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Teaspoon Bailout

“I could as easily bail out the Potomac River with a teaspoon as attend to all the details of the army.”

-Abraham Lincoln


So, in the last 3 trading days, you’ve had begging for Bernanke, a Chinese rate cut, and now another European bank bailout. Nice. Sounds like this must have been the bull case all along. Losers win.


To Lincoln’s point, these people have issues. Bigger issues than a 9 handle pre-market rally in the S&P Futures are going to solve (it was 16 handles on the “news” last night). Piling more debt-upon-debt-upon-debt is the last thing that global consumers need.


As a reminder, short-term Big Government Interventions (money printing and debt leverage) stoke commodity (oil) price inflations. Policies To Inflate then slow global economic growth. They also eradicate whatever is left of investor trust.


Back to the Global Macro Grind


Without credible markets, you don’t solve the #1 issue people have with Global Macro markets right now – trust. Without trust, conflicted and compromised politicians will do just about anything to attempt to save their short-term political career risk. That’s no long-term economic plan for prosperity.


This Teaspoon Bailout strategy is not new obviously. You only have to go back to 2008 when ex-Goldman CEO (and credit derivatives market leader), Hank Paulson, brought out the US Bank Bailout Bazooka. The market rallied into the event (inside information), then rallied for about a nanosecond on the “news” to lower-highs, then resumed its decline.


Then, the former Dartmouth football player (Hank) was seen puking in his garbage can…


Have no fear however, Timmy is still here. There is no question in my mind that central planning pool boy in Chief, Tim Geithner, advised the Europeans to do the same thing he advised America’s politically compromised back then. Having never worked a day outside of Washington’s political elite in his born life, this is what Geithner was sent by his god on this earth to do – bailout banks.


This concentration of conflicted political power gets scarier when you think about how close Geithner is to both the President of the United States and the Washington based (and US tax payer backed) IMF. Geithner is fighting for his short-term political life. And, in the long-run, my grand-children are not yet dead.


As a reminder, Big Government Interventions in what were our free-markets:

  1. Shorten Economic Cycles (through short-term asset price inflations)
  2. Amplify Market Volatility (through made-up bailouts and rules mid-game)

That’s just a bit off versus the Fed’s Congressional mandate for:

  1. Full Employment
  2. Price Stability

Regardless, in exchange for a 9 handle pop in the US futures and Spanish stocks going from down -31% from their YTD peak to -24% (i.e. still crashing), global consumers get themselves a nice pop in taxes, back up to $100/barrel Brent oil.


Dollar down, Euro up, Oil up. Nice.


Just when I was starting to get bullish, from a price (1283 long-term TAIL support), the #1 factor that made for our #GrowthSlowing call in February-March, gets put back on the table via Bernanke begging and Europe bailing. There is nothing that slows real (inflation adjusted) growth faster than food/energy prices rising.


Now if you are in the March 2012 bull market camp that “this time is different” and the world is “de-coupling”, that’s perfectly fine. That’s what makes a market. Piling more debt-upon-debt in Europe is only going to make this structurally low-growth and no-trust market environment worse.


Into and out of the Bernanke Begging last week, we cut our US Equity asset allocation back down to 0%. After starting the week at 12% US Equity allocation, that made for a good week. That puts our current Hedgeye Asset Allocation Model in the following pre-game position:

  1. Cash = 76% (down from 82% last Monday)
  2. International Currency = 12% (all US Dollar, all the time = UUP)
  3. Fixed Income = 12% (US Treasuries and German Bunds = TLT and BUNL)
  4. US Equities = 0%
  5. International Equities = 0%
  6. Commodities = 0%

In other words, we’re already losing today. And we expect to be held accountable for those losses.


While I could say what I would have done if I had this Spanish inside information on Friday afternoon, I won’t. I won’t say that if some conflicted and compromised politician in Washington called me with a look-see that I’d pick up the phone either.


Last I checked, in most parts of the country, cheating and bailing out banks is still un-American.


My immediate-term support and resistance ranges for Gold, Oil (Brent), US Dollar, and EUR/USD, and the SP500 are now $1, $95.61-100.91, $80.02-82.63, $1.24-1.27, and 1, respectively.


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Teaspoon Bailout - Chart of the Day


Teaspoon Bailout - Virtual Portfolio


TODAY’S S&P 500 SET-UP – June 11, 2012 

As we look at today’s set up for the S&P 500, the range is 39 points or -1.56% downside to 1305 and 1.38% upside to 1344. 












