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LV STRIP: JULY DECEPTION

Gaming revenues were likely up solidly in July but should anyone get excited?

 

 

The answer is no.  Our opinion likely won’t stop the initial euphoria that Vegas is back, baby.  When Nevada releases July statistics in the middle of next week, gaming revenues will look strong.  However, we think even a cursory review of the underlying metrics will reveal yet another soft month.  July faces a very easy hold comparison on both slots and tables.  We continue to believe that slot volume is the most important barometer of Strip health, and this metric will likely show another YoY decline.

 

We are projecting gross gaming revenues to increase 14-18% assuming normal slot and table hold percentages.  However, we expect slot and table volume (ex baccarat) to fall YoY.  Slots held at only 6.5% last year versus a normal 7.0% - mainly due to the accounting quirk of month end falling on a weekend.  July 2012 will benefit from a June accounting catch up where the month ended again on a weekend.  Meanwhile, table hold was only 10.3% against a normal 12.0%. 

 

Despite the lower gaming volumes, July wasn’t a disaster.  July 2012 is down a Friday and a Saturday.  However, we do think investors may overreact positively to the initial revenue print and the Vegas stocks, particularly MGM, will trade off following the initial euphoria.

 

We were positive on MGM late last year and at the beginning of 2012 on improving slot volumes.  However, the slot business turned negative in April and so did we.  July should represent the 4th straight month of declining slot volumes in a period where the Strip should be in recovery mode.  Not good.

 

LV STRIP: JULY DECEPTION - FF


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 4, 2012


As we look at today’s set up for the S&P 500, the range is 18 points or -0.54% downside to 1399 and 0.74% upside to 1417. 

                                            

SECTOR AND GLOBAL PERFORMANCE


THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

 

EQUITY SENTIMENT: 

  • ADVANCE/DECLINE LINE: on 08/31 NYSE 1174
    • Increase versus the prior day’s trading of -1294
  • VOLUME: on 08/31 NYSE 746.07
    • Increase versus prior day’s trading of 45.80%
  • VIX:  as of 08/31 was at 17.47
    • Decrease versus most recent day’s trading of -2.02%
    • Year-to-date decrease of -25.34%
  • SPX PUT/CALL RATIO: as of 08/31 closed at 1.84
    • Up from the day prior at 1.42

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: as of this morning 34.33
  • 3-MONTH T-BILL YIELD: as of this morning 0.09%
  • 10-Year: as of this morning 1.57%
    • Increase from prior day’s trading of 1.55%
  • YIELD CURVE: as of this morning 1.35
    • Up from prior day’s trading at 1.33

MACRO DATA POINTS (Bloomberg Estimates)

  • 8:58am: Markit US PMI Final, Aug., est. 51.9
  • 10am: ISM Manufacturing, Aug., est. 50.0 (prior 49.8)
  • 10am: ISM Prices Paid, Aug., est. 46.0 (prior 39.5)
  • 10am: Construction Spending M/m, July, est. 0.4% (prior 0.4%)
  • 11:30am: U.S. to sell $32b 3-mo, $28b 6-mo bills
  • 4pm: USDA Crop-condition reports

GOVERNMENT:

    • Washington Week Ahead: Democrats to Rally for Obama in N.C.
    • Democratic National Convention: Re-nomination of Obama and Biden, speakers include First Lady Michelle Obama
    • House, Senate not in session
    • Clinton seeks unified Asean front to ease disputes w/ China

WHAT TO WATCH:

  • Merkel/Monti lead diplomatic push as Draghi plan takes shape
  • EU outlook cut by Moody’s on Germany, France, U.K. risks
  • Manufacturing in U.S. probably stagnated amid global slowdown
  • Light-vehicle sales rate may have climbed to 14.2m in August
  • Valeant to purchase Medicis Pharmaceutical for $2.6b
  • P&G directors face own challenges while keeping tabs on McDonald
  • Euro-Area July producer-price inflation holds at 2 1/2-yr low
  • Lufthansa cabin crew expand German strikes in salary dispute
  • ‘Posession’ claims top film slot on sales of $21.3m
  • Intel, eBay, Pandora present at Citi Tech conference

