Morning note, data, events, bonds and earnings 27th November 2012

Good morning,

Despite offering my services, the Bank of England has chosen a Canadian, Mark Carney as the Governor. I can only assume there was a mix up of the surnames.
The BoE was rumored some time ago to be looking at an "outsider" to take the top spot, just like that of the England football team, many years before.

The Canadian was one of the options commentators had penciled for the position. Currently serving as Chairman on the G20 stability board, and having worked at Goldman, Canadian department of finance and Bank of Canada, he has been credited with protecting Canada against much of the 2008 crisis.

With a strong understanding of global finance and crisis management, this should be taken in a positive light by global markets, and his education at Oxford should also mean he has a number of allies on the benches within the house of Parliament. There will be some questioning about ties with Goldman, similar of that of Hank Paulson, how came under scrutiny in the financial crisis, that saw financial institutions get a number of favors, not shown to other industries.

Other stories overnight include Europe and its aim to assist Greece. There are talks of the ECB fund, which currently holds Greek debt, giving back profits made from holding its bonds. It certainly feel's like the Christmas spirit is starting to shine. Of course, the ECB declined to comment on possible plans. Finance ministers meet today to discuss Greece's funding issues, for the third time.

Preparation is underway in the US to start designing a budget, where investors are nervous that the Republican's could potential stonewall cuts in a number of their "friendly" sectors.

Markets overnight saw currencies remain stable, with the Euro still trading around 1.2970, and Jpy firming slightly at 82.10. Sterling remained unchanged on the BoE announcement, trading at 1.6025 and holding on to its strong rally last friday.
In the bond market, Spanish and Italian yields continue to fall, with 10yr yields at 5.58 and 4.74% respectively.
Equity markets, which finally feel like they have caught up with currency markets, started to flap a little over night, with volumes falling and markets trending easier.

FTSE -0.6% low volume; O/P: cons. goods, tech U/P: financial, health
CAC -0.8% v.low volume; O/P: health, basic material U/P: financial, industrial
DAX -0.2% v.low volume; O/P: cons.service, cons.good U/P: industrial, utilities
IBEX -0.4% low volume; O/P: cons.services, industrial U/P: tech, basic mat

Sectors here highlight some rotation, which after such a strong performance of financial's over the last 3 months, was expected. Its good to see investors looking at basic materials (finally), which should benefit from improved optimism on growth and reflect the weaker US$. Dont get me wrong, inventories are still high, but so were the sugar mountains in the UK/Europe many years ago. Basic materials still look oversold at these levels.

In the US, the hype over Black Friday is starting to feel like 8pm on boxing day, its done. Sales increased but partly due to increased stores from the major names like Walmart, however, it could show credit easing at a consumer level as credit card usage hits the roof in favor of new TV's, DVD players and other types of must have gadgets.  

SPX -0.2% avg volume; O/P: utilities, tech U/P: telco, oil & gas

Sector performance looks quite defensive. A rebound in Apple helping support the tech sector, but telco's seeing outflows as investors look to move to a more neutral stance into year end. Like Christmas decorations, this seems to be happening earlier and earlier these days.

Data overnight saw both the Chicago fed and Dallas fed come in weaker than expected. Chicago activity came in at -0.56, whilst the Dallas manufacturing came in at -2.8, vs expected 2.5. New orders were actually strong MoM, with an increase of 0.4, and there was also an increase in inventories of +4.1. This however, was weighed down by a large fall in production and capacity utilisation.

Markets.Expect Asia to open relatively flat to slightly easier. Yesterdays sell down, which saw HK trend easier throughout the session, closing just off day lows, means much of the move overnight should be priced in. With currencies trading unchanged, this should see equity markets trend firmer through the session.

Would look to be buying coal, oil and steels. Selling banks, HK+CH property names. Auto's like DF(489) also looking toppy, be short with caution, there is a big squeeze going on.