    • Up from the prior day’s trading of -252
  • VOLUME: on 6/08 NYSE 692.56
    • Decrease versus prior day’s trading of -18.96%
  • VIX:  as of 6/08 was at 21.23
    • Decrease versus most recent day’s trading of -2.26%
    • Year-to-date decrease of -9.27%
  • SPX PUT/CALL RATIO: as of 6/08 closed at 1.34
    • Down from the day prior at 1.43 


  • TED SPREAD: as of this morning 39
  • 3-MONTH T-BILL YIELD: as of this morning 0.08%
  • 10-Year: as of this morning 1.66
    • Increase from prior day’s trading at 1.63
  • YIELD CURVE: as of this morning 1.39
    • Up from prior day’s trading at 1.37 

MACRO DATA POINTS (Bloomberg Estimates):

  • 11am: Fed to sell $1b-1.5b TIPS in 4/15/2013 to 4/15/2015 range
  • 11:30am: U.S. to sell $30b 3-mo., $27b 6-mo. notes
  • 12pm: Fed’s Lockhart speaks on U.S. economy in Chicago
  • 12pm: Fed’s Williams speaks in San Francisco
  • 6pm: Fed’s Pianalto speaks on education 


    • House in recess, Senate in session
    • Supreme Court issues case rulings, only day this week
    • National Governors Association, National Association of State Budget Officers hold conference call briefing to discuss biannual “Fiscal Survey of States,” 11:30am
    • Week Ahead in Washington, Jun 11-15


  • Spain asked euro-region govts. for as much as EU100b ($125b) to rescue its banking system, details of main agreement here
  • Italy in focus after Spain bank rescue
  • Spain bondholders may rank behind official loans on bailout
  • China’s exports rose in May at more than double the pace analysts estimated while industrial output, retail sales trailed forecasts
  • J&J said to pay $2.2b to settle Risperdal U.S. sales probes
  • Goldman may sell hedge-fund admin. unit to State Street
  • AMR CEO Tom Horton says co. plans to emerge from bankruptcy protection as independent co.
  • Rajat Gupta won’t be witness as his insider-trading trial enters final wk
  • Calls to dismiss CEO McClendon are rising at Chesapeake
  • Facebook among those on preliminary list for Russell 3000
  • WW Grainger releases prelim. sales; watch Fastenal
  • Apple may discuss new laptops, iOS updates at developers conference
  • EQT agrees to buy BSN Medical from Montagu for $2.3b
  • Texas Instruments hold mid-qtr forecast call after close
  • Watch casino stocks on data from Las Vegas, Atlantic City
  • “Madagascar 3” is weekend’s top film with $60.4m in sales
  • U.S. Inflation, Apple, OPEC, Egypt Votes: Week Ahead June 9-16 


    • Finisar (FNSR) 4pm, $0.21 



COMMODIITIES – banker bailouts have been prioritized over global consumers now for 5 yrs; that won’t change this morning with Brent Oil shooting back above $100/barrel. Piling more debt-upon-debt is not the way out because it jacks consumers with inflation – and that perpetuates #GrowthSlowing. 

  • Speculators Fail to Reap Crop Rally After Wager Cut: Commodities
  • Copper Jumps Most in Four Months as Chinese Imports Increase
  • Goldman Predicts 29% Return From Commodities Over a Year
  • Commodities Climb as China’s Imports Jump, Spain Seeks Bailout
  • Oil Advances Most in Five Months on Spain Bailout, China Imports
  • Gold Seen Advancing as Dollar’s Value Slumps Against the Euro
  • Corn Advances for Fourth Day as Dry Weather Threatens U.S. Crop
  • LNG Trading Surges as Tullett, Morgan Stanley Seek Asian Premium
  • Hedge Funds Cut Bullish Gas Bets on Supply Worry: Energy Markets
  • Sugar Rises to Six Week-High as Rains Delay Harvesting in Brazil
  • OPEC Poised to Break 10-Year Habit of Supply Cuts During Routs
  • Wheat Stockpiles Contracting on Drought From U.S. to Russia
  • Palm Oil Climbs as Malaysian Stockpiles Tumble to 13-Month Low
  • Pork on Import Menu Helps China Curb Inflation: Chart of the Day
  • Speculators Cut Wagers on Crop Price Rally
  • Sugar May Tumble to Two-Year Low on Surplus, Kingsman Forecasts
  • Iraq Says Oil Price Decline Is Severe; Surplus ‘Tremendous’ 










EUROPE – Spanish stocks are up +3.5% right out of the box and way overbought (instead of down -31% YTD, now they are down -24% YTD, but still crashing = short selling opportunity); DAX is the most important European tape to watch with immediate-term TRADE resistance line that matters most = 6338. We’re looking to re-load on European shorts, across the board.


