Investment Research
02 November 2012
Weekly Focus Sweden Get ready for US presidential election Market movers ahead •
US presidential election. The political climate is likely to remain unfavourable for compromises on reforms that tackle the longer term debt problems.
•
The big event in the euro area is the ECB meeting on Thursday. We believe the ECB will deliver only some verbal support to the market.
•
ISM non-manufacturing index, University of Michigan consumer confidence and service PMIs should give further insight into the strength of the ongoing recovery.
Global update •
Hurricane Sandy caused widespread damage along the US East Coast. The damages from Sandy are estimated to amount to 0.1% of US GDP.
•
US manufacturing ISM increased for a second month in a row and new orders improved as well. Details suggest that primarily domestic demand is picking up.
•
The euro area bank lending survey showed that credit tightening continues at a slightly increased pace.
•
China’s official NBS manufacturing PMI improved moderately to 50.2 in October from 49.8 in September, indicating that growth has bottomed.
•
The Bank of Japan (BoJ) expanded the target for its asset purchase programme further by JPY11trn to JPY66trn.
Focus •
US election update.
•
Spain’s unrealistic expectations.
US ISM
Contents Market movers ahead ........................................... 2 Global update................................................................... 5 Scandi update ................................................................. 7 EMEA Update.................................................................. 8 Latest research from Danske Bank ........ 9 Rates: still range bound ....................................10 FX: US election in focus.....................................11 Commodities: Trapped despite Sandy .....................................................................................................12 Credit: Tighter standards ...............................13 Financial views...........................................................14 Macroeconomic forecast ..............................16 Financial forecast ...................................................17 Calendar ...........................................................................18
Financial views Major indices 02-Nov
3M
12M
10yr EUR swap
1.77
1.85
2.15
EUR/USD
129
135
130
02-Nov
6M
12-24M
1428
-5% to +5%
5%-10%
S&P500
Read more on page17 Source: Danske Bank
Euro area credit tightening continues 80 80 Net bal Net bal 70 70 Credit standards 60 60 50 50 40 40 House purchases 30 30 20 20 10 Tightening 10 Consumer 0 0 credit Enterprises -10 -10 -20 -20 12 09 10 11 07 08 05 06
Source: Reuters EcoWin
Source: Reuters EcoWin
Editors Allan von Mehren +45 4512 8055
[email protected] Steen Bocian +45 45 12 85 31
[email protected]
Important disclosures and certifications are contained from page 21 of this report. www.danskeresearch.com
Weekly Focus
Market movers ahead Global •
•
The main event in the US this coming week is the presidential election on Tuesday, where it will be revealed whether Barack Obama or Mitt Romney will take the seat in the White House for the next four years. The most likely scenario is that the government will be somewhat divided. The result will make the political scene clear for the next two years, but whoever comes out the winner, the political climate is likely to be unfavourable for compromises on reforms that tackle the longer-term debt problems. In addition, the negotiations about a solution for the fiscal cliff dilemma are likely to be very tough. The general uncertainty in the market will therefore not be reduced noticeably, as the threat from the fiscal cliff is unchanged. However, we expect the knee-jerk reaction in financial markets to be positive to a Romney victory and muted to a re-election of Obama. For a thorough comment on the US election see US: election update - political uncertainty to continue, 31 October. Also of importance the next week is the release of the ISM non-manufacturing index and the preliminary reading of the University of Michigan consumer confidence. We expect the non-manufacturing ISM to decrease from 55.1 to 54.7, falling a bit back after last month’s flight. Friday comes the preliminary Michigan consumer confidence, which we expect to show a small drop, as stock prices have declined and jobless claims have been relatively stationary.
Uncertainty will not decrease after the election 350 300
Index
US economic policy uncertainty index
Index
•
The big event in the euro area is the ECB meeting on Thursday although we expect that the ECB will do very little. No doubt the ECB is on easing bias but we do not expect any policy initiatives as the ECB is waiting for Spain to make the next move. ECB has signalled that a rate cut is not imminent and liquidity is plenty, so we do not expect new LTROs. ECB’s president Mario Draghi will probably try his best to give some verbal support to the market and emphasise that the OMT is a powerful tool that is ready to be put into work when asked for. On Wednesday Angela Merkel is scheduled to speak to the European Parliament and the European Commission will release recommendations on Spain as part of the Excessive Deficit Procedure. On the same day the European Commission will release its autumn forecast. In the spring forecast the European Commission expected 1.0% GDP growth in 2013. We expect a significant downward revision for most countries. Given the bad starting point for 2013 we should probably be happy if euro area growth reaches 0.5% next year. The autumn forecast for government deficits has probably deteriorated in line with the economic outlook.