HUGE data day, watch for volatility to increase in the currencies today.

Data.08:00 Australia house affordability
08:30 Australia balance of payments
09:00 Philippines trade balance
09:30 China industrial profits
11:00 Japan small business confidence
15:00 German import pirces
15:45 France consumer confidence
16:30 HK trade balance
17:00 Italy wages
17:30 UK government spending, trade balance, index of sevices
18:00 EU OECD economic outlook
21:30 US durable goods, cap goods
22:00 US Case-shiller
23:00 US Richmond Fed, consumer confidence
23:00 US house price index
Spain budget, Thailand trade balance

Events.16:00 US Fed's Fisher speaks in Germany
16:30 Italy Grilli, Ghizzoni, Cucchiani Speak in Milan
16:30 EU court ruling on ESM validity
18:00 OECD publishes economic outlook
19:30 US Fed's Lockhart speaks on financial stability
EU Ashton at EU-central Asia meeting

Bonds.11:00 Thailand 1,3,6 month auction
11:45 Japan 2yr auction
17:00 Netherlands 3yr auction
17:30 Spain 2.5,6 month auction
18:00 Italy 2,5,14 year auction
00:30 US 4 week auction
02:00 US 2yr auction

Earnings.ADT(US), PVH(US), Remy Cointreau(FP), Severn Trent(UK), Vienna Ins(AV), Britvic(UK), Raiffenisen Bank(AV), Skyworth(HK), Far East Cons(HK), Yue Yuen(HK), China Gas(HK), Luk Fook(HK), Bosideng(HK), Dynam Japan(JP), ITC (HK), Vitasoy(HK), Quam(HK), Focus Media(HK), Kernel(PW), Liberty Bank(RU)

Stoddart

Morning note, data, events, bonds and earnings 1st November 2012

Good morning,

Earlier this week, I used the example of an investment banker getting a new telephone, highlighting how no one likes change. I can tell you now, the same goes for changing bus routes on my way to work this morning!

God, I miss the HK bus and train infrastructure!

US markets re-open little changed, however, its good to see that volumes hit averages, despite European volumes still lower.
European markets opened at the highs and trended lower throughout the session, closing at day lows. As mentioned earlier, volumes were lower by an average of 20%. London's oil and commodity heavy bench mark, the FTSE, closed down 1.2%, impacted heavily by BG Group, which plans to sell its stake in an LNG project to CNOOC. This stock alone took 24 points of the index.

FTSE -1.2% strong volume: O/P: cons.services, utilities  U/P: oil&gas, health
CAC -0.9% v.low volume: O/P: utilities, technology  U/P: basic mat, health
DAX -0.3% avg volume: O/P: cons.services, financial U/P: health, cons.goods
IBEX +0.1% v.low volume: O/P: financial, industrial U/P: basic mat, tech

Being all saints day, many of the European markets closed, including France, Italy, Spain and Portugal, was well as the Philippines here in Asia. From the sector charts, defensives were back in favor as the Euro remains unchanged at 1.2960. As the last of the Christmas trees start going, fund managers are reminded to start locking in gains for the year, and the term risk becomes a dirty word, much to the detriment of us humble brokers.
On this note, I would expect some profit taking in sectors like financials, technology and property. Just looking at the performance of Capitamall(CT SP), yields are now considerably lower, whilst retail sales are looking to stagnate.

Markets.Expect markets to open unchanged on the open, despite a strong rally into the close yesterday across most markets in the region. A possible cause being window dressing. This should see us trend flat over the first hour or two, before seeing profit taking pushing the index easier.
At these levels, basic materials are looking cheap as GDP estimates are still looking relatively lack luster 1 year out. Despite this, governments will be looking to boost construction spending, supporting jobs growth. This should also boost other sectors, such as industrial. Oil should also see support here, time to buy Petrochina(857)
Shorts, I am looking at Singapore property names and Australia financials.

