commodity derivatives, 2. Avoiding costly futures rolls and management fees, instead choosing to pay the fees on depository. This trend will continue and should you want to know the codes and different options, please email me.
With oil coming off and the Euro trading at major support levels, I would be looking to buy upstream oil plays, as at currently levels, they look cheap. GDP estimates and forecasts are too aggressive to the downside and I expect upward revision in early 2013.
With China now trading back above 2000, its time to look at A-share premium/discount. I would look at shorting HSCEI vs either the A-share tracker 2823 HK, or CSI 300 2827 HK at these levels.
China property names have also been huge outperforms as the government looks to support prices and possibly look at taking on inventory. The sector however, is benefiting from an artificially market, where large inventories will still exist and growth within the sector will continue to fall.
These policies will help banks improve balance sheets, as current properties on the banks books can be repackages and sold on. But given the recent performance of the sector, this looks priced in.
Data. 08:30 Australia home loan, investment lending
12:30 Japan bankruptcies
13:00 Japan consumer confidence
14:00 Eco watchers current/outlook
15:00 Germany import/export/trade balance
15:45 France BoF business sentiment/Industrial/manufacturing production
16:00 Turkey GDP/industrial production
17:00 Italy industrial production
17:30 EU sentix investor confidence
18:00 Italy GDP
Greece industrial production/CPI
China imports/exports/trade balance
Watch for coal imports and the Australia index.
Events.19:30 EU foreign ministers meet
21:45 US FDIC systemic resolution advisory committee
Obama speaks about US budget
IMF;s Lagarde visits LatAm
Bonds.10:30 S.Korea 5 year auction
13:30 Philippines 3,6,12 month auction
18:30 Netherlands 3,6 month auction
22:00 France 3,6,12 month auction
03:00 US 3,6 month auction
Earnings.Peregrine Pharma(US), Teavana(US), Converse Tech(US), China Sandi(CH), Indika Energy(IJ)
Stoddart
Press over the weekend should have give the markets some positive sentiment, as China factory output and retail sales came in slightly better, see below:
CPI 2.0% vs expected 2.1%
PPI -2.2% vs expected -2.0%
Industrial production 10.1% vs expected 9.8%
FAI 20.7% vs expected 20.9%
Retail sales 14.9% vs expected 14.6%
Other headlines in the press should also help support Europe, with officials commenting "Greece is close to reaching targets for buying back its existing debt". Current yields continue to fall, currently 13.85% whilst German yields remain unchanged. Expect investors to continue to look a the spread, as further policies continue to support the Southern European states.
The UK continue down a similar route to that of the US, chasing multi-nationals that are avoiding taxes through overseas holding companies and structures. Already we have seen a number of companies publicise they will be reviewing tax procedures, I assume so that the politicians will loosen the noose and potential fines for their existing practices.
Other news, was driven by Friday's data. Greece GDP came in at -6.9% vs expected QoQ unchanged at -7.2%.
The UK industrial production and manufacturing came in surprisingly weak, ind production was -0.8% vs expected +0.8% MoM, Manufacturing -1.3% vs expected -0.2% MoM.
In the US, markets enjoyed some optimism on the back of stronger jobs data. change in non-farm payrolls increased to 146k, vs estimates of 85k in November, helping ease the unemployment rate down to 7.7% vs expected 7.9%. Wages and hourly earnings came in as expected at 34.4 or +1.7%.
The only number to disappoint was the Uni of Michigan confidence indicator which came in at 74.5 vs expected 82.0.
Markets. Despite the optimism and strong data/headlines, the correction in the Euro regardless of bond inflows leaves me nervous that a pull back in equities is due, however, the JPY remains steady, so would could see Asian markets outperform as investors look at improving exports helping to increase growth.
With pull back in EURUSD, gold seems unaffected still trading above the $1700 level, whilst oil sold of $2 back to 86 last week.
Over the last month, I have received a number of requests from clients for physical gold. 2 reasons, 1. Possible regulation on commodity derivatives, 2. Avoiding costly futures rolls and management fees, instead choosing to pay the fees on depository. This trend will continue and should you want to know the codes and different options, please email me.
With oil coming off and the Euro trading at major support levels, I would be looking to buy upstream oil plays, as at currently levels, they look cheap. GDP estimates and forecasts are too aggressive to the downside and I expect upward revision in early 2013.