250
200
200
150
150
100
100
50
50
0 98
00
02
04
06
12
10
08
2|
On Monday we will get final service PMIs, which may improve slightly although they will generally remain in recessionary territory. German factory orders are projected to have increased slightly in September following a disappointing drop in domestic orders in August. If the declining trend in domestic orders continued in September, it is truly alarming. German domestic orders are currently at the lowest level since March 2010. In contrast we expect that German industrial production fell further in September. Euro area retail sales are expected to have declined, partly reflecting a pronounced drop in Spain.
02 November 2012
0
Source: Reuters EcoWin
German orders and industrial production 120 115
2005=100
133
German factory orders >>
123
110
113
105
103 93
95
83
90
<< German industrial production
85
73 01 02 03 04 05 06 07 08 09 10 11 12
Source: Reuters EcoWin
German domestic orders 130 125
130
2005=100
125
120
Exports
120 115
115 110
Total
105
Domestic
100
110 105 100 95
95
•
300
250
100
•
350
10
11
Source: Reuters EcoWin
www.danskeresearch.com
12
Weekly Focus
•
In China the National Congress of the Communist Party of China (CPC) will start on 8 November. Focus will mainly be on the election of the new leadership of the CPC. The new leadership will be announced the day after the CPC congress ends. As the CPC congress usually lasts one week, the new leadership of the CPC is not expected to be announced until 15 November. The most interesting event in connection with the CPC congress will be the current CPC leader Hu Jintao’s policy report to the Congress. In the policy report Hu Jintao will evaluate the past five years and put forward a political programme for the next five years. We expect the political programme to focus on accelerating longer-term structural economic reform and possibly also to open up for some political liberalisation including more use of competitive voting within the CPC and direct election to city councils.
•
Most economic data for October are also scheduled to be released next week. Overall we expect the October data to confirm that the Chinese economy has bottomed out and is recovering moderately. We expect growth in industrial production in October to accelerate to 9.6% y/y from 9.2% y/y in September, partly due to the base impact from weak industrial production in October last year. Fixed Asset Investment and retail sales are also expected to have stayed resilient in October. Preliminary data suggest that the property market continued to recover in October for the fifth month in a row. Finally, we expect CPI inflation to edge slightly higher to 2.0% y/y from 1.9% y/y mostly due to the base impact from lower food prices last year. Inflation remains substantially below the Chinese government’s 4% y/y comfort zone and hence should be no major concern. That said, we expect inflation to increase in the coming months but it should remain below 3% y/y by year-end.
•
In Japan we have no key data releases next week. Focus will be on the political negotiations about raising the ceiling for issuance of so-called deficit bonds. Currently the opposition majority in the Upper House blocks the approval of a higher ceiling for deficit bond issuance and if the ceiling is not raised before the end of November, the government can be forced to terminate its bonds auctions and cut current expenditures instead. We believe that a solution will eventually be found but the price to pay for the Noda government will probably be an early election.
•
G20-finance minister and central bank governors will convene in Mexico City on 4-5 November. As the meeting is just ahead of the US presidential election and the start of the leadership transition in China, it is unlikely to be a meeting with major decisions.
Scandi •
3|
In Denmark, Friday brings figures for foreign trade and the current account in September. It will be interesting to see whether the recent poor data from Europe, especially Germany and Sweden, will be reflected in weaker Danish exports and surpluses. We predict a slight drop in the trade surplus to DKK8.5bn for this reason but we expect the current account surplus to climb to DKK15bn because the balance of payments is not seasonally adjusted and there is generally a positive seasonal effect in September. Wednesday sees data for industrial production in September, which we expect to fall by 1% given the decline in manufacturing confidence since July and the sharp drop in new orders in August. Tuesday brings redundancies for October – the number of redundancy notices doubled to more than 1,600 in September, so it will be interesting to see whether it returns to the 500-1,500 band it had been in since summer 2011. Finally, Tuesday offers figures for bankruptcies and repossessions in October, both of which fell in September.