EURO – uninspiring rally given how large the short position out there is; provided that the EUR/USD can’t overcome $1.27 TRADE resistance, it remains in a Bearish Formation (bearish on all 3 durations) – that makes sense if these characters are going to put their short-term political lives ahead of whatever long-term economic planning remains.















The Hedgeye Macro Team

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Short term trading opportunities notwithstanding, we’d avoid MCD on the long side for now.  The second quarter results and conference call will offer investors more clarity on the business’ prospects for the next year-to-eighteen months.


McDonald’s reported May sales results this morning and, as we suspected, sales disappointed as Global Growth Slowing meant that MCD comps came in below expectations in all regions. Comping the comps in the U.S., Germany slump in Europe, and negative comps in China are important issues going forward.


McDonald’s reported global comparable sales growth of 3.3% in May, which represented deceleration in the two-year average trend from April.  McDonald’s continues to take share from its competitors in major markets and we are positive on the name over the longer term TAIL (three years or less).  Over the near-term, however, we see a difficult compare in June as posing more headline risk for the stock.  Additionally, the FX headwinds that are expected to peak in 2Q and 3Q could cause investors to shy away from McDonald’s in any search for safe plays in the consumer space over the next few months.





United States


McDonald’s U.S. comparable restaurant sales gained 4.4%, slightly ahead of our estimate of 4% and below consensus of 5.3%, according to Consensus Metrix.  With price running at 3%, traffic/mix of 1.4% was short of what the Street was expecting.  The question we would ask at this point is whether the Street is overestimating the ability of the company to drive guest counts through the summer.  As we wrote on 4/23/12, “The evidence suggests that beverages are increasingly becoming a less important part of the vocabulary from McDonald’s’ management team.  With that in mind, foremost in our thoughts is what the company’s strategy will be to maintain top-line momentum over the next few months.” 


MACRO DOWNSIZES MCD - mcd us comps





Management stated that the U.K., Russia, and France drove the 2.9% comp in May, partially offset by Germany.  We expect Germany to be a key focus for investors heading into the second quarter earnings release on 7/23.  Europe represents 40% of total revenues and 39% of total operating profit for McDonald’s.  Overall, the print was a disappointment versus the consensus of 5.1% and the macro environment remains a concern.


MACRO DOWNSIZES MCD - mcd  eu comps





APMEA comparable restaurant sales were perhaps the most glaring of the disappointments in the MCD press release; versus consensus expectations of 3.2%, the print came in at -1.7%.  Japan (SSS -11% in May!) and, to a lesser extent, China drove the comp lower.  Australia posted some positive results that partially offset the slump in China and Japan.  While we view the U.S. and Europe as being far more important than APMEA (18% of operating income), a disappointment of this magnitude in an important growth region for the company is not positive news.


MACRO DOWNSIZES MCD - mcd apmea comps



It has an Extra Value Menu but it is an Extra Value Stock?


The question now is, “does McDonald’s stock represent a compelling value purchase, even if its menu offerings may not?” 


If you believe valuation is a catalyst, then buying the stock here is likely a good idea.  The stock is nearing the bottom of its five-year valuation range and has typically been a safe haven for investors in weaker economic times.  In early March, however, the first mention of austerity impacting Europe moved us to write the following: “We are not buyers of the stock on this selloff.  In short, if austerity is having an impact it will not be a one month phenomenon.” 


The uncertainty in McDonald’s results is somewhat new and forecasting FY12 and FY13 EBITDA is only becoming more difficult as uncertainty mounts.  The volatility in the economies that McDonald’s operates in is, in some cases, so great that the staple nature of the company’s product is not sheltering sales to the extent that it has historically.  Observers, including us, are often tempted to assume that the company’s value offerings will perpetuate strong sales growth.  At this point, we lack confidence that the company has a sufficiently impactful pipeline of promotions to comp the strong U.S. performance during summer 2011.


