No Current Real-Time Positions in Europe
Asset Class Performance:
- Equities: The STOXX Europe 600 closed down -1.7% week-over-week vs +1.6% last week. Bottom performers: Spain -4.2%; Italy -3.7%; Russia (RTSI) -3.0%; Germany -2.7%; Finland -2.7%; France -2.0%; Austria -2.0%; UK -1.7%. Top performers: Turkey +0.6%; Slovakia +0.5%; Switzerland +0.2%. [Other: Greece +0.0%].
- FX: The EUR/USD is down -0.94% week-over-week. W/W Divergences: TRY/EUR +1.01%; NOK/EUR +0.83%; SEK/EUR +0.43%; GBP/EUR +0.18%; CHF/EUR +0.10%; DKK/EUR +0.02%; HUF/EUR -0.44%; CZK/EUR -0.46%; PLN/EUR -1.17%.
- Fixed Income: The 10YR yield for sovereigns were mixed week-on-week. Portugal rose the most at +51bps to 8.86%, followed by Spain +23bps to 5.83%. Greece saw the largest decline at -34bps to 17.87%. Germany, Belgium, and France were notable decliners, falling -12bps, -11bps, and -9bps to 1.33%, 2.31%, and 2.13%, respectively.
- The EUR/USD hit its lowest level in 2 months this week. We maintain an immediate term TRADE range of $1.27 to $1.29 and a heavy intermediate term TREND resistance level of $1.31.
The Eurocrat Shuffle:
The Eurozone continues to take two steps forward and one step back, or is it, one step forward and two steps back? Headline risk continues to be a governing factor. This week it largely revolved around Greece – waiting on the narrow passage of a €13.5B package of spending cuts, tax increases and structural reforms late Wednesday night and ahead of Sunday’s vote on its 2013 budget.
Markets remained constipated over Greece’s next lifeline aid tranche of €31.5B, as the European Commission, Eurogroup, and IMF are in disagreement about how to both reduce Greece’s debt load and set appropriate debt reduction targets for such far-out dates as 2020. On some level an agreement to both will be needed before the money is dropped from the skies. [See our note titled “November ECB Presser: No Surprises” for our commentary on the ECB’s decision to keep rates on hold this week.]
Away from the politically compromised Eurocrats and structural flaws of the Eurosystem, Keith noted that his multi-factor quantitative model was flashing a major buy signal for the German DAX. [Note: we sold our Real-Time Position in German Bonds (BUNL) on Thursday (11/8) so we have no exposure to Europe]. He also said that the broader equity market of Denmark looks good; whereas the UK is flashing a negative set-up.
Beyond the headline news, and broader negative data out this week (see below in the section “Data Dump”), there were a couple positive charts that caught our attention this week:
- Target 2 exposure is actually slowly improving across the periphery.
- Current Account Balances are showing improvement across countries that have historically had heavy deficits.
The European Week Ahead:
Monday: Eurogroup Meeting in Brussels; Oct. Germany Wholesale Price Index (Nov. 12-13); Oct. UK RICS House Price Balance; Sep. Spain House Transactions
Tuesday: Nov. Eurozone ZEW Survey Economic Sentiment; Nov. Germany ZEW Survey Current Situation and Economic Sentiment; Oct. UK PPI Input and Output, CPI, Retail Price Index; Sep. UK ONS House Price; Oct. France CPI - Final; Sep. France Current Account; 3Q France Wages and Non-Farm Payrolls – Preliminary; Oct. Italy CPI - Final; Sep. Italy General Government Debt
Wednesday: Sep. Eurozone Industrial Production; BoE Inflation Report; Oct. UK Claimant Count Rate, Jobless Claims Change; Sep. UK Weekly Earnings, ILO Unemployment Rate, Employment Change; Oct. France Consumer Price Index; 3Q Greece GDP - Advance
Thursday: ECB Publishes Nov. Monthly Report; Oct. Eurozone CPI; 3Q Eurozone GDP – Advance; 3Q Germany GDP – Preliminary; Oct. UK Retail Sales; 3Q France GDP – Preliminary; Spain Catalonia Regional Election; 3Q GDP - Final 3Q Spain GDP – Final; Sep. Italy Current Account; 3Q Italy GDP - Preliminary
Friday: Sep. Eurozone Current Account, Trade Balance; Sep. Italy Trade Balance
NOV 19 – Eurozone Finance Ministers Meeting
NOV 22 – EU Summit and ECB Governing Council Meeting
NOV 26 – Finance Ministers may sign off on Greece’s next bailout tranche, 31.5B EUR
NOV 27 – AFME 4th Annual Spanish Funding Conference in Madrid
DEC 1 – Beginning of the Russian Presidency of G20
DEC 3 – Eurogroup Meeting in Brussels
DEC 6 – ECB Governing Council Meeting
DEC 12-13 – First public consultation between the Russian government, B20 Coalition and international civil society representatives on G20 agenda for 2013 (in Moscow)
DEC 20 – ECB Governing and General Council Meeting
APR 2013 – Parliamentary elections in Italy
MAY 2013 – Presidential elections in Italy
Turkey - received its first investment- grade ranking since 1994 after Fitch Ratings raised the country by one level (BB+ to BBB-), citing an easing in economic risk and lower debt.