02 November 2012
Growth in China appears to have bottomed out 7.5 % y/y 5.0
30
% y/y Based on our forecast for October
Real M2 money supply>>
2.5 0.0
25 20 15
-2.5
10
-5.0
<< Industrial productio
-7.5 -10.0 00
5
(Deviation from trend)
0 02
04
06
12
10
08
Source: Reuters EcoWin, Danske Bank
•
Current account still running huge surplus 15.5 13.0 10.5 8.0 5.5 3.0 0.5 -2.0 -4.5 -7.0
DKK bn
DKK bn
05
06
07
08
09
10
Source: Reuters EcoWin
www.danskeresearch.com
11
12
15.5 13.0 10.5 8.0 5.5 3.0 0.5 -2.0 -4.5 -7.0
Weekly Focus
•
•
There are a multitude of interesting aspects of the Swedish economy coming into sight in the week ahead. First out is the services PMI on Monday (08:30 CET) and after last week’s manufacturing PMI we have little hope for an uptick in this number. Then, when Riksbank minutes are published on Wednesday (09:30 CET) we get to read what was really going through the minds of the executive board members when they chose not to cut rates a couple of weeks ago. At least to us, the key event next week takes place on Friday (09:30 CET) as industrial data (production and orders) must collapse (in a word) to make some sense out of the very weak survey data seen over the past few months. There are a couple of other sets of data out during the week but we consider them to be of little interest in the current environment. In Norway, core inflation has been unusually volatile over the past six months but has trended more or less sideways. Weak global inflationary pressures and a stronger krone will probably keep imported inflationary pressures at bay but domestic inflationary pressures will mount as wage growth accelerates, productivity growth slows and pricing power improves. Inflation is nevertheless likely to remain moderate for a long time to come. We predict a moderate rise in core inflation to 1.2% y/y in October. The week also brings figures for industrial production in September. After several months of rising industrial output despite weak global activity and weak leading indicators, including the PMI, we predict a negative correction in September of 1% m/m.
•
Production must come down!
Source: Macrobond
•
Moderate inflation
Source: Reuters EcoWin
Market movers ahead Global movers
Event
Mon
05-Nov
16:00
Tue
06-Nov
-
Wed
07-Nov
12:00 12:00 Thurs
08-Nov
Fri
09-Nov
-
USD ISM (NAPM) non-manufacturing
Fri
Danske
Consensus
Previous
Oct
54.7
54.5
55.1
m/m|y/y
Sep
0.8%|…
-0.5%|-0.8%
-1.3%|-4.8%
m/m|y/y
Sep
-0.2%|…
-0.6%|0.8%
-0.5%|-1.4%
USD Presidental election DEM Factory orders EUR Merkel addresses European Parliament EUR EU releases recommendations on Spain DEM Industrial production CNY
18th National Congress of the Communist Party of China (CPC) starts
13:45
EUR ECB announces interest rates
%
0.75%
0.75%
0.75%
2:30
CNY
CPI
y/y
Oct
2.0%
1.9%
1.9%
6:30
CNY
Industrial production
y/y
Oct
9.6%
15:55
USD University of Michigan Confidence, preliminary
Index
Nov
82.3
82.5
82.6
Period
Danske
Consensus
Previous
Sep
-1.0%
Scandi movers Wed
Period Index
Event 07-Nov
09-Nov
9:00
DKK Industrial production
9:30
SEK
10:00
NOK Industrial production
9:00
DKK Exports (s.a.)