If the Street is overly optimistic on management’s ability to drive traffic over the coming months, the cheap may get cheaper.  Short term trading opportunities notwithstanding, we’d avoid MCD on the long side for now.  The second quarter results and conference call will offer investors more clarity on the business’ prospects for the next year-to-eighteen months.


MACRO DOWNSIZES MCD - mcd ev to ebitda valuation


MACRO DOWNSIZES MCD - mcd ev ebitda price



Howard Penney

Managing Director


Rory Green


The Week Ahead

The Economic Data calendar for the week of the 11th of June through the 15th is full of critical releases and events. Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.


The Week Ahead - WeekAhead


Weekly European Monitor: Europe’s Runway

-- For specific questions on anything Europe, please contact me at to set up a call.


Positions in Europe: Long German Bunds (BUNL); Short EUR/USD (FXE)


Asset Class Performance:

  • Equities:  The STOXX Europe 600 closed up +2.9% week-over-week vs -3.1% last week. Top performers:  Spain +8.0%; Italy +5.5%; Hungary +3.9%; Russia (RTSI) +3.8%; Finland +3.4%; France +3.4%; Turkey +3.1%. Bottom performers: Ukraine -16.2%; Cyprus -11.3%; Greece -6.2%; Romania -3.9%; Denmark -1.3%.
  • FX:  The EUR/USD is down -0.58% week-over-week vs -0.83% last week.  W/W Divergences: HUF/EUR +3.14%, RUB/EUR +3.02%, PLN/EUR +2.62%, CZK/EUR +1.36%; SEK/EUR +1.03%, NOK/EUR +0.51%, GBP/EUR +0.07%.
  • Fixed Income:  Another crazy week of swings in yields. Greece fell -175bps week-over-week to 28.93% after hit near term highs last Friday.  Portugal also saw large declines, falling -80bps to 11.18%, followed by Spain at -31bps to 6.22%.  German bund yields bounced +11bps on the week to 1.28% after a low of 1.17% on 6/1.  Italy held tight on the week, gaining only +4bps to 5.78%.

Weekly European Monitor: Europe’s Runway  - 11. yields



Europe’s Runway:

In today’s Early Look my colleague Daryl Jones opened the note with a quote from Seth Klarman’s Q1 2012 letter to investors:


“We are comfortable missing out on potentially major rallies if they are based purely on money flows or government action; the risks of engaging in this sort of speculative activity are simply too high.”


We keep this quote front and center as investment advisors: as close as we follow the developing European political scene and attempt to weight probable scenarios for Europe going forward, we cannot get ahead of the decisions of Eurocrats.


We are, however, highly focused on the political calendar. Our expectation is that European markets may be range bound (and in a wait-and-see mode) ahead of a stiff calendar of events in June, including: Greece elections (on the 19th), G20 Meeting (18-19.), EU Summit (28-29.), and more clarity on Spanish bank recapitalizations.


The main topics of discussion at these meetings should surround: a fiscal union, Eurobonds, a Pan-European insurance deposit facility, and scope of the ESM, all measures that could have great impact on markets.  Here we’ll say that while we do not think any of these measures will be signed off on this month, sentiment around these measures will be critical to track as Europeans try to will an end to the crisis.


To this end, this week saw Germany rhetorically increase its pro-fiscal union stance, with Merkel importantly signaling that the Eurozone cannot survive as just a monetary union. She said:


“We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy,” Merkel said. “And we need most of all a political union, that means we need to gradually give competencies to Europe and give Europe control.”


While Merkel’s stance is still decidedly anti-Eurobonds, her emphasis on the importance of a fiscal union shows her determination to keep the Union intact, it recognizes the compromised nature of having states simply bound under monetary policy, and it portends a message that Brussels (via stronger countries like Germany) will continue to subsidize the weaker nations to keep the existing Eurozone fabric alive.


However, getting countries to relinquish their fiscal sovereignty to Brussels is a large step, one we think is challenged by the great cultural divide across countries, which may delay formal ratification across member states. Already we’ve seen fierce resistance from the UK. In any case, we believe a fiscal union will first have to be in place before Eurobonds could be issued (if they ever are).