With China now trading back above 2000, its time to look at A-share premium/discount. I would look at shorting HSCEI vs either the A-share tracker 2823 HK, or CSI 300 2827 HK at these levels.
China property names have also been huge outperforms as the government looks to support prices and possibly look at taking on inventory. The sector however, is benefiting from an artificially market, where large inventories will still exist and growth within the sector will continue to fall.
These policies will help banks improve balance sheets, as current properties on the banks books can be repackages and sold on. But given the recent performance of the sector, this looks priced in.
Data. 08:30 Australia home loan, investment lending
12:30 Japan bankruptcies
13:00 Japan consumer confidence
14:00 Eco watchers current/outlook
15:00 Germany import/export/trade balance
15:45 France BoF business sentiment/Industrial/manufacturing production
16:00 Turkey GDP/industrial production
17:00 Italy industrial production
17:30 EU sentix investor confidence
18:00 Italy GDP
Greece industrial production/CPI
China imports/exports/trade balance
Watch for coal imports and the Australia index.
Events.19:30 EU foreign ministers meet
21:45 US FDIC systemic resolution advisory committee
Obama speaks about US budget
IMF;s Lagarde visits LatAm
Bonds.10:30 S.Korea 5 year auction
13:30 Philippines 3,6,12 month auction
18:30 Netherlands 3,6 month auction
22:00 France 3,6,12 month auction
03:00 US 3,6 month auction
Earnings.Peregrine Pharma(US), Teavana(US), Converse Tech(US), China Sandi(CH), Indika Energy(IJ)
Stoddart
Thursday, 6 December 2012
Morning note, data, events, bonds and earnings 7th December 2012
Good morning,
After such a strong run, markets are starting to feel like they are running out of steam. A pull back in the Euro and USDJPY struggling to continue its run, bond yields in Europe are starting to see slowing inflows.
10 year bonds in Greece remain at 14.37%, Italy 4.56% and Spain 5.44%, whilst the UK 1.71%, Germany 1.29% and France 1.98 saw their bonds firming around 5bps overnight.
Equity markets in Europe remained strong, on good volume, as the region has been underperforming all year. All excluding Spain are up YTD, but markets with a stronger balance sheet like Germany, have outperformed by a country mile.
FTSE +0.2% good volume; O/P:telco, basic materials U/P:industrial, cons.goods
CAC +0.3% v.good volume; O/P:industrial, health U/P:utilities, tech
DAX 1.1% v.good volume; O/P:basic materials, health O/P:utilities, telco
IBEX +0.4% v.good volume; O/P:health, cons.services U/P:tech, oil & gas
Sectors show little correlation. What it does show is some degree of rotation into lagging sectors oil & gas and industrials. I continue to like upstream oil plays as oil, which has fallen from the highs, remains above $85 which looks to be a major support level.
Worth also noting that recently, demand for precious metals has been increasing. With the US budget approaching and Europe coming to some level of a solution, investors are looking increasing at US$ hedges. The has also been a pick up in demand for physical holding, which could highlight the possibility of restrictions due to MiFID 3, however, I suspect this will target soft commodities due to supply constraints.
In the US, markets remained relatively range bound, before a late rally helped push markets to close just off day highs, on good volume.
S&P +0.3% avg volumes; O/P:tech, cons.services U/P: utilities, telco
The sectors again highlight the strength of Apple, which after 2 days of heavy selling, finds support and rebounds. The 200 day moving average will now be a major resistance level, and AAPL looks set to trade in the 500-600 range, provided it can hold the $500 level. Noise is that Samsung on both book and earnings valuations looks cheap, however, I would avoid buying Samsung at these levels.
Data overnight saw the EU government expenditure fall more than expected, at -0.2% vs estimates of flat. Whilst Greek unemployment continued to rise at 26%, which could only hurt progress with the EU.
Eurozone GDP came in at -0.6 (seasonally adjusted), which was inline with estimates.
German factory orders helped markets, falling -2.4% where estimates had the number at -5.6%.
Bank of England rates announcement saw rates unchanged which was no surprise. We could see them drop by another 25bps early next year should UK growth continue to slow.
In the US, initial jobless claims came in at 370k, better than the 380k expected.
Markets.Expect a rebound in the early session after Europe and the US however, this looks set to be just an initial reaction, we should see markets drift easier after the first hour. I would be looking to reduce positions in tech, banks and China property at these levels.
