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Reports Europe

European stock market, economy and companies update (November 22, 2013)

November 22, 2013, Friday, 11:37 GMT | 06:37 EST | 16:07 IST | 18:37 SGT
Contributed by Trade The News

- Japan BOJ Gov Kuroda: JPY currency (yen) was not at abnormally low levels; not abnormal nor bubble
- Sweden Nov confidence data handily beats expectations; SEK currency firms by 0.6% afterwards
- German IFO beats expectations
- ECB announced that its weekly 3-year LTRO Funds repayment would be suspended for three weeks during the holiday period
- Today is the 50 year anniversary of Kennedy assassination

Indices [Stoxx50 flat, FTSE 100 -0.10% at 6,676, DAX flat at 9,192, CAC-40 +0.30% at 4,266, IBEX-35 +0.20% at 9,614, FTSE MIB -0.3% at 18,778, SMI +0.2% at 8,284, S&P 500 Futures flat at 1,794]

Market Focal Points: Markets open mostly higher tracking Thursday's gains in US markets, SMI outperforms on Novartis $5B stock buyback, FTSE MIB lags on banking sector, EuroStoxx 50 volatility index hit lowest level since early 2007, Commentary from various ECB speakers (Draghi, Nowotny, Noyer, Praet), Germany IFO data above ests

By Sector
- Financials [Eurazeo -4% (share placement)]
- Healthcare [Novartis NOVN.CH +2% (stock buyback), Merck KGaa MRK.DE +1.5% (broker commentary), Stada SAZ.DE +1.5% (broker commentary)]
- Consumer Discretionary [WPP WPP.UK +1.5% (CEO commentary), Serco SRP.UK +1% (management change), Pernod Ricard RI.FR +1% (broker commentary), Carrefour CA.FR +0.5% (broker commentary); Tui Travel TT.UK -4.5% (share placement)]
- Industrials [Continental CON.DE +1.5% (raised sales target for driver assistance systems)]
- Energy [Solar World SWV.DE +4% (speculated acquisition), Essar Energy ESSR.UK +8% (to meet FTSE free float requirement), Tullow Oil TLW.UK +1.5% (oil find)]
- Utilities [E.ON EOAN.DE -0.80% (broker commentary)]
- Telecom [Tiscali TIS.IT +10% (takeover speculation)]
- Basic Materials/Resources [Eramet ERA.FR -2.5% (cautious CEO commentary)]
- Stoxx50 sectors [Telecom +0.7%, Utilities +0.1%, Industrials +0.1%, Consumer Non-Cyclical flat, Basic Materials flat, Financials flat; Consumer Cyclical -0.2%, Energy -0.1%, Technology -0.1%]

- ECB announced that its weekly 3-year LTRO Funds repayment would be suspended for three weeks during the holiday period. The last 2013 LTRO repayment to settle on Dec 23rd; thereafter, the next repayment would settle on 15 January 2014. (**Note: Move seen as procedural)
- ECB's Draghi commented at a banking conference in Frankfurt that Eurozone situation had improved greatly. He reiterated its mandate for ECB that they act for the European Union as a whole but also stressed that low interest rates for too long created risk for financial stability. He expected to announce key parameters of stress tests by end-Jan 2014 together with EBA
- ECB's Noyer (France) commented from the SUERF conference in Paris that Many EU problems could have been avoided with a banking union. Bank resolution could be difficult if left to national authorities
- ECB's Nowotny (Austria) commented from the SUERF conference in Paris that divergence still existed between the European Union and the Euro zone and must be solved for stress tests. Interest rates were extremely low, current rates could not be seen as long-term equilibrium. He added that if the region was were nearing stagnation, could not think of hiking.
- ECB's Praet (Belgium) commented from the SUERF conference in Paris stated that European debt overhang issue must be addressed. Things were going better progressively, but remained fragile.
- Bank of England's (BoE) Dale: Business says that economy is picking up but there is still some ways to go for the UK economy
- Sweden Central Bank (Riksbank) Dep Gov Floden (dove) stated that there were quite a few positive signals in the global economy but some large unresolved issues remained within the EMU. He saw decent conditions for an improvement in the domestic economy. Inflation was quite negative and low underlying inflation (CPIF) could lead to credibility problems for central bank
- Italy PM Letta reiterated view that EU banking union could be completed by year end. country remained vulnerable until Italian 10-year was stable near 3% yield
- IFO Economists stated that German manufacturers were clearly more optimistic and saw stronger exports. Stimulus in Euro zone and world economy could be seen in exporter expectations
- Ukraine PM Azarov: IMF position outline in recent letter was 'last drop' for country and scrapped preparations for EU trade agreement
- Japan Cabinet Office (Govt) Nov Monthly Report maintained overall assessment that domestic economy was recovering moderately but cut its export view for the third straight month. Export volume had not grown much despite weaker yen currency due to slow demand in emerging markets (Previously Japan noted that net exports likely to show modest gains in coming months)
- Japan ambassador for economic diplomacy Mori: Japan and US fail to reach agreement in trade talks
- China Ministry of Commerce (MoFCom) forecasted 2013 retail sales over +13% y/y; to promote online service consumption
- China revises method for reporting balance of payment statistics (*Note: earlier in the week it stated that it would push forward new GDP accounting system by end of 2014)
- Iran envoy Ravanchi: Nuclear talks in Geneva could be extended
- White House to delay health-insurance enrollment for 2015. New time frame to sign up for 2015 coverage: Nov 15th, 2014 to Jan 15th, 2015 (prior Oct 15th, 2014 to Dec 7th, 2014)