EARNINGS:

    • Smithfield Foods (SFD) 6am, $0.45
    • Campbell Soup (CPB) 7:30am, $0.38 - Preview
    • Finisar (FNSR) 4pm, $0.14
    • Francesca’s Holdings (FRAN) 4:01pm, $0.24
    • Forest City Enterprises (FCE/A) 4:02pm, $0.06
    • Guidewire Software (GWRE) 4:05pm, $0.04
    • Bloomin’ Brands (BLMN) After-mkt

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

OIL – never, in human history, has > $100 Oil not perpetuated real (inflation adj) growth slowing. Maybe this time is different. Its probably not. Yield Spread (10s-2s) moved back to +133bps wide this past wk, only 10bps away from its slowest growth (implied) since 2008.

  • Cotton Glut Extending Slump as Levi’s Costs Slide: Commodities
  • German Power Swings at 7-Year Low Curb Trading: Energy Markets
  • Dockwise Profits Aided by U.S. as Mine Sweepers Deploy: Freight
  • Soybeans, Meal Climb to Records on U.S. Drought, Stimulus Bets
  • Oil Advances to Highest Price in a Week on Stimulus Speculation
  • Gold Seen Rising on Prospects for Further Central-Bank Stimulus
  • Copper Seen Falling as EU Credit Rating Fuels Crisis Concern
  • Iron Ore Trading Rose to Record Last Month as Prices Plunged
  • Cocoa Rebounds as Supplies May Lag Behind Demand; Sugar Advances
  • Record Gold Sales to Iran Profit Lira Bondholders: Turkey Credit
  • India Rules Out Duty-Free Import of Raw Sugar on Local Supplies
  • U.S. Shale Glut Means Gas Shortage for Mexican Industry: Energy
  • Obama Gets Fossil-Fuels Boost After Green-Jobs Revolution Fades
  • Soybeans, Meal Climb to Records on Drought
  • Iron Ore Drops to Near Three-Year Low on China Growth Concerns
  • U.K. Lawmakers Urge 2015 End for EU Sugar Quotas Capping Output

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


EUROPE – lower-highs across the board in European squeeze tapes as the markets w/ less short interest (FTSE, Swiss, etc) fall first this morn; how many more rumors, plans, etc do they have? We will see, but the FTSE just snapped my 5781 TRADE line.

 

THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS


CHINA – somewhere in between golf and time w/ the kids this weekend, China reminded us that PMI sub 50 remains and that they won’t deliver the stimuli drugs w/ Oil at $116/barrel. Shanghai down another -0.75% overnight (-17% since May).

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team



Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

No More

“And so he urged his countrymen: No more.”

-Hampton Sides (Blood and Thunder)

 

That’s what the head of the Navajo warriors, Manuelito, said to his people before ultimately succumbing to General Sherman’s troops. Maybe we’re going down versus the Fed’s Bailout Beggars too, but it won’t be without one heck of a fight.

 

Last week ended with a Draghi bagging the Jackson Hole meeting and Ben Bernanke doing nothing that resembled what he was allegedly going to do only 2 weeks prior. Rumor versus reality is a widening spread.

 

“What is the truth (Ray Dalio)?” Stocks continue to make lower-highs as bonds continue to make higher-lows. I urge all of you to join me in calling for No More of what has not worked. Otherwise, you’ll have $130-150 Oil and 1970s stagflation all over again.

 

Back to the Global Macro Grind

 

Both US and Global Equities were down again last week (2 consecutive down weeks for the SP500, 1 month lows for Asia). Both Treasury Bonds and Commodities were up. The latter perpetuates #GrowthSlowing expectations in the former.