Italy - Italian Treasury officials rejected proposals to create a so-called bad bank for the non-performing loans of the nation’s lenders amid concern the plan would strengthen the link between sovereign and bank debt, said people with knowledge of the matter.
France - the IMF warned that France risks falling behind the likes of Spain and Italy if it does not reform its economy. It called for a comprehensive program of structural reforms, citing the country's significant loss of competitiveness.
Eurozone PPI 2.7% SEPT Y/Y vs 2.7% AUG
Eurozone Retail Sales -0.8% SEPT Y/Y vs -0.9% AUG
Eurozone Sentix Investor Confidence -18.8 NOV (exp. -21) vs -22.2 OCT
UK Halifax House Price -1.7% OCT Y/Y vs -1.2% September
UK New Car Registrations 12.1% OCT Y/Y vs 8.2% September
UK Industrial Production -2.6% SEPT Y/Y vs -1.0% AUG
UK Manufacturing Production -1.0% SEPT Y/Y vs -1.2% AUG
Germany CPI 2.1% OCT Final Y/Y UNCH [0.1% M/M UNCH]
Germany Exports -2.5% SEPT M/M vs 2.3% AUG
Germany Imports -1.6% SEPT M/M vs 0.4% AUG
Germany Industrial Sales -1.2% SEPT Y/Y vs -1.3% AUG
Germany Factory Orders -4.7% SEPT Y/Y vs -4.6% AUG [-3.3% SEPT M/M vs -0.8% AUG]
France Bank of France Business Sentiment 92 OCT vs 92 SEPT
France Industrial Production -2.5% SEPT Y/Y vs -0.9% AUG
France Manufacturing Production -2.5% SEPT Y/Y vs -0.3% AUG
Italy Industrial Production SA -1.5% SEPT Y/Y vs 1.7% AUG
Italy Industrial Production WDA -4.8% SEPT Y/Y vs -5.2% AUG
Italy Industrial Production NSA -10.5% SEPT Y/Y vs -5.1% AUG
Spain Industrial Output NSA -11.7% SEPT Y/Y vs -2.5% AUG
Spain Unemployment Change 128.2k OCT M/M (exp. 110k) vs 79.6k SEPT
Norway Industrial Production -5.0% SEPT Y/Y vs 1.9% AUG
Norway CPI 1.1% OCT Y/Y vs 0.5% SEPT
Norway CPI incl. oil 1.7% OCT Y/Y vs 1.4% SEPT
Finland Industrial Production -1.7% SEPT Y/Y vs -1.4% AUG
Sweden Industrial Production -5.0% SEPT Y/Y vs 2.7% AUG
Switzerland Unemployment Rate 3.0% OCT vs 2.9%
Switzerland CPI -0.1% OCT Y/Y vs -0.3% SEPT
Austria Wholesale Price Index 4.2% OCT Y/Y vs 4.2% SEPT
Netherlands CPI 2.9% OCT Y/Y vs 2.3% SEPT
Netherlands Industrial Production -0.2% SEPT Y/Y vs -0.6% AUG
Greece Unemployment Rate 25.4% AUG vs 24.8% JUL
Greece Industrial Production -7.3% SEPT Y/Y vs 2.5% AUG
Greece CPI 1.6% OCT Y/Y vs 0.9% September
Ireland CPI 2.1% OCT Y/Y vs 2.4% SEPT
Ireland Industrial Production -12.7% SEPT Y/Y vs -0.5% AUG
Portugal Industrial Sales -8.1% SEPT Y/Y vs -1.3% AUG
Russia Consumer Prices 6.5% OCT Y/Y vs 6.6% SEPT
Czech Republic Unemployment Rate 8.5% OCT vs 8.4% SEPT
Czech Republic Retail Sales -3.3% SEPT Y/Y vs -0.8% AUG
Czech Republic CPI 3.4% OCT Y/Y vs 3.4% September
Romania Retail Sales 5.1% SEPT Y/Y vs 4.7% AUG
Hungary Industrial Production 0.6% SEPT Y/Y vs 1.8% AUG
Slovenia Industrial Production -0.2% SEPT Y/Y vs 4.2% AUG
Latvia Preliminary Q3 GDP 5.3% Y/Y vs 5.0% in Q2 [1.7% Q/Q vs 1.3% in Q2]
Turkey Consumer Prices 7.80% OCT Y/Y vs 9.19% SEPT
Turkey Producer Prices 2.57% OCT Y/Y vs 4.03% September
Turkey Industrial Production 6.2% SEPT Y/Y vs 0.9% AUG
Interest Rate Decisions:
(11/8) BOE Main Interest Rate UNCH at 0.50% (and asset purchase program UNCH)
(11/8) ECB Main Interest Rate UNCH at 0.75%
(11/8) Serbia Repo Rate HIKED to 10.95% from 10.75% (exp. 11%)
(11/9) Russia Refinancing Rate UNCH at 8.25%
(11/9) Russia Overnight Deposit Rate UNCH at 4.25%
(11/9) Russia Overnight Auction-Based Repo UNCH at 5.50%