Wednesday, October 7, 2015

Event Watch

Trade the News ~ Event Watch Calendar

European Mid-Market Update


- UK Industrial production rises to a 26 month high at 1.0% after being negative in the previous month. Cable reclaims 1.53.
- German industrial production turns negative on the month continuing the raft of weak data seen for Europe's largest economy
- AB InBev raises offer for SabMiller

Economic data

-(UK) AUG INDUSTRIAL PRODUCTION M/M: 1.0% V 0.3%E; Y/Y: 1.9% V 1.2%E
-(UK) AUG MANUFACTURING PRODUCTION M/M: 0.5% V 0.3%E; Y/Y: -0.8% V -0.1%E
-(ES) Spain Aug Industrial Output NSA Y/Y: 5.0% v 5.2%e; Industrial Output SA Y/Y: 2.7% v 4.7%e

Fixed Income Issuance: 

None seen




- Stoxx50 +0.6% at 3,244, 
- FTSE +0.6% at 6,370, 
- DAX +0.8% at 10005, 
- CAC-40 +0.5% at 4,693, 
- IBEX-35 0.90% at 10185, 
- FTSE MIB 0.8% at 22215, 
- SMI -0.2% at 8,690, 
- S&P 500 Futures +0.6%

- Market Focal Points/Key Themes: European stocks open higher; gains lead by materials stocks supported by rising commodities; Energy stock supported by improvements in oil price, but airlines impacted; risk sentiment continues to be supported; AB InBev submits a new offer for SABMiller, but the later said it was "opportunistic"; Norway said will stimulate economy with injection from sovereign fund, further supporting Norwegian energy stocks


- Consumer discretionary [SABMIller SAB.UK +1.3% (new offer), Tesco TSCO.UK +1.0% (results), AB InBev ABI.BE +3.1% (new offer), Elior ELR.FR -4.2% (placement)]
- Industrials [OHL OHL.ES -7.4% (capital hike), Kloeckner KCO.DE +6.9% (trading update)]
- Materials [Gemfields GEM.UK -7.6% (update)]


(JP) Bank of Japan Gov Kuroda: Economy continues to recover moderately, though exports and production impacted by slowdown in emerging markets
- Will check risks, adjust BOJ policy as appropriate
- Will keep easing until 2% inflation is stable
- Economy is getting closer to full employment
- Further wage hikes key to gradual rise in CPI; companies can afford to raise wages more given record-high profits
- If US FED does raise rates, it's a sign US economy is strong
- Not considering cutting rates on excess reserves; thinking on excess reserves will not change in the future
(SE) Sweden Central Bank (Riksbank) Floden: Economy is growing stronger, inflation is on way up
- Riksbank to continue to conduct expansionary policy
(NO) Norway Fin Min Jensen: Cuts FY16 GDP growth forecast to 1.8% from 2.0% prior; Guides FY16 unemployment at 4.5% from 4.1% prior
- Sees total petroleum production of 217.6B SM3 OE in 2015


The major FX markets against the dollar are a mixed bag this morning, with cable demonstrating strength while the euro is showing a bit more weakness against the dollar; USD/JPY trades relatively quiet 
- The GBP/USD is trading higher on the late morning session after much better than expected Industrial Production results were released, with cable trading towards its highs of 1.5310 from its morning lows of 1.5240 earlier in the early morning session
- The EUR/USD had a relatively weaker morning session, currently trading in the mid to low range from its early morning highs of 1.1281 to recent lows of 1.2222
- The USD/JPY trades midrange and relatively sideways in the late morning session from its morning highs of 120.169 to lows of 119.904, consolidating after some volatility shown in the overnight session

Fixed Income:

Bund futures trade at 155.80.36, down 36 ticks, as risk on sentiment trumps weaker data out of Germany. The break of support at 155.85 sees 155.67 next, followed by a corretion to 155.42 and 155.21.. To the upside, analysts eye a break of today's highs at 156.16 to target initial resistance at 156.4 with a break above 156.68 seeing 157.23 targeted.
Today Germany will sell €4.0B in its 10 year Bund which brings the equivalent of 29K Bund futures supply to the market.