Oil & gas, and coals still look cheap at these levels.
Data.13:00 Japan leading index/coincident index
15:00 German labor cost
15:45 France trade balance
16:30 Netherlands industrial production
17:00 Singapore foreign reserves
17:30 UK manufacturing production
21:30 US non farm payrolls
21:30 US unemployment rate/earnings
22:55 US Uni of Michigan confidence
Events.19:00 EU to adopt proposals on tax evasion
22:00 Monti meets Toshiba CEO - possible asset sale???
ECB holds governing council meeting
Bonds.11:45 Japan 3 month, 1 year auction
18:00 France 6,7,15 and 18 year bonds
Earnings.Piraeus Bank(GR), Berkleley Group(UK), Oldtown(MK)
Stoddart
After such a strong run, markets are starting to feel like they are running out of steam. A pull back in the Euro and USDJPY struggling to continue its run, bond yields in Europe are starting to see slowing inflows.
10 year bonds in Greece remain at 14.37%, Italy 4.56% and Spain 5.44%, whilst the UK 1.71%, Germany 1.29% and France 1.98 saw their bonds firming around 5bps overnight.
Equity markets in Europe remained strong, on good volume, as the region has been underperforming all year. All excluding Spain are up YTD, but markets with a stronger balance sheet like Germany, have outperformed by a country mile.
FTSE +0.2% good volume; O/P:telco, basic materials U/P:industrial, cons.goods
CAC +0.3% v.good volume; O/P:industrial, health U/P:utilities, tech
DAX 1.1% v.good volume; O/P:basic materials, health O/P:utilities, telco
IBEX +0.4% v.good volume; O/P:health, cons.services U/P:tech, oil & gas
Sectors show little correlation. What it does show is some degree of rotation into lagging sectors oil & gas and industrials. I continue to like upstream oil plays as oil, which has fallen from the highs, remains above $85 which looks to be a major support level.
Worth also noting that recently, demand for precious metals has been increasing. With the US budget approaching and Europe coming to some level of a solution, investors are looking increasing at US$ hedges. The has also been a pick up in demand for physical holding, which could highlight the possibility of restrictions due to MiFID 3, however, I suspect this will target soft commodities due to supply constraints.
In the US, markets remained relatively range bound, before a late rally helped push markets to close just off day highs, on good volume.
S&P +0.3% avg volumes; O/P:tech, cons.services U/P: utilities, telco
The sectors again highlight the strength of Apple, which after 2 days of heavy selling, finds support and rebounds. The 200 day moving average will now be a major resistance level, and AAPL looks set to trade in the 500-600 range, provided it can hold the $500 level. Noise is that Samsung on both book and earnings valuations looks cheap, however, I would avoid buying Samsung at these levels.
Data overnight saw the EU government expenditure fall more than expected, at -0.2% vs estimates of flat. Whilst Greek unemployment continued to rise at 26%, which could only hurt progress with the EU.
Eurozone GDP came in at -0.6 (seasonally adjusted), which was inline with estimates.
German factory orders helped markets, falling -2.4% where estimates had the number at -5.6%.
Bank of England rates announcement saw rates unchanged which was no surprise. We could see them drop by another 25bps early next year should UK growth continue to slow.
In the US, initial jobless claims came in at 370k, better than the 380k expected.
Markets.Expect a rebound in the early session after Europe and the US however, this looks set to be just an initial reaction, we should see markets drift easier after the first hour. I would be looking to reduce positions in tech, banks and China property at these levels.
Oil & gas, and coals still look cheap at these levels.
Data.13:00 Japan leading index/coincident index
15:00 German labor cost
15:45 France trade balance
16:30 Netherlands industrial production
17:00 Singapore foreign reserves
17:30 UK manufacturing production
21:30 US non farm payrolls
21:30 US unemployment rate/earnings
22:55 US Uni of Michigan confidence
Events.19:00 EU to adopt proposals on tax evasion
22:00 Monti meets Toshiba CEO - possible asset sale???
ECB holds governing council meeting
Bonds.11:45 Japan 3 month, 1 year auction
18:00 France 6,7,15 and 18 year bonds
Earnings.Piraeus Bank(GR), Berkleley Group(UK), Oldtown(MK)
Stoddart
Monday, 3 December 2012
Morning note, data, events, bonds and earnings 4th December 2012
Good morning,
Mixed performances on the first trading day of the month. Equity markets were expected to be slightly weaker, as stocks sold down after some rather aggressive window dressing on month end.