Another big topic this week is whether Spain's troubled banks will be able to recapitalize with funds provided directly from the bailout mechanism, or whether the EFSF/ESM will have to channel the money through FROB, the country's bank resolution fund. The size of the bank recap needs are still widely unknown, with figures spanning from 40B to 100B EUR . We’re going to key off an IMF report released on Monday (6/11), and a separate report due by 21. June from two independent assessors, Oliver Wyman and Roland Berger.


What we do know is that there is no panacea to “fix” Europe’s mess with one fell swoop. The road to end this sovereign and banking crisis is a long one. Note that ECB President Draghi even suggested 10 years (see our note titled “June ECB Presser YouTubed”). We think that Eurocrats are likely to continue to attach band-aid bailout packages in lieu of more comprehensive packages, either because they cannot form a consensus with other member states, because it would spell their own political suicide at home, or because they simply are not savvy enough to craft a path of resolutions to cure the sovereign and banking ails. 


Given the likelihood of Europe to drag its feet, we unfortunately see many months ahead of David Einhorn’s chart playing out:


Weekly European Monitor: Europe’s Runway  - 11. einhorn


For yet another week we point you to the Data Dump section below. This week showed weakness in PMIs, contraction in Industrial Production across most countries, weak Eurozone Retail Sales, and some really poor numbers in Germany across the board.  No European country is immune to our theme of growth slowing!




Below is an updated EUR/USD price level chart. Our immediate term TRADE and intermediate term TREND levels of support are both at $1.22. Our TRADE resistance level is $1.25. Our call remains that if $1.22 breaks, look out below! We’re not EUR parity folks because we see Eurocrats stepping in to prevent it, however the runway of uncertainty until June 17th elections puts significant downside risk in play. However, we’re well cognizant that the pair could see a bounce on any optimism around discussions concerning any number of proposals on the table, including: Eurobonds, a Pan-European Deposit Guarantee facility, another LTRO, and the ESM.


Weekly European Monitor: Europe’s Runway  - 11. EUR



Call Outs:

Spain: Fitch downgraded Spain by three levels to BBB, within two steps of non-investment grade. (only Moodys is left; S&P already cut).


Troika and Portuguese See Eye to Eye?: The troika said Portugal's bailout remains on track. It said that its fourth review found that the program is making good progress amid continued strong external support. It added that as long as the government continues to implement the measures embedded in the program, Europe will stand ready to support Portugal until it is able to regain market access.


Germany: A poll by German broadcaster ZDF asked if Greece should stay with the EUR?  60% said NO.


PBoC chief highlights support for Eurozone: Chief Zhou Xiaochuan said in comments published on Monday with Chinese Business News that China will continue to buy Eurozone bonds, support the IMF and invest in European infrastructure and privatization programs. However, Zhou also urged Europe to step up its reforms to stem the debt crisis.



China's CIC head sees heightened risk of Eurozone breakup: Lou Jiwei said that he sees mounting risks of a Eurozone breakup. He added that the sovereign wealth fund has scaled back its holdings of stocks and bonds across Europe and also noted that the CIC would be unlikely to invest in jointly-guaranteed Eurobonds if they were introduced as a crisis response measure. The paper said that the comments reflect Beijing's heightened concerns about the manner in which European leaders are dealing with the crisis.


Italy - Tax evasion weighing on recovery: Anna Tarantola, deputy director-general of the Bank of Italy, said that 27.4% of GDP in Italy evades taxation due to underground and criminal economic activities. The WSJ article noted that if the state taxed revenue of more than €400B in unrecorded activity at the 45% tax rate, Italy could eliminate its €2T public debt in less than a decade, or slash it in half to the key 60%-of-GDP level by 2017.


European Commission outlines banking union plan: Dow Jones noted that the European Commission proposed legislation on Wednesday for EU-wide bank recovery and resolution that aims to shift the cost of dealing with bank failures away from taxpayers and onto investors. Banks would be required to draw up resolution plans that set out how they could be quickly wound up if they get into trouble, while national authorities would be given additional powers to intervene when a bank is on the verge of collapse. Under the bail in process, losses could be forced on subordinated bondholders, though the only in the event they are exhausted would senior unsecured creditors be involved (the EC said that forcing creditors to share more of the burden of bank crises in the future could raise bank funding costs by 5-15 bp). The European Commission also proposed the creation of national resolution funds, which would force banks to set aside cash that would be used if they failed. It also recommended that an EU member country would have to lend some of its resolution funds to another state in the event of a broader crisis. Separately, Reuters said that the legislation is unlikely to take effect before 2015.


