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India Equity Research Reports, IPO and Stock News
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Lots of EU headlines (and finally, after 24 years)
Markets finished the week very much in a risk-on mood. The S&P500 rallied almost 2%, to finish the
week up a little over 1%. European bourses generally did better than the US on Friday, with the DAX up
3.5% on the day but only up 0.06% for the week. In response to the better sentiment the 10Y UST
moved back above 2.2%. It still finished down a couple of basis points from the previous week’s close,
however.
If we start with the data, the IFO only posted a moderate decline in falling to its lowest level since June
2010. At 106.4 it is still well above its historical average, though expectations are falling faster. The
French INSEE survey of business confidence also declined moderately. In the UK, consumer confidence
fell more than expected. Finally, the core Canadian CPI rose 0.5%mom, a result that was well above
expectations. This pushed the annual core rate to 2.2%, its biggest rise since December 2008. Clothing
made a material contribution to the rise in the core with a gain of 4.9%mom.
The media outlets over the weekend have been full of stories about the EU Summit. A story in the
Telegraph says that “Europe’s leaders are threatening to trigger a formal default on Greek debt and risk a
‘credit event’ if banks refuse to accept loses of up to 140bn euro on their holdings.” In terms of the
haircut that banks will need to accept to avoid this a figure of 50% features in the article, with banks being
“made to raise at least 100bn euro over the next six to nine months” to make sure they can withstand
losses of this scale. A Reuters story also mentions the figure of 100 billion euros to recapitalise the banks
and the possible 50% haircut on Greek debt. This story does, however, emphasise that “several major
areas of disagreement remain and it will require vast amounts of hard negotiation …to strike a deal that
convinces financial markets and Europe’s major trading partners that the crisis is in hand.” Reuters says
the biggest issue is how to scale up the EFSF. The most recent Bloomberg story says that a forced
restructuring of Greek debt will be “excluded” and quotes French President Sarkozy as saying “work is
going well on the banks, and on the fund and the possibilities of using the fund, the options are
converging.” But “on the question of Greece….we’re not there yet.” The Bloomberg article also
mentions the figure of 100 billion euros for bank recapitalisation and on the EFSF says that “policy makers
are heading toward using [it] to guarantee bond sales as a way to extend its reach. A second option is to
set up an EFSF-insured fund that would seek outside investment in troubled bonds.”
For the week ahead, Wednesday features prominently. On the data front, French and German PMIs
(Monday), Germany CPI (Thursday) and Spanish unemployment (Friday) are some of the key highlights in
Europe. In the US, we have the Case-Shiller House Price index, Conf Board Consumer Confidence and
Richmond Fed Manufacturing all on Tuesday. US durable goods and new home sales are due Wednesday.
We then get the first Q3 GDP report on Thursday and Personal Income/Spending data on Friday. In Asia,
Australia’s PPI is out on Monday and then the CPI is due Wednesday. NZ gets its CPI data on Tuesday.
Chinese HSBC Flash Manufacturing PMI for October on Monday will be a key update given rising
evidence of a slowdown in real activity. Away from the macro headlines it will be a busy week in terms of
company earnings. We are expecting 191 S&P 500 and 104 DJStoxx600 companies to report during the
week. With major US financials’ results out of the way focus moves to corporates.
Finally, as a New Zealander I can’t let Sunday’s World Cup final pass without some comment. In a
game fitting the occasion, at least in terms of drama and tension, the New Zealand ‘All Blacks’ held on to
a lead of 8-7 over France to win their first world cup final since 1987. Far too close for comfort for the
author, believe me!
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Lots of EU headlines (and finally, after 24 years)
Markets finished the week very much in a risk-on mood. The S&P500 rallied almost 2%, to finish the
week up a little over 1%. European bourses generally did better than the US on Friday, with the DAX up
3.5% on the day but only up 0.06% for the week. In response to the better sentiment the 10Y UST
moved back above 2.2%. It still finished down a couple of basis points from the previous week’s close,
however.
If we start with the data, the IFO only posted a moderate decline in falling to its lowest level since June
2010. At 106.4 it is still well above its historical average, though expectations are falling faster. The
French INSEE survey of business confidence also declined moderately. In the UK, consumer confidence
fell more than expected. Finally, the core Canadian CPI rose 0.5%mom, a result that was well above
expectations. This pushed the annual core rate to 2.2%, its biggest rise since December 2008. Clothing
made a material contribution to the rise in the core with a gain of 4.9%mom.
The media outlets over the weekend have been full of stories about the EU Summit. A story in the
Telegraph says that “Europe’s leaders are threatening to trigger a formal default on Greek debt and risk a
‘credit event’ if banks refuse to accept loses of up to 140bn euro on their holdings.” In terms of the
haircut that banks will need to accept to avoid this a figure of 50% features in the article, with banks being
“made to raise at least 100bn euro over the next six to nine months” to make sure they can withstand
losses of this scale. A Reuters story also mentions the figure of 100 billion euros to recapitalise the banks
and the possible 50% haircut on Greek debt. This story does, however, emphasise that “several major
areas of disagreement remain and it will require vast amounts of hard negotiation …to strike a deal that
convinces financial markets and Europe’s major trading partners that the crisis is in hand.” Reuters says
the biggest issue is how to scale up the EFSF. The most recent Bloomberg story says that a forced
restructuring of Greek debt will be “excluded” and quotes French President Sarkozy as saying “work is
going well on the banks, and on the fund and the possibilities of using the fund, the options are
converging.” But “on the question of Greece….we’re not there yet.” The Bloomberg article also
mentions the figure of 100 billion euros for bank recapitalisation and on the EFSF says that “policy makers
are heading toward using [it] to guarantee bond sales as a way to extend its reach. A second option is to
set up an EFSF-insured fund that would seek outside investment in troubled bonds.”
For the week ahead, Wednesday features prominently. On the data front, French and German PMIs
(Monday), Germany CPI (Thursday) and Spanish unemployment (Friday) are some of the key highlights in
Europe. In the US, we have the Case-Shiller House Price index, Conf Board Consumer Confidence and
Richmond Fed Manufacturing all on Tuesday. US durable goods and new home sales are due Wednesday.
We then get the first Q3 GDP report on Thursday and Personal Income/Spending data on Friday. In Asia,
Australia’s PPI is out on Monday and then the CPI is due Wednesday. NZ gets its CPI data on Tuesday.
Chinese HSBC Flash Manufacturing PMI for October on Monday will be a key update given rising
evidence of a slowdown in real activity. Away from the macro headlines it will be a busy week in terms of
company earnings. We are expecting 191 S&P 500 and 104 DJStoxx600 companies to report during the
week. With major US financials’ results out of the way focus moves to corporates.
Finally, as a New Zealander I can’t let Sunday’s World Cup final pass without some comment. In a
game fitting the occasion, at least in terms of drama and tension, the New Zealand ‘All Blacks’ held on to
a lead of 8-7 over France to win their first world cup final since 1987. Far too close for comfort for the
author, believe me!
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