Bond markets saw a HUGE rally in Spanish, Greek and Italian, with 10yr yields currently Spain: 5.216%, Italy: 4.435%, Greece: 14.56%. Greece start the session at 15.8% but due to the bond repurchase announcement, we saw a it fall 128 bps.
Equity volumes remained strong across the southern states of Europe, whilst the rest of the region remained around average. Markets opened slightly firmer, trended higher until the US opened, which saw them sell back down again. Mostly due to the firmer US$, as brief details of new tax policies hit the press.
FTSE +0.1% low volume; O/P:health, industrials U/P:telco, financial
CAC +0.3% avg volume; O/P:utilities, health U/P: financial, telco
DAX +0.4% avg volume; O/P:tech, basic materials U/P: utilities, consumer goods
IBEX -0.6% v.good volume; O/P:basic materials, tech U/P:cons.services, financial
Sectors here showing us very little. The UK is looking at some rather nasty tax policies on high end property, which should make the market nervous.
Desperately chasing down overseas investors and offshore banking, the UK really has to be careful not to discourage inflows. The thought is the tax should help dispersion, where property prices in London are considerably more than that in the north of England.
The finance sector has been very strong over the last 6 months, due to politicians continued work on policies to support the heavily indebted members of the EU. With such a large amount of liquidity in the market, when credit eases, the new loan market will be extremely strong as banks increase lending.
Data overnight and maybe missed was the Spanish PMI data, which came in at 45.3 vs expected 43.9. This number actually means it is still contracting, but I like the fact it is contracting at a lower rate than expected. Stoddart = forever optimistic.
The rest of Europe also saw PMI contract, with German, France, Italy and the region all with a score under 50. Greece however, was very weak, with a PMI of 41.8, which raises questions about its ability to buy back 10 Billion Eur of bonds which it announced yesterday.
Italy came through with a strong budget balance, coming in at -4.3b vs October at -13.1b, however, new car sales were at -20% highlighting austerity is hitting the consumer market at present.
In the US, equity markets trended easier throughout the session, closing at day highs as the US$ continues to firm. Surprisingly, we also saw UST's weaker, whilst gold and crude oil remained relatively unchanged.
S&P -0.5% avg volumes; O/P:telco, tech U/P:basic materials, industrials
Sector maps in the US look very defensive, with telco, tech and health care all outperforming. Apple continues to squeeze, however, it is now approaching major resistance levels, which could weigh on the S&P.
Markets.
Asian markets are all slightly easier, with volumes lower by about 20%. As the US$ and JPY continue to firm against majors, equity markets are turning defensive.
Shanghai continues to sell down, currently 1954, -6pts, where health, consumer goods and services are all dragging the index low. Utilities and Oil & gas remain top performing sectors but are barely flat on the day.
The question on everyones mind is, where is the intervention?
I continue to like upstream oil plays at these levels. We should be looking for US$ hedges at these levels, where crude remains strong and should see a number of countries continue to build inventories.
China property looks rich at these levels, and with talks of the government taking on inventory and supporting prices, the market remains artificially high and doesnt reflect the "real" demand.
Data.11:30 Australia RBA cash target
11:30 Thailand consumer confidence
16:00 Spain unemployment MoM
17:30 UK PMI construction
18:00 Eurozone PPI
22:45 US ISM NY
UK Halifax house prices
Events.16:00 EU finance ministers meet
19:00 ESM's Regling speaks at Think Tank
22:30 US FDIC releases quarterly banking survey
Clinton meets NATO
Bonds.13:30 Philippines 10year auction
19:00 EFSF 3month auction
00:30 US 4week auction
Earnings.Toll brothers(US), Big lots(US), Autozone9US0, Vail resorts(US), Panadora Media(US), Elekta(SS), TUI Travel(UK)
Stoddart
Mixed performances on the first trading day of the month. Equity markets were expected to be slightly weaker, as stocks sold down after some rather aggressive window dressing on month end.
Bond markets saw a HUGE rally in Spanish, Greek and Italian, with 10yr yields currently Spain: 5.216%, Italy: 4.435%, Greece: 14.56%. Greece start the session at 15.8% but due to the bond repurchase announcement, we saw a it fall 128 bps.