 

But no worries. Everyone who drives to work, eats food, and sends their kids to school this week understands the very basic P&L problem associated with cost of living rising as nominal wages are falling:

  1. American median incomes = down -5% since 2009
  2. US Dollar = down -5% since January 20, 2009
  3. Oil (WTIC) = +150% since January 20, 2009

Almost everyone, that is…

 

Mostly everyone else understands the concept of long-term lower-highs (stocks) and higher-lows (bonds) as well.  Here’s what’s happened in the last 2 weeks as we setup for risk managing September:

  1. US Stocks (SP500) = down -0.85% (from 1418) to 1406 on Friday
  2. European Stocks (Eurostoxx600) = down -1.8% (from 272) to 267 this morning
  3. Chinese Stocks (Shanghai Comp) = down -3.5% (from 2118) to 2043 this morning

All the while:

  1. US Equity Volatility (VIX) = up +30% from its YTD closing low (2wks ago)
  2. Commodities (CRB Index) = up +1.9% (from 303) to 309 this morning
  3. US Treasury Yields (10yr) = down -14% (from 1.81%) to 1.55% this morning

So, who on God’s good earth profits from this economic model? If you bought bonds, volatility, and commodities 2 weeks ago, you did. But what % is that of the global population? Did higher prices in those 3 things perpetuate economic growth, or slow it?

If you bought Gold 2 weeks ago (we didn’t because we didn’t think Bernanke would go to Qe4 – and he didn’t), that’s up +4.8%. Great trade! But what does that mean? It means that the purchasing power of US Dollars continues to be debauched.

 

Are institutional investors long Gold? You bet your Madoff they are – and with headlines dominating your every day like this: “Gold, Near 5mth High, Seen Gaining on Prospects for More Stimulus” (Bloomberg), why shouldn’t they be?

 

Weekly CFTC data implies Gold buyers ramped bets on Bernanke right back up to where they were before they started falling in March (+19% wk-over-wk to almost 132,000 contracts).

 

Those are called expectations. Instead of jobs and economic growth, that’s what Bernanke really stimulates and, in doing so, perpetuates the US growth slow-down via commodity inflation.

 

This is why our Global Macro Model continues to nail  #GrowthSlowing calls at these shortened economic cycle turns well ahead of consensus. Our models adjust, real-time, for Dollar Debauchery and Oil Inflation.

 

How long can inflation of market prices be masked as “economic growth”? Not for long. Each and every one of these Qe experiments gives markets shorter-term pops and more volatile reversals.

 

So, if you bought Gold (or Commodities) at the month-end markup of February 2012, or if you bought it there at lower-highs on Friday, the probability just went straight up (like the asset price did) that they will now come down again.

 

That’s called Deflating The Inflation. And while Bernanke wants you to believe that you’ll have no more of that (maybe ever), I’ll repeat what we all can’t afford any more of – policies to inflate asset prices that, in turn, slow growth.

 

My immediate-term support and resistance ranges for Gold, Oil (Brent), US Dollar, EUR/USD, 10yr UST Yield, and the SP500 are now $1, $113.69-116.57, $81.11-81.91, $1.24-1.26, 1.55-1.64%, and 1, respectively.

 

Best of luck out there this week,

KM

 

Keith R. McCullough
Chief Executive Officer

 

No More - Chart of the Day

 

No More - Virtual Portfolio


Bonds. James Bonds.

This note was originally published at 8am on August 20, 2012 for Hedgeye subscribers.

“This is a serious problem, although it is not as dramatic as sort of an epidemic.”

                -James Bond

 

Author Ian Fleming created James Bond, code named 007, in 1953 and subsequently featured him in twelve novels and two short story collections.  Bond was an intelligence officer in the Secret Intelligence Service and a Royal Naval Reserve Commander.   Fleming based this fictional character on many of the intelligence officers and commandos he met during World War II.  Interestingly, the name James Bond came from American ornithologist James Bond, a Caribbean bird expert and author of the definitive field guide Birds of the West Indies. (Don’t worry, I haven’t read it either.)

 

Over the course of the Fleming’s twelve novels and the twenty-two James Bond movies (the highest grossing series ever at $4.9 billion), Bond utilizes his astute intelligence gathering capabilities, combined with various gadgets, including an exploding attaché case, to save the world from a myriad of threats.  If Bond were a research analyst studying today’s markets, the U.S. bond markets may be considered an emerging epidemic in his analytical purview. 