9:30
SEK
10:00
NOK Core inflation(CPI-ATE)
m/m
9.2%
Industrial production s.a.
m/m|y/y
Sep
m/m
Sep
0.3%|1.9% 4.1%
m/m|y/y
Sep
0.4%|3.2%
m/m|y/y
Oct
…|1.2%
Source: Bloomberg and Danske Markets
4|
02 November 2012
-2.3%
Riksbank Minutes
www.danskeresearch.com
1.1%|1.1%
Weekly Focus
Global update US: hurricane Sandy rages but data look slightly better Hurricane Sandy caused widespread damage along the US East Coast this week resulting in US financial markets being closed on Monday and Tuesday. The damages from Sandy are estimated to amount to USD10bn, which corresponds to 0.1% of GDP. While the short-term effect on economic activity is negative, as shops are closed and traffic is jammed, there is a lot of rebuilding to be done in coming months, which will add to growth. In any event, economic data the coming months will be difficult to interpret as there will significant distortions. Otherwise, economic data released this week have been positive. The manufacturing ISM increased for a second month in a row to 51.7 and new orders improved as well. Details of the survey suggest that it is primarily domestic demand that is picking up as new export orders continue to be depressed. There were also positive signs from the labour market. The Conference Board’s measure of consumer sentiment for October increased and more importantly, the sub-index on the labour market showed jobs-plentiful less jobs-hard-to-get declining to its lowest level since 2008. That said, the weekly initial jobless claims have been basically flat around the 370,000 level over the past couple of months, which suggests that the improvement in the labour market has stalled lately. We will get more information this afternoon with the October employment report but the release is after the deadline of this publication.
Data in the euro area are still bouncing at the bottom The data this week confirmed that the euro area is still bouncing at the bottom. The unemployment rate spiked to a new euro-era high of 11.6% in September up from 11.5% in August. The European Commission’s consumer confidence data are still close to the lowest level since 2009. Inflation edged down to 2.5% in October from 2.6% in September. Irish PMIs remain in their own league compared to the rest of the euro area. The Irish manufacturing figure showed an improvement to 52.1 from 51.8 – the highest since July. Spanish GDP dropped 0.3% q/q in Q3. This was substantially better than expected a month ago and also better than Bank of Spain’s estimate of -0.4% q/q released last week, see also Research: Spain's unrealistic expectations, 31 October. The euro area bank lending survey showed that credit tightening continues and that the pace of tightening has increased for enterprises while it is unchanged for households. Banks expect credit tightening to both households and enterprises to continue at this pace in the fourth quarter. This is an important headwind - in particular in southern Europe. The degree of credit tightening varies significantly from country to country. In Germany, credit standards are broadly unchanged, while Italian enterprises continue to face substantial credit tightening. Banks reported an improvement in their access to retail and wholesale funding across all funding categories and expect funding conditions to improve further in the fourth quarter. Banks indicated a considerable moderation in the impact of sovereign debt tensions on banks' funding conditions, see Flash comment: Euro area credit tightening, 31 October.
ISM improved 65 Index
60
55
55
50
50
45
45
ISM manufacturing
40
40
35
35
30 00
30 02
06
04
08
10
12
Source: Reuters EcoWin, Danske Bank Markets
The downtrend in claims has stalled 460
'000
'000
440
420
400
400
380
380
360
360
Initial jobless claims
340
340
11
12
Source: Reuters EcoWin, Danske Bank Markets
Euro area unemployment in new euro era high 13
%
Unemployment rate, %
13 12
12
11
11 Euroland
10
10 9
9 Germany
8
8 7
7
6
6 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: Reuters EcoWin, Danske Bank
Euro area banks are still tightening credit standards 90
Bank credit survey
Net bal
70
Enterprises
50
Net bal
90 70
Tightening credit
House purchases
30
50 30 10
Consumer credit
-10
Easing credit
-30 03
04
05
06
07
08
09
10
Source: Reuters EcoWin, Danske Bank
02 November 2012
460 440
4-week moving average
420
10
5|
65
Index
60
www.danskeresearch.com
11
12
-10 -30
Weekly Focus
China: PMIs confirms moderate recovery In China the manufacturing PMIs for October suggest that growth bottomed out in Q3 and that China has embarked on a moderate recovery in Q4. China’s official NBS manufacturing PMI improved moderately to 50.2 in October from 49.8 in September, see Flash Comment - China: Manufacturing PMIs confirm moderate recovery, 1 November. This was not a particularly strong reading on the NBS manufacturing PMI as it appears that most of the improvement in October can be explained by seasonality left in the NBS manufacturing PMI. Adjusted for seasonality new orders in the manufacturing PMI were largely unchanged close to 50. More significant was the upward revision of the HSBC manufacturing PMI in October from 49.1 in the flash estimate to 49.5 in the final reading. The HSBC manufacturing PMI improved from 47.9 in September. Importantly, the upward revision was driven mainly by stronger new orders. In the final reading new orders improved from 47.3 to 51.2 – the highest level for new orders since October last year. The marked upward revision in the final reading also indicates that late responders in October were more positive than early responders, suggesting sentiment improved during October. This bodes well for November. It now appears relatively safe to say that both manufacturing PMIs will be above 50 in November. Hence, it is now also safe to say that GDP growth measured year-on-year bottomed out in Q3 and is poised to improve in Q4. There might even be some upside to our forecast of 8% q/q AR GDP growth in Q4.