Equity volumes remained strong across the southern states of Europe, whilst the rest of the region remained around average. Markets opened slightly firmer, trended higher until the US opened, which saw them sell back down again. Mostly due to the firmer US$, as brief details of new tax policies hit the press.
FTSE +0.1% low volume; O/P:health, industrials U/P:telco, financial
CAC +0.3% avg volume; O/P:utilities, health U/P: financial, telco
DAX +0.4% avg volume; O/P:tech, basic materials U/P: utilities, consumer goods
IBEX -0.6% v.good volume; O/P:basic materials, tech U/P:cons.services, financial
Sectors here showing us very little. The UK is looking at some rather nasty tax policies on high end property, which should make the market nervous.
Desperately chasing down overseas investors and offshore banking, the UK really has to be careful not to discourage inflows. The thought is the tax should help dispersion, where property prices in London are considerably more than that in the north of England.
The finance sector has been very strong over the last 6 months, due to politicians continued work on policies to support the heavily indebted members of the EU. With such a large amount of liquidity in the market, when credit eases, the new loan market will be extremely strong as banks increase lending.
Data overnight and maybe missed was the Spanish PMI data, which came in at 45.3 vs expected 43.9. This number actually means it is still contracting, but I like the fact it is contracting at a lower rate than expected. Stoddart = forever optimistic.
The rest of Europe also saw PMI contract, with German, France, Italy and the region all with a score under 50. Greece however, was very weak, with a PMI of 41.8, which raises questions about its ability to buy back 10 Billion Eur of bonds which it announced yesterday.
Italy came through with a strong budget balance, coming in at -4.3b vs October at -13.1b, however, new car sales were at -20% highlighting austerity is hitting the consumer market at present.
In the US, equity markets trended easier throughout the session, closing at day highs as the US$ continues to firm. Surprisingly, we also saw UST's weaker, whilst gold and crude oil remained relatively unchanged.
S&P -0.5% avg volumes; O/P:telco, tech U/P:basic materials, industrials
Sector maps in the US look very defensive, with telco, tech and health care all outperforming. Apple continues to squeeze, however, it is now approaching major resistance levels, which could weigh on the S&P.
Markets.
Asian markets are all slightly easier, with volumes lower by about 20%. As the US$ and JPY continue to firm against majors, equity markets are turning defensive.
Shanghai continues to sell down, currently 1954, -6pts, where health, consumer goods and services are all dragging the index low. Utilities and Oil & gas remain top performing sectors but are barely flat on the day.
The question on everyones mind is, where is the intervention?
I continue to like upstream oil plays at these levels. We should be looking for US$ hedges at these levels, where crude remains strong and should see a number of countries continue to build inventories.
China property looks rich at these levels, and with talks of the government taking on inventory and supporting prices, the market remains artificially high and doesnt reflect the "real" demand.
Data.11:30 Australia RBA cash target
11:30 Thailand consumer confidence
16:00 Spain unemployment MoM
17:30 UK PMI construction
18:00 Eurozone PPI
22:45 US ISM NY
UK Halifax house prices
Events.16:00 EU finance ministers meet
19:00 ESM's Regling speaks at Think Tank
22:30 US FDIC releases quarterly banking survey
Clinton meets NATO
Bonds.13:30 Philippines 10year auction
19:00 EFSF 3month auction
00:30 US 4week auction
Earnings.Toll brothers(US), Big lots(US), Autozone9US0, Vail resorts(US), Panadora Media(US), Elekta(SS), TUI Travel(UK)
Stoddart
Sunday, 2 December 2012
Morning note, data, events, bonds and earnings 3rd December 2012
Good morning,
Some strong volumes going through on Friday, as November comes to an end and window dressing helped US markets close flat on the day.
Press over the weekend was heavily focused again on macro data, with headlines targeting the US debt and spending expirations, and Europe with Merkel looking at Greek debt write offs.
In Asia, headlines focused on a strong manufacturing number, which came in at 50.6 indicating growth, however, it missed estimates of 50.8. There are once again, talks of China GDP estimates under the new leadership, with the survey indicating towards 7.5% growth. With the RMB so strong, exports will continue to ease, causing increasing fears that China will struggle to hit existing estimates. As rising inflation and "real" property prices and transactions continue to stagnate, investors fear that domestic demand will not be able to take up the slack of falling exports.
We are already seeing the high end market being hit, with falling sales of luxury consumer discretionary goods, such as automobiles and watches.