Data.07:50 Japan foreign and domestic stock & bond data
08:00 S.Korea trade balance
08:30 Australia import/export data
09:00 China PMI
12:00 Thailand CPI
13:30 RBA commodity price index
15:00 UK Nationwide house prices
16:00 Turkey manufacturing PMI
16:15 Spain manufacturing PMI
17:30 UK PMI
19:30 US challenger job cuts
20:15 US ADP employment change
20:30 US Non farm productivity/jobless claims
22:00 US ISM manufacturing/construction spending

Events.18:00 Italy's Monti meets Germany's Steinbruck
22:30 IMF regular meeting
EU bans naked CDS's

Bonds.11:45 Japan 3 month, 10 year auction

Earnings.Western refining(US), Marathon Petrolum(US), Pfizer(US), Watson Pharma(US), United Therapeutics(US), Exxon Mobil(US), Alliant tech(US), Estee Lauder(US), Visteon(US), Cigna(US), Kellogg9US), Apache(US), Avis Budget(US), Yelp(US), Las Vegas sands(US), Starbucks(US), First solar(US), AIG(US), Onyx Pharma(US), Overseas Shipholding(US), Edison(US), Linkedin(US), RDSA(UK), BSKYB(UK), Smith & Nephew(UK), Lloyds(UK), BT(UK), Eisai(JP), Mitsui Chem(JP), Calbee(JP), Fuji Media(JP), Casio(JP), Nikon(JP), Sony(JP), Sharp(JP), Ibiden(JP), Cosmo oil(JP), Hankook tire(KR), Sumsung heavy(KR), Samsung C&T(KR), Hyundai hysco(KR), S-oil(KR), Woori Fin(KR), Rosneft(RU), Arcelik(TR)

Stoddart

Morning note, data, events, bonds and earnings 3rd October 2012

Good morning

I start the morning run down on a sad note. ING closed the last of the old Baring's equity business yesterday. It is certainly the end of an era.

Markets overnight saw volumes ease as investor sentiment weakens, despite stronger New York ISM and Eurozone PMI.

In bonds markets, we saw Spanish yields continue to fall, now at 5.60% and Italy looking to break the 5% level. These are still running after the Spanish bank stress test showed the 100m Euro set aside by the EFSF is enough to cover its current short fall. Spain will take the capital injection, it has to. But there could be some delay over terms. The ECB will move quickly to ease these fears.  

Equity markets again saw defensives outperform. The recent run in basic materials came to an end, despite the Euro holding above 1.29 against the green back. Again, this is in keeping with an increasing equity exposure, but with a defensive stance.

I would like to turn your attention to a news story out of Nigeria. Late last night, tensions started to raise in the north east, where extremists(suspected to come from Niger), started attacking a local town. This might seem far way from most of us over the world, but the impact quite certainly escalate. The group, called Boko Haram, have been attacking communication masts also, which is strange, given many like to get the word out. This is picking up pace and could impact business in not just Nigeria, but also Africa.

Current oil reserves are estimated at between 16-22 billion barrels, with production levels of 2.4m per day targeted by the government. A large concentration of that coming from Niger delta. Given these possible threats, and the US$ weakening, I would be looking to reduce exposure to oil companies in the region, and long crude at these levels.

Markets.

Asian markets mixed as markets such as HK and India re-open. Japan sold off early open, but has since recovered and is trading up on the day. I was a little keen yesterday, wanting to buy the AU$ after the RBA cut rates 25bps, its now trading at 1.023 and I still want to buy it. 

Outperforming sectors are defensives such as utilities. The financial sector is looking extremely rich here with NAB not far off a 52week high. I would be looking to short here, as the over supply of basic materials will see earnings in Australia slow, and the housing sales stagnate.