 

Even if not an epidemic, bond issuance levels this year have been staggering.   Firstly, in the municipal bond market in the United States, as of May, issuance is up 70% compared to the same period in 2011.  Secondly, in the U.S. corporate bond market issuance is up 5% year-over-year, but has seen a serious acceleration in the last few months with investment grade issuance up 54% and high yield up 30% in July 2012.  Finally, according to Lipper Research, bond ETFs have seen the eighteenth consecutive month of net inflows.

 

So, is there is a bond epidemic / bubble?  Given the stance of the global central banks to keep interest rates at artificially low levels, it is likely not an epidemic that is going to end in the short term.  In fact, we are actually aggressively allocated to U.S. government bonds as we think equities are at an extreme and growth is continuing to slow.  Certainly though, James Bond, the research analyst, would be gathering his intelligence and watching and waiting for an opportunity to sell the high yield bond market.

 

As we show in the Chart of the Day below, which we have aptly named, From the Central Banks with Love, the high yield market is at a generational low in yield.  Obviously when studying a corporate bond, there are a number of factors to analyze in determining whether it is overvalued or undervalued.  Certainly, the overall interest rate environment is critical, but ultimately the prospects of the company are the drivers of a junk bond’s value, especially given the bond’s inferior position in the capital structure.  Therefore, given that yields in the junk bond market are literally at generational lows, it implies that default risk is also close to an all-time low.  Personally, I’d need a few James Bond-esque martinis before I’d believe that last point to be an accurate assessment of default risk.

 

Speaking of bonds, Der Spiegel reported this weekend that the ECB may set a specific threshold to cap periphery bond yields at its meeting in September.  The immediate reaction in the European sovereign debt markets is, not surprisingly, positive as credit default swaps are trading tighter across the board.  As well, the Spanish 10-year is back down to 6.19%.  Even if positive in the short term, broad intervention in a large market speaks to another epidemic, the epidemic of government intervention in the free markets.  Random intervention by governments does not build confidence in the markets.  And confidence is what is sorely missing in the European debt markets.

 

In the latest sign that global growth is slowing, the Shanghai Composite hit a fresh three and a half year low this morning.   The Chinese equity markets may not always garner headlines in the U.S. financial media, but nonetheless China remains the engine for global growth and as China goes so goes marginal global growth.  Thursday will give us some important insights on Chinese and global growth as flash PMIs are reported for China, Europe and the United States.

 

Keith is back in Thunder Bay this week taking some time off with his family ahead of what is going to be a busy next few months at Hedgeye, so we will be highlighting some of the key calls from our broader research team this week.  This will be kicked off this morning with our Financials Sector Head Josh Steiner and our Retail Sector Brian McGough leading our morning client call at 830 a.m.  Email qa@hedgeye.com if you like to ask them any questions, or get access to the call.

 

Although we are currently not short it in the Virtual Portfolio, one of McGough’s favorite short ideas has been J.C. Penney.   We’ve been consistently short JCP for the past fifteen months and will likely look to re-short when we see our level.  McGough had the following to say after JCP’s recent earnings announcement:

 

“We won't bother with the full financial review. Comps down -22%, dot.com down 33% and a ($0.67) loss pretty much sums that up.

 

But that's the past. We invest for the future. One thing that matters in investing for the future is believing in who is running the ship. We initially figured that Johnson's Apple halo would have lasted 18-24 months. But about 5-minutes into his commentary today, his credibility stood up, ran out the door, and got hit by a bus.

 

Last quarter, his level of arrogance around communicating the message was bothersome. He spoke to the Street like we were toddlers, or at least retail novices. He glossed over the bad, and played up whatever positive statistic he could find. A JV mistake for a new CEO.”

 

As it relates to CEO Ron Johnson at J.C. Penney, or really any CEO of a large public company, perhaps Ian Fleming said it best when he wrote:

 

“Once is happenstance. Twice is coincidence.  Three times is enemy action.”

 

Indeed.

 

Our immediate-term support and resistance ranges for Gold, Oil (Brent), US Dollar, EUR/USD, 10yr UST Yield, and the SP500 are now $1601-1624, $110.89-115.21, $82.20-82.89, $1.22-1.24, 1.72-1.87%, and 1406-1419, respectively.

