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Forex Blog - European Market Update: Euro-Zone Retail Sales Hit New Lifetime Low
Â·*** ECONOMIC DATA ***
Services PMI: 37.1 v 36.7 prior
Â·IT July Services PMI: 45.6 v 47.
Â·FR July Final Services PMI: 47.5 v 47.0e
Â·GE July Final
Services PMI: 53.1 v 53.3e
Â·EU July Final Services PMI: 48.3 v 48.
Â·EU July Final Composite PMI: 47.8 v 47.8e
Services PMI: 47.4 v 46.6e
Â·UK June Industrial Production: M/M -0.2%
v 0.1%e || Prior revised from -0.8% to -0.9% |||| Y/Y -1.6% v -1.2%e ||
Prior revised from -1.6% to -1.7%
Â·UK June Manufacturing Production:
M/M -0.5% v 0.1%e || Y/Y -1.3% v -0.6%e || Prior revised from -0.8% to -0.
Â·EU June Retail Sales: M/M -0.6% v -0.6%e || Prior revised from 1.
2% to 0.5% |||| Y/Y -3.1% v -1.3%e || Prior revised from 0.2% to -0.
Â·*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
equity news overnight Societe Generale [GLE.FR] reported Q2 net income of
â‚¬644M, above the â‚¬550M consensus, and net banking income of â‚¬5.58B, down
from the â‚¬6.62B a year ago. Societe Generale's tier 1 capital ratio was 8.
2%, up from 8.0% in the prior quarter. During Q2 Soc Gen took a â‚¬580M write
down. Soc Gen said that the market environment is likely to remain
difficult, and forecasted a 2008 French banking revenue gain of 1%-2%.
Swiss Re [RUKN.SZ] reported Q2 net income of CHF600M, well below the
CHF775M consensus. Net premiums were CHF6.11B, below the CHF6.64B consensus,
while ROE was 8.5%, down from 16.8% a year ago. Swiss Re reported a Q2
writedown of CHF1.7B on its investment portfolio. Swiss Re sees a
challenging short-term outlook, but reiterated its 2008 targets. Swiss Re
[RUKN.SZ] announced overnight a deal to acquire Barclay's [BARC.UK] Life
Assurance Company for ÂŁ753M in cash. Swiss Re will acquire approximately
760 000 life insurance and pension policies and annuity contracts,
representing approximately GBP 6.8 billion in invested assets. The
transaction is accretive to economic and US GAAP earnings and is expected
to achieve an ROE in excess of Swiss Re's over-the-cycle target of 14%.
Heidelberg Druck [HDD.GE] reported a Q1 net loss of â‚¬39M in line with the
loss o â‚¬40M expected. Druck's Q1 pretax was a loss of â‚¬50M, slightly
better than the loss of -â‚¬55M expected, while revenue of revenue of â‚¬657M
was just above the â‚¬651M consensus. Druck's Q1 order backlog stood at â‚¬1.
15B, up from the â‚¬934M in the comparable period a year ago. Druck does not
expect to match the prior year's sales and operating results for the FY
2008/09 as a whole. Air France [AF.FR] reported Q1 net income of â‚¬168M,
just above the â‚¬162M consensus, operating income of â‚¬234M, in line with the
â‚¬232M consensus, and revenue of â‚¬6.3B, slightly above the â‚¬6.26B consensus.
Air France reaffirmed its FY08/09 outlook, including its FY09 op. income
forecast of â‚¬1.0B, which is above the â‚¬900M consensus. Adidas [ADS.GE]
reported Q2 net income of â‚¬116M, just above the â‚¬113M consensus, and
revenue of â‚¬2.52B, which was just above the â‚¬2.49B consensus. Adidas said
that their FY08 operating margin is seen approaching 10%, above the
previous forecast of 9.5%, and forecasted their FY08 gross margin at over
48%, up from the previous forecast of 47.5%-48%. Furthermore Adidas guided
net growth of at least 15% for FY08.