Gilt futures trade at 118.34, down 46 ticks fueled by a strong UK industrial number. The break of support at 118.44 sees 118.21 next with a break targeting 117.83. Analysts eye resistance at 119.00 initially followed by 119.36, with a break seeing 119.64 next.

Wednesday's liquidity report showed Tuesday's excess liquidity rose to €510.1B a rise of €2.3B from €507.8B prior. This was primarily due to AFs and MonPol portfolios falling to negative €84.4B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility fell to €633M from €642M.

Corporate issuance saw roughly $8.5B come to market with EIB accounting for the majority of this via its $4B 5 year deal. Else where we Rolls-Royce did come to market with a two tranche offering for $1.5B.

Political/In the Papers:

- (SY) Russia in expert talks with Turkey to avoid air incidents

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- 07:00 (US) MBA Mortgage Applications w/e Oct 2nd: No est v -6.7% prior
- 07:00 (BR) Brazil Sept FGV Inflation IGP-DI M/M: 1.22%e v 0.4% prior; Y/Y: No est v 7.8% prior
- 07:30 (CL) Chile Sept Trade Balance: No est v -$0.1B prior; Total Exports: No est v $4.9B prior; Total Imports: No est v $4.9B prior; Copper Exports: No est v $2.4B prior 
- 07:30 (CL) Chile Sept International Reserves: No est v $38.4B prior 
- 08:15 (US) Baltic Dry Bulk Index
- 08:00 (BR) Brazil Sept IBGE Inflation M/M: 0.54%e v 0.2% prior; Y/Y: 9.5%e v 9.5% prior
- 08:00 (CL) Chile Aug Nominal Wage M/M: No est v 1.0% prior; Y/Y: No est v 6.2% prior
- 08:00 (PL) Poland Sept Official Reserves: No est v $98.7B prior
- 08:00 (HU) Hungary Central Bank Sept Minutes  
- 08:00 (RU) Russia Sept Official Reserve Assets: No est v $366.3B prior
- 08:30 (CA) Canada Aug Building Permits M/M: 0.3%e v -0.6% prior
- 10:00 (UK) Sept NIESR GDP Estimate: No est v 0.5% prior
- 10:30 (US) DOE Weekly Crude Oil Inventories 
- 11:30 (BR) Brazil Weekly Currency Flows  
- 15:00 (US) Aug Consumer Credit: $19.5Be v $19.1B prior
- 17:00 (NZ) New Zealand Sept Heavy Truckometer Heavy M/M: No est v -0.6% prior
- 19:50 (JP) Japan Aug Machine Orders M/M: No est v -3.6% prior; Y/Y: No est v 2.8% prior
- 19:50 (JP) Japan Aug Current Account Balance: ¥1.221Te v ¥1.809T prior; Adjusted Current Account: No est v ¥1.322T prior; Trade Balance: No est v -¥108.0B prior

Wednesday's poster of the day

Asia Mid-Session Update

Economic Data

- (CN) China Sept FX Reserves: $3.51T v $3.50Te, v $3.56T prior (5th consecutive month of decline)
- (UK) SEPT BRC SHOP PRICE INDEX Y/Y: -1.9% V -1.4% PRIOR (29th month of decline) 

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -0.2%, 
- S&P/ASX flat, 
- Kospi +0.5%, 
- Shanghai Composite closed, 
- Hang Seng +1.0%, 
- Dec S&P500 -0.2% at 1,964

Commodities/Fixed Income

- Dec gold +0.1% at $1,148/oz, 
- Nov crude oil +1.2% at $49.11/brl, 
- Dec copper +0.8% at $2.37/lb

- (US) API Petroleum Inventories: Crude: -1.2M v +4.6M prior week 
- SLV: iShares Silver Trust ETF daily holdings fall to 9,855 tonnes from 9,903 tonnes (lowest level since Dec 2012) 
- (AU) Australia MoF (AOFM) sells A$900M in 3.25% 2025 Bonds; avg yield: 2.62%; bid-to-cover: 2.14x 

Market Focal Points/FX

- Asian indices are mixed, tracking less upbeat sentiment on Wall St where stocks broke a string of 5 consecutive sessions of gains. Instead, Asian bourses were more closely aligned with regional developments rather than broader market bias. In FX, USD remained under pressure, particularly against JPY and NZD, as USD/JPY fell some 50pip after BOJ stood pat on policy and NZD extended its gains to 6-week high near $0.66 on another strong dairy trade auction out of Fonterra. S&P eminis were up 4pts around 1,974 late in the Asian session.