In China PMIs suggest stronger growth in industrial production 65
% 3m/3m 6 Industrial production >>
Diffusion
60
4
55 50
2
45 <
40 35
0 -2
30 07
08
09
10
12
11
Source: Reuters EcoWin, Danske Bank Markets
Bank of Japan delivers another round of aggressive easing Bank of Japan (BoJ) expanded the target for its asset purchase programme further by JPY11trn to JPY66trn in connection with its monetary meeting on 30 October, see Flash Comment - Japan: BoJ delivers another round of monetary stimulus, 30 October. In addition BoJ introduced a new lending facility to stimulate bank lending. Albeit this was largely in line with expectations, financial markets initially reacted with some disappointment. Nonetheless, the bottom line remains that monetary policy in Japan is now being eased relatively aggressively with the current pace of asset purchases close to 8% of GDP on an annual basis. We expect the target for asset purchases to be expanded further to make room for BoJ to maintain this pace of asset purchases next year. In connection with its monetary meeting BoJ revised both its growth and inflation forecast markedly lower. The September-data released in the past week confirmed that Japan will be in a recession in H2 2012. Particularly, seasonal adjusted industrial production in September plunged 4.4% m/m in September on the back of a 1.6% m/m drop in August. Retails sales also was weak in September driven by a decline in auto sales on the back of the expiry of subsidies for purchase of eco-friendly autos in September. These weak data indicates a contraction in GDP exceeding 2% q/q AR in Q3.
6|
02 November 2012
Bank of Japan expands target for asset purchases further 70 60
JPY trn
JPY trn
Bank of Japan's asset purchases Ceiling Utilized
50 40
70 60 50 40 30
30 20
20
10
10 0
0 Sep Dec Mar 10
Jun Sep 11
Dec Mar
Source: Bank of Japan
www.danskeresearch.com
Jun 12
Sep
Weekly Focus
Scandi update Denmark – lacklustre data We learned during the week that the number of jobless climbed to 165,200 in September, up from 163,500 in August. An increase was expected after a relatively large fall in August, which seemed to be due mainly to technical factors relating to the start of the academic year. Looking ahead, we expect unemployment to climb gently, as Danish growth is not currently high enough to stabilise the labour market. The weak growth outlook was confirmed by Tuesday’s business confidence data for October. The overall picture was negative, fuelled by a sharp fall in manufacturing confidence from 0 to -7. Finally, Wednesday brought figures for the housing market showing a drop in house prices of 1.6% in August, which is consistent with the established pattern of Danish house prices having been largely unchanged since the beginning of the year – a pattern that we expect to persist in coming quarters.
Substantial decrease in manufacturing confidence indicator 15
Index
Index
15
5
5
-5
-5
-15
-15
-25
-25
-35
-35 06
07
08
09
10
11
12
Source: Reuters EcoWin
Sweden – a hit in the gut Of all forecasters, we at Danske Bank have reason to gloat as incoming data continues to disappoint. However, there is nothing even mildly gratifying about the outcomes we are seeing in Sweden currently. Last in line was PMI, which retracted from an already-weak level of 44.7 to 43.1, making Sweden among the worst performing economies in Europe (and there is some hefty competition for that belt, believe me you). This is not only bad; it is clearly worse than we have suggested and shows that the Swedish manufacturing industry is in a relatively deep recession. Thankfully, thus far, the services sectors have held up well but given the distinct cyclical pattern of lagging the industrial sectors, we hold little doubt that i.a. labour intensive retail and construction companies are sailing dire straits. Needless to say, this also adds to the view of a December cut from the Riksbank.