CDS Risk Monitor:


Week-over-week CDS were largely down versus a mixed bag last week.  Portugal saw the largest declines in CDS w/w at -88bps to 1089bps, followed by Italy -28bps to 543bps, and Ireland -27bps to 686bps. Germany was one of the gainers that we track, rising +5ps w/w to 108bps.


Weekly European Monitor: Europe’s Runway  - 11. cds   a


Weekly European Monitor: Europe’s Runway  - 111. cds   b


Data Dump:


PMI Services –

Sweden 47.7 MAY vs 48.6 APR

Spain 41.8 MAY vs 42.1 APR

Eurozone 46.7 MAY vs 46.9 APR

Italy 42.8 MAY vs 42.3 APR

France 45.1 MAY vs 45.3 APR

Germany 51.8 MAY vs 52.2 APR

Russia 54.9 MAY vs 52.6 APR

Ireland 48.9 MAY vs 52.2 APR


Eurozone Composite 46.0 MAY vs 46.7 APR

UK Construction PMI 54.4 MAY vs 55.8 APR


Eurozone PPI 2.6% APR Y/Y (exp. 2.7%) vs 3.5% MAR  [0.0% APR M/M (exp. 0.2%) vs 0.5% MAR]

Eurozone Retail Sales -1.0% APR M/M (exp. -0.1%) vs 0.3% MAR   [-2.5% APR Y/Y (exp. -1.1%) vs -0.2% MAR]

Eurozone Preliminary Q1 GDP 0.0% Q/Q (UNCH vs previous est.) vs -0.3% in Q4   [-0.1% Y/Y (previous est. 0.0%) vs 0.7% in Q4]

Eurozone Household Consumption 0.0% Q/Q (exp. 0.1%) vs -0.5% in Q4

Eurozone Gross Fixed Capital Formation -1.4% Q/Q (exp. -1.2%) vs -0.4% in Q4

Eurozone Govt Expenditure 0.2% Q/Q (exp. 0.1%) vs -0.1% in Q4


Germany Factory Orders -1.9% APR M/M (exp. -1.1%) vs 3.2% MAR   [-3.8% APR Y/Y (exp. -3.8%) vs -0.2% MAR]

Germany Industrial Production -2.2% APR M/M (exp. -1.0%) vs 2.2% MAR   [-0.7% APR Y/Y (exp. 0.9%) vs 1.4% MAR]

Germany Exports -1.7% APR M/M (exp. -0.7%) vs -0.8% MAR (1st decline this year)

Germany Imports -4.8% APR M/M (exp. -0.1%) vs 0.9% MAR


UK PMI Services 53.3 MAY vs 53.3 APR

UK BRC Sales Like For Like 1.3% MAY Y/Y vs -3.3% APR

UK Halifax House Prices 0.5% MAY M/M vs -2.3% APR   [-0.1% MAY Y/Y vs -0.5% APR]

UK New Car Registrations 7.9% MAY Y/Y vs 3.3% APR

UK PPI Input -2.5% MAY M/M (exp. -1.6%) vs -1.4% APR   [0.1% MAY Y/Y (exp. 1.2%) vs 1% APR]

UK PPI Output -0.2% MAY M/M (exp. 0.1%) vs 0.6% APR   [2.8% MAY Y/Y (exp. 3.2%) vs 3.2% APR]


France ILO Unemployment Rate 10% in Q1 vs 9.8% in Q4

France Bank of France Business Sentiment 93 MAY vs 94 APR

Spain Industrial Output WDA -8.3% APR Y/Y (exp. -6.5%) vs -7.5% MAR (biggest decline in more than 2 years)

Italy Industrial Production -9.2% APR Y/Y vs -5.6% MAR


Portugal Q1 GDP Final -0.1% Q/Q (UNCH vs previous) and -2.2% Y/Y (UNCH)

Portugal Industrial Sales -6.8% APR Y/Y vs -1.6% MAR


Switzerland Unemployment Rate 3.2% MAY vs 3.2% APR

Switzerland CPI -1.1% MAY Y/Y vs -1.1% APR

Holland CPI 2.5% MAY Y/Y vs 2.8% APR

Holland Industrial Production 0.1% APR Y/Y vs 1.6% MAR

Ireland CPI 1.8% MAY Y/Y vs 1.9% APR

Ireland Industrial Production 2.8% APR Y/Y vs 1.6% MAR


Greece Unemployment Rate 21.9% MAR vs 21.4% FEB (youth unemployment now 52.8%)