- BOJ declined to offer any additional monetary policy easing and also maintained its economic assessment on broader economy and all of its components. Few were expecting expanded QE, however the no-change in all sectors does little to bolster the case for a more popular view of easing in late October, when the BOJ will also unveil its forecasts for inflation and growth. Earlier today, former MOF official Sakakibara (Mr. Yen) said expanded QE may actually arrive later in December.

- Korea's Kospi is bolstered by strong guidance out of Samsung Electronics, which topped consensus with prelim Q3 Op profit KRW7.3T (v KRW4.1T y/y) v KRW6.7Te, Rev KRW51.0T (v KRW47.5T y/y) v KRW50.6Te. This also marks the first quarter of rising profits in some 2 years.  Samsung shares were up nearly 8% headed toward the close.

- China put out its FX reserves data showing the govt spent about $50B supporting the Yuan in Sept - about half the estimated amount but still a notable margin. Separately, report out of Moody's revised China GDP target for next year down to 6.3% from 6.5%. This also follows the WEO report out of the IMF earlier today which actually maintained China GDP at 6.8% in 2015 and 6.3% in 2016. Slowing GDP in China was also on display in the quarterly report out of Yum Brands, where the pace of recovery was well below the company's expectations.

- Down under, Australia put out its 2nd straight month of expansion in AiG construction, while iron ore miner Fortescue had reportely received further interest in its assets from China. New Zealand's global dairy trade auction earlier in US hours saw its 4th straight price gain, though industry watchers noted higher prices were in part due to the 2-month low in the quantity of dairy being offered.


US equities / ADRs:
- X: Announces possible consolidation of flat-rolled operations; 2K employees issued WARN notices; -1.2% afterhours
- NKTR: Closes direct private placement with TPG special situations partners of $250M; -1.2% afterhours 
- ADBE: Guides initial FY16 $2.70 v $3.23e, R$5.7B v $5.97Be, provides long term guidance ahead of analyst day; -3.1% afterhours
- CLF: Terminates pellet supply agreement with Essar Algoma; -7.4% afterhours 
- NUS: Guides Q3 R$570-573M v $629Me; cites currency headwinds and lower sales in China; -10.9% afterhours 
- YUM: Reports Q3 $1.00 v $1.07e, R$3.43B v $3.68Be; Cuts FY15 EPS guidance; Raises dividend 12% to $0.46 from $0.41 (implied yield 2.2%); -18.3% afterhours
- ADXS: Reports clinical hold of investigational agent Axalimogene Filolisbac; -25.8% afterhours

Notable movers by sector:
- Consumer discretionary: Ryohin Keikaku 7453.JP -7.7% (H1 result); J.Front Retailing 3086.JP +1.1% (H1 result); Air New Zealand AIR.NZ +2.6% (H1 guidance)
- Financials: Daewoo Securities 006800.KR +1.7% (bid speculation)
- Industrials: Nippon Express 9062.JP -2.7% (H1 earning speculation); China Resource Cement 1313.HK-4.0% (profit warning); Aurizon Holdings AZJ.AU -0.4% (cost cuts)
- Technology: Sony Corp 6758.JP +0.8% (to start chip company); MediaTek 2454.TW +3.9% (Sept revenue); Samsung Electronics 005930.KR +6.3% (Q3 prelim result)
- Materials: Glencore Xstrata 805.HK +7.0% (financing arrangements); Saracen Mineral Holdings SAR.AU +1.3% (Q1 result)
- Energy: Santos STO.AU +10.5% (stake sell-off speculation); Woodside Petroleum WPL.AU +4.4%, Origin Energy ORG.AU +23.8% (oil price rises)
- Healthcare: Summerset Group SUM.NZ +2.8% (Q3 guidance)

all things bonds

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

monthly pivots

upside retracements

downside retracements

regression channels

support and resistance

On the economic calendar:-

07:00 MBA Mortgage Applications
08:30 Gallup US Job Creation Index
10:30 EIA Petroleum Status Report
13:00 10 Year Note Auction
15:00 Consumer Credit