Data   (BST+7hours)

15:00 Turkey CPI, PPI

15:15 Spain PMI

15:45 Italy PMI

15:50 France PMI

15:55 German PMI

16:00 EU PMI

16:30 UK PMI

17:00 Eurozone retail sales

20:15 ADP employment change

22:00 US ISM

Events - WTO council meeting

Bonds

11:35 Japan 3 month auction

17:30 India 3+12 month auction

Earnings

Tecso(UK), Monsanto(US), Sportingbet(UK), Family Dollar Stores(US), OCZ Tech(US), Centrotherm Photovoltaics(GE), Sareum(UK), Gold Oil(UK), Gemfields(UK), Avanti Comm(UK), Lawson(JP), Sollers(RU), RiTe Uglihevik(RU)

Stoddart

Morning note, data, events and earnings 2nd October 2012

Good Morning,

Firstly, a big hats off to the rescue services in HK, who risk their lives in very aggressive under-currents of the HK habour, and saved so many.

Equity markets saw a strong rebound overnight, on relatively stable volumes.
European markets moved aggressively higher as the Euro rallies back above the 1.2940 level, now trading slightly easier at 1.2895.

France:+2.4% avg volume, o/perform Health,Utilities; u/perform O&G,Con.Service
Spain: +1% volume +32%, o/perform health,basic mat; u/perform O&G,Telco
Germany:+1.5% volume -22%, o/perform basic mat,financial; u/perform telco,tech
UK: +1.4% avg volume, o/perform financial,basic mat; u/perform teclo,heath

Defensive outperforming as investors increase weightings in Europe, but with the correct level of caution. The financial sector seeing inflows as the European debt situation improves. Spain got a strong boost as stress test showed banks needed considerably less than the Eur 100b set aside by the EFSF.
With Spanish 10 year bonds trading at 5.83%, its not the lowest they have traded recently, but possible delays in Spain taking funds from the ECB have seen CDS's increase of late, expect yields to fall as Spain negotiates terms for the use of the EFSF.
With the US$ weakening, basic materials are seeing inflows. With prices making or trading near multi year lows, inflows are 1. bottom fishing 2. US$ expectations helping support prices. I doubt, with current inventory levels, that anyone can expect demand driven price increases for the next 6/12 months.
US markets traded small up, however, tech under pressure as heavy weight Apple continues to ease. Given were is has come from, and the hype, I would still be happy to short this name.
S&P: +0.3% avg volume, o/perform health, cons.goods; u/perform utilities,telco
NASDAX flat, volumes -5%

US markets followed Europe with demand for defensive names. Factory orders data last night showed orders growing (a number over 50), which is a very strong performance, but we are going into a high demand period. That said, the market will be more optimistic with future data. Sentiment right now is "wait and see" if the data improves ahead of stimulus working its way through. After being burnt before, I still little interest from interestors in rushing to get long growth.
Bernanke plays to sentiment by highlighting that low rates until 2Q 2015 does not mean low growth... this will certainly be true, and given comments, I expect rates will not be considered until will see GDP above 3%, the last thing they want is to spook the market, enjoying high to hyper inflation over a deflationary enviroment.

Markets.
Korea, Australia and Japan all trading firmer, but the do feel like they are running out of steam... in line with the Euro.
I expect Europe to give up some of yesterdays gains on the open so Asia should start to trend easier from current levels.
Defensive will continue to see inflows, basic materials also, as short sellers are quick to cover.

Data:09:30 Japan earnings
12:30 Australia RBA rate announcement, expect no change but talks of possible rate cuts if the market continues to ease. Limited inflationary pressure currently.
14:00 UK house prices
14:30 RBA commodity price index
15:00 Spain unemployment, big jump expected to 57k MoM, but upside surprise last time round
16:30 UK PMI construction
17:00 EU PMI
21:45 US ISM New York

Bonds.10:30 S.Korea 3yr auction
11:00 Tahi 1/3/6/12 month auction
17:30 UK 10yr auction
23:30 US 4 week auction