A tale of two trends
Source: Macrobond
Norway – strong growth, low rates It might seem that the Norwegian economy is in the perfect situation right now. The past week has seen a series of data confirming that growth is still above trend despite weak global activity, homebuilding is at a 25-year high, construction orders are up 50% on last year, unemployment is only just above 3%, retail sales have picked up again and credit growth is still running at 7%. On the other hand, the appreciation of the krone means that Norges Bank has once again pushed back when it expects to put up interest rates. The bank is now saying that the first rate increase will come between March and June next year, which is around three months later than signalled in June. The bank's interest rate path is nevertheless well above current market pricing. The problem for borrowers is that any cuts in banks' lending rates would have to be countered by higher policy rates from Norges Bank.
7|
02 November 2012
Stronger currency means lower interest rates 105,0 105,0 I-44 I-44 102,5 102,5 100,0 100,0 97,5 97,5 95,0 95,0 92,5 PPR juni >> 92,5 90,0 90,0 87,5 87,5 PPR Oktober >> 85,0 85,0 96 98 00 02 04 06 08 10 12 14
Source: Reuters EcoWin, Norges Bank
www.danskeresearch.com
Weekly Focus
EMEA Update Impossible to postpone Polish rate cut any longer A month ago, the Polish central bank (NBP) disappointed the markets by not cutting its key policy rate but next week we think the NBP will finally deliver. Indeed, the NBP has now fallen somewhat behind the curve in our view. There are very clear signs that the Polish economy is slowing, the zloty remains fairly strong and inflationary pressures are clearly easing. So yes, inflation is still above the NBP’s 2.5% inflation target but this is due mostly to supply-side factors and we expect inflation to slow. Furthermore, with monetary easing continuing around the world, we have a hard time seeing why the NBP should not cut next week. We are not alone. The consensus expectation is also for a rate cut of 25bp to 4.5%. So now is the time for the NBP to act and if the NBP fails to deliver next week then the economy is likely to slow even further and then it cannot be ruled out that the Polish economy will enter recession in 2013. This is certainly not our main scenario but the NBP has to deliver to avoid recession.
NBP is expected to cut next week 6.0 % 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 07
08
09
6.0 % y/y 5.5 <
> 2.5 2.0 1.5 11 12 10
Source: Reuters EcoWin
Russian inflation growth is cooling down Russian consumer prices remained unchanged over the past week, keeping the YTD figure at 5.7% versus 5.1% a year earlier. The effect of weaker-than-expected crops is deteriorating, which is slowing down price growth in grain products. Fruit and vegetable prices decreased 0.8% last week. Yet, y/y inflation remains higher than Russia’s central bank’s target. In the middle of October, the CPI climbed up to 6.8% y/y, from 6.6% in September. We expect October inflation to stay at 6.8% and the 2012 figure to settle under 7% y/y. However, we do not exclude Bank Rossii hiking 25bp in the first 10 days of November pushing its refi rate to 8.50%. Despite the slowdown in economic growth, Russian manufacturing showed the best results in five months, as the PMI increased to 52.9 from 52.4 in September. New orders from Russian companies expanded their fastest since March 2011. High domestic demand is driving production up.
Bank Rossii sees no deficit of liquidity Russia’s central bank Bank Rossii stated on 31 October that it provides enough liquidity to the financial sector. Russian money supply has climbed to its historically highest RUB7.27tn last week. We see it as very positive for the banking sector and the whole economy, as the mistakes of the 2008 crisis seem to have been avoided. However, demand remains exceptionally high lifting the MosPrime three-month lending rate to a three-year high of 7.36%. At the same time, Bank Rossii’s hawkish rate policy is keeping corporate loans very expensive. Bank Rossii also said it had plans to start one- to 12month floating rate refinancing instruments linked to the RUONIA rate in Q1 13. Until now, banks could only access fixed rate central bank funding with longer maturities considered both expensive and inflexible.