Â·In the newspapers, according
to Corriere della Sera Luxottica Group [LUX.IT] has denied reports that CEO
Andrea Guerra will be replaced FT Deutschland wrote overnight that
Continental [CON.GE] may not build defense against an unsolicited takeover
bid by Schaeffler Group in time. According to MF Banca Monte dei Paschi
Siena [BMPS.IT] has ended its plan to sells its French and Belgian units.
Les Echos reported overnight that Carre Group [CAR.FR] may be saved though
a buyout by the Moonscoop TV Production Company.
Â·In energy news
overnight an OPEC source said that OPEC is unlikely to change output quotas
at the September meeting unless oil prices fall below $80/barrel.
Furthermore the OPEC source said that the recent decline in oil prices was
the result of a pause in Iranian tensions, and could easily be reversed.
Â·In new supply overnight the DMO sold ÂŁ2.25B in 4.75% 2030 gilts
with an average yield of 4.841%, and a bid-to-cover of 1.58x. The auction
had a 14-tick price tail. In fixed income related news the Wall Street
Journal noted overnight that investors are becoming concerned with bonds
backed by credit-card payments. The concerns follow rising defaults on
credit-card payments. The article points out that, in July, issuance of
credit-card asset-backed securities fell to $4.4B from $5.26B in June (JP
Morgan data). The Telegraph looked at the frozen conditions in Europe's
junk bond market. The article noted that companies in the UK and Europe
have failed to place a single high-yield bond since the credit crisis
started a year ago. Citing Morgan Stanley, the Telegraph wrote overnight
that a replay of Spain's ERM crisis in the early 1990s could wipe out the
capital base of weak lenders that have exposure to the real estate market.
Morgan Stanley says that the deterioration in Spain is just in the early
stages and most of the pain could be suffered in 2009.
currencies the commodity picture helped the USD to firm during the European
morning as oil elected massive sell stops orders below the $119.70-level to
briefly test $118.00, while spot Gold fell below its 200-day moving average
of $890.66. The catalyst for the recent commodity plunge was comments from
the Australian Central Bank that it saw the scope to lower interest rates
is fanning the flames of lower commodity prices. Softer European PMI and
UK production data helped to cement the view that the global economy is
shifting into low gear. Thus ahead of a slew of key central bank decisions
this week; the technical picture appears to be slowly changing in favor of
a stronger USD. In the Euro dealers have noted some bids just under the 1.
5500-level where Eastern Europeans have been prior buyers of Euros. However,
dealers have cautioned of potential 'air pockets' below the 1.5490 level
as interbank players build short-term Euro long positions on the prospect
that 1.55 will hold this time around.
Â·*** NOTES ***
again European data continued the high/low trend overnight with final
reading on July service PMIs coming in at lifetime lows, and the y/y
reading for Euro-Zone retail sales declining to an all time low as well.
Oil prices were also in focus overnight as they managed to fall by $2 over
the course of about a minute before bouncing back slightly from the $118
handle. Looking ahead there are a number of notables due in the US this
morning including Acher Daniels Midland (ADM), Convidien (COV), D R Horton
(DHI), Duke Energy (DUK), Brinker International (EAT), Hewitt Associates
(HEW), Health Net (HNT), MGM Mirage (MGM), Nisource (NI), Procter & Gamble
(PG), Molson Coors Brewing (TAP), and Weyerhaeuser (WY). While earning will
be key in the morning, the FOMC's interest rate decision will be in focus
in the afternoon. The Fed is widely expected to hold interest rates at 2.
00% this afternoon.
Â·â€śAll life is an experiment. The more
experiments you make the better.â€ť - Ralph Waldo
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Trading Ideas for 18 December 2017
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Amazing Trader EVENT RISK Calendar:
Mon 18 Dec
10:00 EZ- final HICP
Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account
Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude
Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP
Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes
Mon 25 Dec
00:00 Christmas Holidays
Potential Trading Opportunities
John M. Bland, MBA
- POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.
- POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
- POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity
- POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
- POTENTIAL PRICE RISK: Medium- Wed --15:30-- US- EIA Crude
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