 

 

Keep your head up and stick on the ice,

 

Daryl G. Jones

Director of Research

 

Bonds.  James Bonds. - Chart of the Day

 

 

Bonds.  James Bonds. - Virtual Portfolio

 


Weekly European Monitor: Grinding Higher?

Takeaway: Despite sovereign yields moderating, growth remains constrained and austerity’s tail is not fully priced in across Europe.

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

 

Positions in Europe: Short EUR/USD (FXE)

 

Asset Class Performance:

  • Equities:  The STOXX Europe 600 closed down -0.7% week-over-week vs -1.8% last week. Bottom performers: Ukraine -5.2%; Russia (RTSI) -2.9%; Sweden -1.4%; Switzerland -1.4%; UK -1.1%; Finland -1.0%. Top performers: Portugal +2.5%; Spain +1.5%; Italy +1.5%; Hungary +0.7%.[Other: France -0.6%; Germany 0.0%; Greece +0.4%].
  • FX:  The EUR/USD is up +0.56% week-over-week.  W/W Divergences: RUB/EUR -2.14%; HUF/EUR -1.90%; PLN/EUR -1.85%; TRY/EUR -1.69%; GBP/EUR -0.15%; DKK/EUR -0.04%; NOK/EUR -0.01%; CHF/EUR +0.01%.
  • Fixed Income:  The 10YR yield for sovereigns across the region were mostly higher this week. Spain saw the largest increase, +28bps to 6.70%, followed by France’s +14bps move to 2.19%.  Italy rose +8bps to 5.79bps and Germany was up +4bps to 1.39%.  Greece bucked the trend, falling -54bps to 23.43%.  
  • Sovereign CDS:  Sovereign CDS followed yields, up slightly across the periphery this week. On a week-over-week basis Spain rose the most, up +18bps to 511bps, followed by Italy +14bps to 463bps. France, Germany, the UK, and Ireland were mostly flat on the week. Portugal showed a negative inflection of -13bps to 669bps.   

Weekly European Monitor: Grinding Higher? - bb. yields

 

Weekly European Monitor: Grinding Higher? - bb. cds a

 

Weekly European Monitor: Grinding Higher? - bb. cds b

 

 

Grinding Higher?


This week in Europe produced a ton of noise: it started off with Draghi announcing that he would not attend Jackson Hole and increased speculation that the ECB is considering informal, flexible yield targets on short-term peripheral sovereign debt and concluded with Bundesbank President Jens Weidmann reiterating his opposition to ECB purchases of peripheral debt and his possible resignation. In short, we see the success of targeting yields as highly doubtful. Interesting, Chancellor Merkel remains in a tight spot supporting Weidmann while understanding that she must play ball with her fellow Eurocrats and inevitably grant more bailouts and support concessions to prevent the exit of Greece and limit risk premiums across the periphery.

 

Keep in mind that the market is wrestling with two immediate catalysts: 1. The results of the Governing Council meeting of the ECB this coming Thursday (9/6), and 2. The decision of the German Constitutional Court on 9/12. 

 

We think it’s unlikely that we’ll get definitive color on secondary peripheral buying at the ECB’s meeting and expect rates to be on hold until we get at least another month of data and after there’s clarity from the German Constitutional Court’s decision on the constitutionality of the ESM and Fiscal Compact; currently it looks probable that it will pass.

 

While sovereign yields and CDS spreads were marginally higher on a week over week basis, they remain (at least for the moment) under levels seen earlier this summer -- as recently as late July -- when Italy and Spain’s 10YR were trading north of the 6% and 7% levels, effectively the market’s freak-out level. It’s unclear whether this is a function of indecision ahead of the ECB and German Court decisions or a new-found confidence that Eurocrats will continue to throw the kitchen sink at their problems despite our view that Eurocrats have no clue on how to craft a long term path towards a united, growing Europe.

 

Interestingly, new issuance from Italy and Spain this week was issued at lower yields than previous auctions for similar maturities, a bullish signal. But is it sustainable? We think not so long as growth remains constrained and austerity’s tail is not fully priced in. Recent fundamental data, as we show below for this week under the section Data Dump, remains awful to challenged.