Earnings.Wolsely(UK), Mosaic(US), Mechel(RU), Xyratex(US), Bonduelle(FR), St Ives(UK), HALS Development(RU), Tatneft(RU)
All times British Summer Time(BST) +7 hours

Stoddart

Morning note, events, data and earnings 1st October 2012

Good Morning

Mixed feeling in the press this weekend. As expected, after the recent run, investors are now looking for clarity in the data... which will take time. Having been burnt by other stimulus packages, running out of steam, fears are that improved liquidity in the interbank market in Spain and Italy, will not be passed on to consumers. Similar to that of the US back in 2009.
The correction in the currency markets, with the US$ firming, was to be expected and with noise of a possible Spanish ratings cut by Moody's, outflows of European debt are expected once again.
Equity market volumes have remained strong, but are destined to ease given sentiment is now turning negative again, as Spain drag their feet, and others follow suit. After watching "To big to fail" at the weekend, it looks and feels very similar to Dick Fuld's position.
US markets outperforming on Friday, which will continue, until we start seeing some of these plans for growth coming out from the European leaders.
France's new wealth tax will not be well received. With Hollande's appointment over Sarkozy, it was not mentioned how he planned to reduce the deficient... now we know. This will certainly raise concerns that manufacturing, industrial and R&D will either be reduced or move overseas.
Spain's budget is targeting cuts rather than tax hikes. Initial cuts will hit the unemployment data, however, with France making it harder to do business and Germany coming up for an election next year, we could see investment move to the South.

Markets. Lots of holidays this week in Asia. Australia, Korea, HK and China off today.
Japan is easier 80bps and volumes look 22% lighter vs avg volumes at this time. We should equity markets continue to ease inline with currencies. Once again, defensive inflows will pick up but to a lesser extent than back in May.
With the European banks now having access to liquidity, the environment has improved. Budget releases are causing quite a stir, with riots in Madrid, but this will come to pass as the easing debt burden will promote reconstruction plans of Southern Spain after some heavy floods.
With some aggressive moves and volumes easing/expected to ease, I would be looking to pick up some of the distressed names. In particular, basic materials which although the firming US$ will hurt spot prices in the near term, a low rate environment, and China's new infrastructure stimulus talks, should help ease over supply.
Like many stimulus packages, the pressure will be put on the banks. Especially in China, where funding will be needed to pursue these government projects. Credit and liquidity both remain tight. Banks do not want to lend at a risk of raising Non Performing Loans(NPL'S). But given the governments control, and nervousness of the housing market, banks will be encouraged. This does not look good for the sector.

Events.Japan to appoint new finance minister
13:30 Philippines 3,6+12 month auction
17:30 Netherlands 3+9 month auction
21:00 France 3,6+12 month auction
23:30 US 3+6 month auction

Data.12:00 Indonesia inflation, trade balance
12:00 Thai CPI
13:00 India PMI
15:15 Spain PMI
15:45 Italy PMI
15:50 France PMI
15:55 German PMI
16:00 Greece PMI
16:00 Italian unemployment
16:00 EU PMI
16:30 UK PMI, mortgage approvals, consumer credit, money supply
17:00 EU unemployment
22:00 US ISM, construction spending

Earnings.Eurobank Ergasias(GR), Shimamura(JP), Neo Group(SG), Central Euro Dist Corp(US), Razgulay(RU), U10(FR), FFP(FR), Weborama(FR)

Stoddart

The weak ahead, data, events, bonds and earnings

Please see attached for PDF print out.

