Sunday, November 14, 2010

Market movers ahead

  • The main mover in the US will be retail sales. We look for a stronger number than consensus with total retail sales growing 1.2% m/m (consensus 0.7% m/m) and retail sales ex autos and gas growing 0.5% m/m (consensus 0.3%). Strong car sales and decent chain store sales are behind the robust retail sales estimate. Core inflation is expected to rise 0.1% in line with consensus, taking the annual rate down to 0.7% – clearly at the low end of the Fed’s comfort zone. The Philadelphia Fed survey for October should see a decent increase to 13 from 1 in September, reflecting improving conditions in the industrial sector. Housing data (starts, permits and NAHB) are expected to be mixed.
  • Euroland should attract a lot of attention next week as the debt crisis is set to continue. Eurostat will release revised Greek debt and GDP figures for 2009 on Monday. According to local media reports, deficit/GDP will be revised up from 13.6% to 15.5% and debt/GDP from 115% to 127%. The Eurogroup will meet in
Brussels on Tuesday and the Ecofin Council will meet on Wednesday. The agenda might not be that exciting, but we are sure there will be a lot of interesting discussions – not least in the margin of the meeting. The market will look for signals on the German proposal for a debt restructuring mechanism. There are also a lot of ECB speeches that could draw attention next week. On the macro data front, it looks less exciting. Euro area trade figures released on Monday are likely to show some softness for September. German ZEW on Tuesday has downside risks as the escalating debt crisis could have a substantial negative impact on analyst sentiment. Euro area final inflation on Tuesday is projected to show that core inflation remains low despite headline inflation at 1.9%.
  • In Switzerland PPI and trade balance data are due to be released. The PPI will provide further insight into the magnitude of the near-term undershooting of inflation. However, this is not the main focus of the market. With the eurozone peripheral under pressure, investors are looking to Switzerland for a fiscal and risk ‘safe haven’.Hence, we expect support to remain for the Swiss franc in the short term, as it is one of the most liquid hedges against PIIGS losses.
  • In Asia there will probably be some focus on the APEC meeting in Yokohama, Japan this weekend. There will probably be little news in the wake of the close of the G20 meeting in Seoul, South Korea on Friday. However, there is the possibility that the discussions in connection with the G20 meeting will be continued in connection with the APEC meeting, where many of the G20 countries will be present including the US, China, Japan, Russia, South Korea and Indonesia.
  • In Japan the main focus next week will be the release of Q3 GDP growth on Monday. We expect GDP growth to have been 1.7% y/y AR in Q3 and hence to have accelerated marginally from 1.5% y/y AR in Q2. While the overall message remains that the Japanese recovery has lost considerable steam, growth does not appear to have slowed as much as feared. On the other hand, Japan’s export engine has completely lost steam with exports broadly flat and net exports not contributing to growth in Q3. We think there eventually will be a negative spill-over from the weak exports to domestic demand in Q4, where we still believe export growth could slow below 1% y/y AR. There are no major releases scheduled in China next week.


  • The most interesting data release in Denmark is probably new car registrations in October. Car sales are a good indicator of optimism – or lack of – among consumers, as consumers do not usually go out and buy a car unless they are confident of having an income and job going forward. Hence it will be interesting to see if the recent positive developments in car sales can continue. In Sweden, on 16 November, the Swedish National Debt Office (SNDO) will release a new borrowing forecast with revised estimates for 2010-11 and the first estimate for 2012. Assuming that the new debt office forecasts are similar to the recent NIER forecast, SNDO could in our view improve the budget projection by cSEK7bn. Our guesstimate is that the SNDO will show a budget close to balance in 2011 and a small (<10bn) surplus in 2012. But that’s not the full story. Whereas the government this spring included privatisation revenues of some 25bn per year, the debt office in June decided to exclude such revenues simply due to uncertainties.
  • The main item of interest in Norway will be the foreign trade figures for October, which are due on Monday. All Norwegian industrial indicators show that it has mainly been increased activity among domestic-oriented manufacturers that has contributed to the post-summer spurt in growth. Given the signs of a more robust upswing in the global economy, there is hope that the export numbers for October will show that the export-oriented industrial sector is also experiencing higher activity levels. If so, then the Norwegian economy will soon be firing on all cylinders.
Full report: Market movers ahead

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