Markets.Expect markets in Asia today to start giving back some of there gains from Friday on the open, but with the Euro still strong at 1.30, we should see equity markets remain buoyant, trending firmer through the session.
Its hard to see the Euro trending much firmer given the overhang in the US and Greek/Spanish/Italian.Portuguese debt, however, I would not be short the Euro at these levels. Major supports are now 1.27, 1.2840 and 1.2980.
Data.08:00 S.Korea HSBC Manufacturing PMI
80:00 UK Hometrack housing
08:30 AU retail sales, invnetories
09:00 China non-manufacturing PMI
09:45 China HSBC manufacturing PMI
12:00 Thailand CPI
12:00 Indonesian trade balance/inflation,CPI
13:00 Japan vehicle sales
13:30 Australia RBA commodity price
16:00 Turkey CPI, PPI
16:15 Spain PMI - number expected very weak, possible upside surprise
16:45 - 55: Italy, France Germany PMI
17:00 EU PMI
17:00 Greek PMI
17:30 UK PMI
23:00 US ISM manufacturing/prices paid/construction spending
Events.08:10 BoJ deputy Gov Nishimura speaks at Panel
12:00 BoJ Shirakawa and ECB Noyer speak at Europlace Forum
17:30 UK's BoE publishes quarterly FLS lending data
US financial stability oversight council meet in Washington
EU area finance ministers meet in Brussels
Bonds.10:30 S.Korea 3 year auction
11:00 Thai 1,3,6,12 month auction
18:00 Netherlands 3,6 month auction
18:30 German 3 month auction
22:00 France 3,6 month auction
Earnings.Elektra(SW), TUI travel(GB), China Sandi(HK), Ito(JP0, Pigeon(JP), Cerebos Pac(SG)
Stoddart
Some strong volumes going through on Friday, as November comes to an end and window dressing helped US markets close flat on the day.
Press over the weekend was heavily focused again on macro data, with headlines targeting the US debt and spending expirations, and Europe with Merkel looking at Greek debt write offs.
In Asia, headlines focused on a strong manufacturing number, which came in at 50.6 indicating growth, however, it missed estimates of 50.8. There are once again, talks of China GDP estimates under the new leadership, with the survey indicating towards 7.5% growth. With the RMB so strong, exports will continue to ease, causing increasing fears that China will struggle to hit existing estimates. As rising inflation and "real" property prices and transactions continue to stagnate, investors fear that domestic demand will not be able to take up the slack of falling exports.
We are already seeing the high end market being hit, with falling sales of luxury consumer discretionary goods, such as automobiles and watches.
Markets.Expect markets in Asia today to start giving back some of there gains from Friday on the open, but with the Euro still strong at 1.30, we should see equity markets remain buoyant, trending firmer through the session.
Its hard to see the Euro trending much firmer given the overhang in the US and Greek/Spanish/Italian.Portuguese debt, however, I would not be short the Euro at these levels. Major supports are now 1.27, 1.2840 and 1.2980.
Data.08:00 S.Korea HSBC Manufacturing PMI
80:00 UK Hometrack housing
08:30 AU retail sales, invnetories
09:00 China non-manufacturing PMI
09:45 China HSBC manufacturing PMI
12:00 Thailand CPI
12:00 Indonesian trade balance/inflation,CPI
13:00 Japan vehicle sales
13:30 Australia RBA commodity price
16:00 Turkey CPI, PPI
16:15 Spain PMI - number expected very weak, possible upside surprise
16:45 - 55: Italy, France Germany PMI
17:00 EU PMI
17:00 Greek PMI
17:30 UK PMI
23:00 US ISM manufacturing/prices paid/construction spending
Events.08:10 BoJ deputy Gov Nishimura speaks at Panel
12:00 BoJ Shirakawa and ECB Noyer speak at Europlace Forum
17:30 UK's BoE publishes quarterly FLS lending data
US financial stability oversight council meet in Washington
EU area finance ministers meet in Brussels
Bonds.10:30 S.Korea 3 year auction
11:00 Thai 1,3,6,12 month auction
18:00 Netherlands 3,6 month auction
18:30 German 3 month auction
22:00 France 3,6 month auction
Earnings.Elektra(SW), TUI travel(GB), China Sandi(HK), Ito(JP0, Pigeon(JP), Cerebos Pac(SG)
Stoddart
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