 

 

Auction Results (highlights):


Italy sold €4.0B 10YR bonds with an average yield of 5.82% vs prior 5.96%, (bid to cover 1.42 vs prior 1.29; target €3.0-4.0B).

 

Italy sold €9.0B 6M bills with an average yield of 1.585% vs previous 2.454% on July 27 (bid-to-cover 1.69 times vs previous 1.61).

 

Spain sold 3M bills at 0.946%, down from the 2.434% at the last auction in July (bid-to-cover improved to 3.4x from 2.9x).

 

Spain sold 6M bills at 2.026% vs 3.691% last month (bid-to-cover fell to 2.2x from 3.0x in July).

 

 

 

Call Outs:

 

Germany - German government economic adviser Lars Feld (one of Germany's five "wise men") said that a breakup of the Euro would cut up to 10% off the German economy. He added that even just a Greek exit would present significant risks.

 

China - Premier Wen told visiting Merkel that Spain, Italy, and Greece must take “comprehensive measures” to prevent crisis from worsening.  Wen did say China is willing to invest in the European Bond Market, though on the condition of a full evaluation of risk, and said that the key to solving the crisis is to strike a balance between fiscal tightening and economic stimulus.

 

Netherlands - The Political backdrop in the Netherlands ahead of the 12-Sept elections: opinion surveys show that the anti-austerity Socialist Party could garner between a fifth and a quarter of the seats in parliament, beating out the pro-business Liberal Party. This could put Socialist party and its leader, Emile Roemer, in a position to form a coalition. However, forming a coalition will not be easy, as an alliance with its two natural allies, Labor and Green, would be unlikely to secure enough seats to form a government. This could spell coalition building problems over austerity plans agreed under the government in April and derail the budget targets for 2013 set by the European Commission. The Socialists also want a referendum on the new fiscal compact.

 

Germany - Der Spiegel reported that German Chancellor Merkel wants an EU convention to draft a new treaty for deeper Eurozone integration. The magazine said that Merkel hopes that an EU leaders' summit in December can produce a firm date for the start of the convention on a new treaty.

 

Spain - ECB data showed that deposits in Spanish banking institutions fell 4.7% M/M in July. However, a Bank of Spain official told Dow Jones that the number was impacted by the fact that Spanish companies typically pay taxes in July, while households tend to spend more in the summer months as they go on holiday.

 

Spain - ECB data showed that Spanish banks cut their government bond holdings by €7.58B to €247.2B in July, the largest monthly drop since August of last year.

 

Italy - Prime Minister Monti said in an interview with the Italian business daily Il sole-24 Ore that while he may seek support from the Eurozone bailout mechanism to help lower borrowing costs, he does not want Italy to be subjected to "some sort of intrusive special administration like has happened with the countries that needed aid to balance their accounts". He added that Italy is "not in that situation".

 

Spanish - Deposit outflows for July was €74B (2x the previous month and equal to 7% GDP).

 

Portugal - According to a government source, troika is considering relaxing Portugal's 2012 budget deficit target from 4.5% of GDP to slightly above 5%. The paper said that the concession is in exchange for the improvement that Portugal has shown with its external deficit, which came in below 2% in the first half of the year, below the annual 2.5% target.

 

Spain - Moody's expected to downgrade Spain to junk in September. Moody's put Spain on negative review in June, giving itself three months to decide whether or not to cut the sovereign debt rating to junk.

 

 

EUR/USD:

 

Our immediate term TRADE range for the cross is $1.23 to $1.26. In the second chart below we look at CFTC data for net contracts of Euro non-commercial positions. Interestingly, since a high in short positions in the Euro on 6/5/12 (-213.060 contracts), investors have been less bearish (and covering), moving to 41% less bearish contracts (-125.817) as of 8/21.  On a 1M basis, contracts moved to 20% less bearish; 3M = 35% less bearish; and 6M = 8% less bearish.     