Highlights: Data is a lot lighter this week.
Tuesday China property prices (although discount without total sales data), US NAHB index also.
Wednesday BOJ rates, BoE minutes and US housing data.
Thursday US jobs data, and on Friday we have Spanish Housing and trade balance.
Bond auctions this week look light. Worth watching Spain and Greek short dated
auctions for possible weakness. Also the EFSF 6m auction on Tuesday.
Stoddart
Stoddart's Week Ahead 17th-21st September

Morning note, events and data 14th September 2012

Good morning,

Wont ramble on too much about the FOMC, you've read the headlines and that tells the story. My 3 main thoughts:
1. Buying housing or Asset Backed Securities (ABS) does not increase jobs, it just reduces the burden on banks
2. The US will make an absolute fortune in 2014 - 2017 when they "job these out"
3. Get ready to short the hell out of US 10yrs in 2013/14
This whole exercise was about making nice happy numbers and headlines. The FOMC wanted to highlight that stimulus is unlimited, and it will stop at nothing to encourage growth, in this case, using near zero interest rates till mid 2015.

How did the markets react?
Europe closed before the announcement, with equity markets mixed.
CAC -1.2%, DAX -0.45%, IBEX -0.7%, UKX +0.7% all on roughly average volumes.
Sector performance saw defensives stronger and profit taking in materials and financial, not surprising after such a strong run.
Markets have rallied on the headlines and now, as reality sets in and Greece unemployment higher, fears start to creep back in. However, the market is hugely short the European region, inflows will continue as investors take a more neutral weighting. There is also more short squeeze to come, when the markets take the next leg up. Technicals out early next week will show this.
Greece unemployment came in at 23.6% vs last quarter 22.6%
US markets rallied aggressively on the FOMC meeting, with the S+P up 1.6% and market volumes up 20-70% across all indices. The weaker jobs data, with initial claims of 382k vs expected 370k was explained by the recent tropical storm - I think is just another excuse used to justify a weaker number.
Sector performance highlights aggressive inflows to growth names, out of defensive.
Outerperformers: Basic materials, financials and oil & gas
Underperformers: Health, industrials and telecoms
The NASDAQ also underperformed the S+P and industrials for the first time in quite a while.
Expect further inflows to growth. The market has rather large positions weighted in government debt and defensive equities. Outflows will now be looking at improving growth and corporate credit/high yield.

Markets today:
Going gang busters for the laggeds. With the US$ weakening, physical metal prices have stabilised, some have even started to rebound. This looks like it has more to go but please note, inventories are huge and we have yet to see a pick up in demand... this will run out of steam. Oil, now 98.75 WTI, finally seeing inflows, which although the US$ had moved, up until last night, oil hadnt reacted and was trading around the $95 level. This has more to go and is an alternative hedge to gold, with the kicker of improving growth.

Trading.
I am looking for a pull back in the defensives. This throws up huge opportunities to pick up quality assets, on improving yields. It might take a month to get to these levels, but they are now being watched closely.
Basic materials are all at breakout levels, which I will highlight in next weeks technicals. They still have room to run, but I would not be paying up just yet, we will see fast money outflows next week as the hype dies down and everyone goes back to looking at the data.
We could see China over the weekend, following in the footsteps of the US giving the markets a "triple macro boost". Some plans have already been realised but am watching for support on the industrial side. We already have infrastructure in road and rail projects.

Events:
SEC meeting on price stability, G27 finance ministers meeting and announcement of Greek stimulus measures.

Data: In Singapore time (GMT +7 hours)
12.30 Japan industrial production and capacity utilisation.
14:30 India whole sale prices
15:00 Spain labor costs and house prices - some negativity expected
15:30 Thai foreign reserves
17:00 Eurozone CPI and employment
17:00 Italian current accounts
20:30 US CPI and retail sales
21:15 US industrial production and capacity utilisation
21:55 U. of Michigan confidence
22:00 US business inventories - watch for follow through from the wholesale inventories strong number earlier this week.

Earnings - top securities
Suntor(US), Nexus(AU), Kagara(AU), Norilsk Nickel(RU), JD weatherspoon(GB), Swisher Hygiene(US), Virco Manu(US), Marcus(US)

Have a great weekend.... expect some heavy news papers over the weekend, with all the data this past week.
Stoddart