Greece CPI 0.9% MAY Y/Y vs 1.5% APR

Greece Industrial Production -2.2% APR Y/Y vs -8.5% MAR

Greece Q1 GDP Final -6.5% Y/Y vs March 15th estimate -6.2%


Finland Q1 GDP 0.8% Q/Q vs 0.0% in Q4   [1.7% Y/Y vs 1.3% in Q4]

Finland Industrial Production -3.2% APR Y/Y vs -4% MAR

Sweden Industrial Production -6.2% APR Y/Y vs -6.9% MAR

Norway Industrial Production 7.5% APR Y/Y vs 2.4% MAR

Norway Credit Indicator Growth 6.7% APR Y/Y vs 7% MAR


Russia CPI 3.6% MAY Y/Y vs 3.6% APR

Romania Retail Sales 3.4% APR Y/Y vs 3.1% MAR

Romania Q1 GDP -0.1% Q/Q vs -0.2%   [0.3% Y/Y vs 1.9% in Q4]

Czech Republic Retail Sales -4.1% APR Y/Y vs -0.4% MAR

Hungary Industrial Production -3.1% APR Y/Y (exp. 0.5%) vs 0.6% MAR


Turkey Consumer Prices 8.28% MAY Y/Y (exp. 9%) vs 11.14% APR   [-0.21% MAY M/M (exp. 0.40%) vs 1.52% APR]

Turkey Producer Prices 8.06% MAY Y/Y vs 7.65% APR   [0.53% MAY M/M vs 0.08% APR]


Interest Rate Decisions:

(6/6) ECB Interest Rate UNCH at 1.00%

(6/6) Poland Base Rate UNCH at 4.75%

(6/7) BOE Interest rate UNCH at 0.50% and Asset Purchase Target on hold at 325B Pounds



The Week Ahead:


Sunday: May UK Lloyds Employment Confidence    


Monday: May Germany Wholesale Price Index (June 11-12); May UK RICS House Price Balance; Apr. France Industrial Production, Manufacturing Production; Apr. Spain House Transactions; 1Q Italy GDP - Final


Tuesday: May UK NIESR GDP Estimate; Apr. UK Industrial Production, Manufacturing Production; 1Q France Non-Farm Payrolls - Final


Wednesday: Apr. Eurozone Industrial Production; Jun. Germany 3Q Manpower Employment Outlook (Jun 13-15); May Germany CPI – Final; May France CPI; Apr. France Current Account; May Spain CPI – Final; May Italy CPI – Final; Iceland Sedlabanki Interest Rate


Thursday: ECB Publishes June Monthly Report; May Eurozone CPI; 1Q Eurozone Labour Costs; 1Q Spain House Prices; Apr. Italy General Government Debt; 1Q Greece Unemployment Rate


Friday: May Eurozone 25 New Car Registration; Apr. Eurozone Trade Balance; 1Q Eurozone Employment; Apr. UK Trade Balance; 1Q Spain Labour Costs; Apr. Italy Trade Balance


Extended Calendar Call-Outs:


JUNE: Greece to Identify 5.5% of GDP in Austerity Measures


10 June: France – first round of parliamentary elections


11 June: Spain – Independent auditors contracted by the government are due to report in mid-June on the state of the banks, and a detailed IMF report on the financial system is due

14 June: Eurogroup Meeting


15 June: G20 Summit of Finance Ministers


17 June: Greece – probable date for next general election, France – second round of parliamentary election


18-19 June: G20 Summit in Los Cabos, Mexico


20-21 June: Eurogroup Meeting; Ecofin Meeting in Luxembourg


22 June: Greek T-Bill Redemption for 1.3 Billion EUR


28-29 June: EU Summit in Brussels, aim to formally sign off on growth proposals; EC meets to discuss Institutional Affairs


30 June:  Deadline for EU Banks to meet €106B capital target/the 9% Tier 1 capital ratio, Iceland – Presidential election


JULY:  France – extraordinary session of parliament in July is due to re-draft the 2013 budget 


1 July:  ESM to come into force


5 July: ECB governing council meeting


19 July: ECB governing council meeting


18-19 October: Summit of EU Leaders



Matthew Hedrick

Senior Analyst

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