 

Weekly European Monitor: Grinding Higher? - bb. eur

 

Weekly European Monitor: Grinding Higher? - bb. cme

 

 

Data Dump:

 

In yet another week Europe showed very weak fundamental data across most of the board.  In highlight, Eurozone confidence figures broadly declined in August versus July, a similar trend that was seen with German (IFO) confidence declining for four straight months, as inflation moved higher in the Eurozone (+2.6% in August) and remained sticky and high in Italy, at 3.5%.

 

Eurozone Business Climate -1.21 AUG (exp. -1.30) vs -1.27 JUL

Eurozone Consumer Confidence (Final) -24.6 AUG (inline) vs -21.5 JUL

Eurozone Economic Confidence 86.1 AUG (exp. 87.5) vs 87.9 JUL

 

Weekly European Monitor: Grinding Higher? - bb. confid euro consumer and econ

 

Eurozone Industrial Confidence -15.3 AUG (exp. -15.5) vs -15.1 JUL

Eurozone Services Confidence -10.8 AUG (exp. -9.0) vs -8.5 JUL

 

Weekly European Monitor: Grinding Higher? - bb  euro conf manufact and service

 

Eurozone M3 3.8% JUL Y/Y (exp. 3.2%) vs 3.1% JUN

Eurozone CPI 2.6% AUG (exp. 2.5%) vs 2.4% JUL

Eurozone Unemployment Rate 11.3% JUL vs 11.3% JUN (revised from 11.2%)

 

Germany Unemployment Change +9K AUG (exp. +7K) vs +9K JUL

Germany Unemployment Rate 6.8% AUG vs 6.8% JUL

Germany IFO Business Climate 102.3 AUG (exp. 102.7) vs 103.2 JUL

Germany IFO Current Assessment 111.2 AUG (exp. 110.8) vs 111.5 JUL

Germany IFO Expectations 94.2 AUG (exp. 95) vs 95.5 JUL

 

Weekly European Monitor: Grinding Higher? - bb. ifo

 

Germany Import Price Index 0.7% JUL M/M (exp. 0.9%) vs -1.5% JUN   [1.2% JUL Y/Y (exp. 1.4%) vs 1.3% JUN]

Germany GfK Consumer Confidence 5.9 SEPT vs 5.8 AUG

Germany CPI Preliminary 2.2% AUG Y/Y (exp. 2.0%) vs 1.9% JUL

Germany Retail Sales -1.0% JUL Y/Y (exp. 0.1%) vs 3.7% JUN

 

France Own Company Production Outlook -6 AUG vs -9 JUL

France Production Outlook -44 AUG vs -44 JUL

France Business Confidence 90 AUG vs 89 JUL

 

UK M4 Money Supply -4.6% JUL Y/Y vs -5.2% JUN

UK Nationwide House Prices -0.7% AUG Y/Y (exp. -2.2%) vs -2.6% JUL

 

Italy Business Confidence 87.2 AUG (exp. 86.8) vs 87.1 JUL

Italy Hourly Wages 1.5% JUL Y/Y vs 1.5% JUN

Italy Retail Sales -0.5% JUN Y/Y vs -1.7% MAY

Italy Consumer Confidence 86 AUG vs 86.5 JUL

Italy Unemployment Rate 10.7% JUL Prelim.  vs 10.7% JUN

Italy CPI 3.5% AUG Prelim Y/Y vs 3.6% JUL

Italy PPI 2.4% JUL Y/Y vs 2.2% JUN

 

Spain CPI Preliminary 2.7% AUG Y/Y (exp. 2.3%) vs 2.2% JUL

Spain final Q2 GDP -0.4% Q/Q (exp. -0.4%) and UNCH vs preliminary   [-1.3% Y/Y (exp. -1.0%) and -1.0% preliminary]

 

Spain Mortgages on Houses -25.2% JUN Y/Y vs -30.5% MAY

Spain Retail Sales -6.9% JUL Y/Y vs -4.4% JUN

 

Portugal Consumer Confidence -49.2 AUG vs -50.4 JUL

Portugal Economic Climate -4.0 AUG vs -4.4 JUL

Portugal Industrial Production -0.2% JUL Y/Y vs -4.6% JUN

Portugal Retail Sales -7.9% JUL Y/Y vs -5.4% JUN

 