Currencies/Fixed Income:
- In FX the impetus out of Europe came from the German Ifo data which beat expectations and sent the EUR/USD back above the 1.35 handle.
- The JPY currency (yen) was softer in late Asia after Japan BOJ Gov Kuroda commented in parliament that the current yen level was not at abnormally low levels and not abnormal nor in bubble territory. The USD/JPY tested a 4-month high above 101.35 while EUR/JPY cross hit 136.56
- The SEK currency strengthened by 0.6% following better confidence data out of Sweden. The EUR/SEK went from 8.95 to under 8.90 after the data release
- Analysts noted that the temporary suspension of 3-year LTRO payments by ECB could fuel volatility.

Political/In the Papers:
- (EU) ECB's Asmussen: Negative deposit rates cannot be ruled out, need to be very cautious if negative deposit rates are used; EU needs to determine how to deal with undercapitalized banks before it runs stress tests.
- (EU) ECB's Weidmann (Germany): Publishing ECB minutes, in a timely manner, would help improve the understanding of how monetary policy is made
- (EU) Germany Constitutional Court (Karlsruhe) Spokesman: Reiterates court will not rule on ECB bond buying under the OMT program this year
- (GR) Greece PM Samaras expected to highlight Greece's progress on economic reforms and stress the inability to impose additional austerity in a tense political climate in meet with German Chancellor Merkel today - Greek press
-(GR) IMF comments on Greece, feels it can meet its own financing needs in the coming months and does not suffer from an acute pressure for financing
- (GR) Greece to make renewed plea for debt relief - financial press
-(PT) EU/IMF/ECB Troika on Portugal: Constitutional Court could complicate market return
-(UK) BOE's Dale: Will take years before the UK economy can return to normal; rates will stay low for a sustained period of time
-(US) Fed's Lacker (hawkish, non-voter): Reiterates costs of QE outweigh the benefits.
-(US) Fed's Bullard (dovish, FOMC voter): Reiterates strong Nov jobs report would raise the chance of a Dec taper; Reiterates support for setting a 1.5% inflation floor as a threshold requirement for rate policy action