Ireland Property Prices -13.6% JUL vs -14.4% JUN

 

Austria PPI 0.2% JUL Y/Y vs 0.3% JUN

Belgium CPI 2.86% AUG Y/Y vs 2.32% JUL

Switzerland KOF Swiss Leading Indicator 1.57 AUG vs 1.41 JUL

 

Sweden Household Lending 4.4% JUL Y/Y vs 4.6% MAY

Sweden PPI -1.1% JUL Y/Y (exp. -0.6%) vs 0.2% JUN

Sweden Consumer Confidence 5.4 AUG vs 5.6 JUL

Sweden Manufacturing Confidence -9 AUG vs -3 JUL

Sweden Economic Tendency 97.1 AUG vs 95.4 JUL

 

Netherlands Producer Confidence -4.6 AUG vs -5.2 JUL

Netherlands Consumer Spending -0.6% JUN Y/Y (exp. -1.7%) vs -1.6% MAY

Belgium Unemployment Rate 7.2% JUL vs 7.2% JUN

 

Denmark Q2 GDP Preliminary -0.5% Q/Q vs 0.3% in Q1   [-0.9% Y/Y vs 0.3% in Q1]

Norway Unemployment Rate 2.6% AUG vs 2.7% JUL

Finland Business Confidence -7 AUG vs -5 JUL

Finland Consumer Confidence 0.5 AUG vs 0.1 JUL

 

Ireland Consumer Confidence 70 AUG vs 67.7 JUL

Ireland Retail Sales Volume -1.5% JUL Y/Y vs -6.0% JUN

 

Greece Retail Sales -9.6% JUN Y/Y vs -9.2% MAY

 

Poland Q2 GDP 0.4% Q/Q (exp. 0.5%) vs 0.6% in Q1   [2.4% Y/Y (exp. 2.9%) vs 3.5% in Q1]

Hungary Unemployment Rate 10.5% JUL vs 10.9% JUN

Hungary Producer Prices 6.2% JUL Y/Y vs 6.9% JUN

 

Slovakia Consumer Confidence -25.9 AUG vs -23.0 JUL

Slovakia Industrial Confidence -4.7 AUG vs -6.7 JUL

Slovakia PPI 3.6% JUL Y/Y vs 4.0% JUN

Turkey Tourist Arrivals -0.6% JUL Y/Y vs 2.7% JUN

 

 

Interest Rate Decisions:

 

(8/28) Hungary Base Rate Announcement CUT 25bps to 6.75%

(8/29) Norway Deposit Rates UNCH at 1.50%

 

 

The Week Ahead:

 

Monday:  Aug. Eurozone, Germany and France PMI Manufacturing – Final; Aug. UK PMI Manufacturing; Spain and Greece Manufacturing PMI; Aug. Italy PMI Manufacturing, New Car Registrations, and Budget Balance

 

Tuesday: Jul. Eurozone PPI; Aug. UK PMI Construction, BRC Shop Price Index; Aug. Spain Unemployment

 

Wednesday: Aug. Eurozone PMI Composite and Services - Final; Jul. Eurozone Retail Sales; Aug. Germany PMI Services – Final; Aug. UK. PMI Services, Official Reserves; Aug. France PMI Services – Final; Spain Services PMI; Aug. Italy PMI Services

 

Thursday: Governing Council meeting of the ECB in Frankfurt; ECB Announces Interest Rates; 2Q Eurozone Household Consumption Expenditures, Gross Fixed Capital Formation, Government Expenditures, GDP – Preliminary; Jul. Germany Factory Orders; BoE Announces Rates; BoE Asset Purchase Target; Aug. UK New Car Registrations; 2Q France Unemployment Rate; Jun. Greece Unemployment

 

Friday: Aug. Germany Wholesale Price Index (Sept. 7-12); Jul. Germany Exports, Imports, Current Account, Trade Balance, Industrial Production; 2Q Germany Labor Costs Workday and Season 1Q Labor Costs to be published the day as 2Q; Aug. UK BoE/GfK Inflation Next 12 Months, PPI Input and Output

 

 

Matthew Hedrick

Senior Analyst


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