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (CN) EU-China Summit Nov. 21-22 in Beijing
- (IR) IAEA negotiators meet Iran officials in Geneva through Nov 22nd
- (PE) Peru Q3 GDP Y/Y: 4.4%e v 5.6% prior
- (PT) Portugal releases Year-to-Date Budget Report
- 05:45 (DE) Germany Fin Min Schaeuble speaks at European Banking Congress, Frankfurt
- 05:45 (DE) ECB's Weidamnnn in Frankfurt
- 06:00 (DE) German Chancellor Merkel hosts Greece PM Samaras
- 06:00 (IS) Iceland to sell Bonds
- 06:00 (PL) Poland to hold Exchange Offer
- 06:00 (EU) ECB announces weekly 3-year LTRO Funds repayment
- 06:10 (UK) DMO to sell combined £2.0B in1-month, 3-month and 6-month Bills
- 06:30 (IN) India Forex Reserves w/e Nov 15th: No est v $282.1B prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (EU) EMA Releases Drug Approvals & Safety Decisions
- 07:00 (CL) Chile Oct PPI M/M: No est v -0.2% prior
- 07:30 (BR) Brazil Oct Current Account Balance: -$7.0Be v -$2.6B prior; Foreign Direct Investment (FDI): $5.3Be v $4.8B prior
- 08:00 (DE) German Chancellor Merkel speaks at East, Central German CDU/CSU Federation
- 08:00 (PT) Bank of Portugal Monthly Economic Indicators Report
- 08:30 (CA) Canada Oct CPI M/M: -0.1%e v +0.2% prior; Y/Y: 0.8%e v 1.1% prior; Consumer Price Index: 123.3e v 123.3 prior
- 08:30 (CA) Canada Oct CPI Core M/M: 0.2%e v 0.2% prior; Y/Y: 1.2%e v 1.3% prior
- 08:30 (CA) Canada Oct CPI Seasonally Adj M/M: No est v 0.2% prior; CPI Core Seasonally Adj M/M: No est v 0.1% prior
- 08:30 (CA) Canada Sept Retail Sales M/M: 0.3%e v 0.2% prior; Retail Sales Ex Auto M/M: 0.2%e v 0.4% prior
- 08:40 (US) Fed's George speaks on Banking Supervision in Paris
- 09:00 (BE) Belgium Nov Business Confidence: -7.0e v -7.7 prior
- 09:00 (EU) Euro Area Finance Minister meet on bloc budgets
- 09:00 (ES) IMF Spain Full Bank Report expected
- 10:00 (US) Sept JOLTs Job Openings: 3.84Me v 3.883M prior
- 10:30 (BE) ECB's Praet (Belgium) in Paris
- 10:30 (EU) ECB's Mersch (Luxembourg) in Frankfurt
- 11:00 (US) Nov Kansas City Fed Manufacturing Activity: 6e v 6 prior
- 11:00 (US) Fed to purchase $1.25-1.75B in notes
- 11:30 (DE) German Chancellor Merkel at CSU party conference
- 12:15 (US) Fed's Tarullo in Washington on shadow banking
- 14:00 (AR) Argentina Oct Industrial Production M/M: +1.8%e v -0.8% prior
- 14:30 (IT) Italy PM Letta in Berlin
- 17:00 (US) Fed's Stein with member Locherlakota in Boston

***Economic Data***
- (RU) Russia Narrow Money Supply w/e Nov 18th (RUB): 7.89T v 7.80T prior
- (UK) Retailer John Lewis reports weekly LFL sales for week ending Nov 15th (y/y): +10.7% v +7.1% prior
- (DE) Germany Q3 Final GDP Q/Q: 0.3% v 0.3%e; Y/Y: 1.1% v 1.1%e; GDP WDA Y/Y: 0.6% v 0.6%e
- (DE) Germany Q3 Private Consumption Q/Q: 0.1% v 0.2%e; Government Spending Q/Q: 0.5% v 0.3%e; Capital Investment Q/Q: 1.6% v 0.7%e; Construction Investment Q/Q: 2.4% v 1.5%e; Domestic Demand Q/Q: 0.7% v 0.4% prior; Exports Q/Q: 0.1% v 0.3%e; Imports Q/Q: 0.8% v 0.6%e
- (CN) Shanghai Futures Exchange (SHFE) Weekly Copper Stockpiles: 151.8K v 170.6K prior
- (EU) ECB €223M borrowed in overnight loan facility vs. €230M prior; €48.2B parked in deposit facility vs. €52.7B prior - Daily Eurosystem Liquidity Conditions
- (AT) Austria Sept Industrial Production M/M: -0.5 v -0.5% prior; Y/Y: -0.1 v -1.3% prior
- (SE) Sweden Nov Manufacturing Confidence: 105.8 v 100.6e; Consumer Confidence: 104.9 v 102.0e; Economic Tendency Survey: 104.1 v 101.8e
- (DE) Germany Nov IFO Business Climate: 109.3 v 107.7e; Current Assessment: 112.2 v 111.5e; Expectations Survey: 106.3 v 104.0e
- (IT) Italy Sept Retail Sales M/M: -0.3% v +0.1%e; Y/Y: -2.8 v +0.2% prior
- (IS) Iceland Oct Wage Index M/M: 0.2% v 0.7% prior; Y/Y: 6.0% v 5.9% prior
- (MY) Malaysia Oct CPI Y/Y: 2.8% v 2.7%e

Fixed Income:
- (IN) India sold total INR150B vs. INR150B indicated in 2019, 2023, 2032 and 2042 bonds
- (ZA) South Africa sold total ZAR800M in 2025, 2038, and 2046 I/L Bonds