Chief Analyst Lars Christensen +45 45 12 85 30 [email protected]
8|
02 November 2012
www.danskeresearch.com
Weekly Focus
Latest research from Danske Bank 1/11/12 Flash Comment - China: Manufacturing PMIs confirm moderate recovery China's manufacturing PMIs for October both improved and it is now relatively safe to say that the Chinese economy bottomed out in Q3 31/10/12 Fact Book: The Netherlands This Fact Book on the Netherlands gives a brief overview of the main aspects of the Dutch economy. 31/10/12 Research: Spain's unrealistic expectations The Spanish government expects the recession to come to an end by mid-2013. In an environment of fiscal tightening and sliding house prices, that appears to be wishful thinking. 31/10/12 Research US: Election update - political uncertainty to continue There is now less than a week before the presidential and congressional election on 6 November. The situation has moved from a clear lead for Obama to a close race between the two presidential candidates over the past two months 31/10/12 Flash comment: Euro area credit tightening The euro area bank lending survey shows that credit tightening continues and that the pace of tightening has increased for enterprises while it is unchanged for households. 30/10/12 Flash Comment - Japan: BoJ delivers another round of monetary stimulus The Bank of Japan has announced a JPY11trn increase in its asset purchase programme and a new lending facility to stimulate bank lending 30/10/12 Fact Book Spain This fact book on Spain gives a brief overview of the main aspects of the Spanish economy. 29/10/12 Norges Bank preview We expect NB to signal a rate hike no later than March. The downside risk stems from NB neglecting the effect from lower Nibor rates, as lending rates so far are unaffected. 29/10/12 Fact book Italy This fact book on Italy gives a brief overview of the main aspects of the Italian economy.
9|
02 November 2012
www.danskeresearch.com
Weekly Focus
Rates: still range bound Macro divergence becoming more pronounced US data are fine, emerging markets data including China show acceleration. Meanwhile, in Europe, the headwinds are still strong and the macro picture is still bleak. Overall, we continue to get confirmation from the data that the global outlook is gradually improving. Global rates are remarkably stable and any attempt to break the ranges we have seen over the past six months has been firmly rejected. In the shorter parts of the curve, say, up to five years, we expect the ranges to hold for some time to come, as the central banks pledge low for long. At the longer end of the curves, however, it will be a question of time before the ranges are broken and we move back into the ranges seen in 2011.
US elections next week It is our view that the Fed’s new monetary policy regime will support the growth outlook and lead to higher inflation expectations. Therefore, we expect a gradual increase in rates and steeper curves regardless of the outcome of the elections. Initially however, US Treasury markets are probably most at risk in the scenario where Romney secures a united Congress, as this should reduce the risk of a significant fiscal contraction hitting the economy early 2013. In the status quo scenario, it seems most likely that rates will remain range bound until the fiscal cliff is dealt with.
ECB meeting to bring little news We do not expect the ECB to chance its stance on monetary policy but we expect Mario Draghi to continue to signal easing bias. At least he should given the lacklustre activity data. He will probably mention that the OMT stands ready to be used, just to remind everyone about his new power. This is probably pretty close to what is priced into the markets and we expect relatively subdued market reaction. EUR rates have moved somewhat lower in most tenors as a reaction to the weak data. Positioning wise, we see less value in receiving EUR rates at the current stage, as we are at the lower end of the ranges and as we think the ranges will hold. For tenors below five years we would use spikes in rates to go for lower rates again. For the longer dated tenors, we are considering doing risk reversals. Curve steepeners are still our preferred position.
Focus on Danish FX reserves The Danish market will keep an eye on the Danish currency FX reserves today at 16:00 CET. Over the past month, DKK has weakened. However, we still estimate that the Danish central bank intervened for only a few billions in October. The release should underline that an independent Danish rate hike is certainly not imminent. Given the latest widening of DKK-EUR swap spreads, we are beginning to look to go against this but the timing is probably still a bit premature.
Within tight ranges 1.50%
1.50%
1.40%
1.40%
1.30%
1.30%
1.20%
1.20%
1.10%
1.10%
1.00%
1.00%
0.90%
0.90%
0.80% May 12
0.80%
Aug 12
swap 2y 2y usd6m
swap 2y 2y eur6m
Source: Danske Bank
Also in the long end of the curve 3.50%
3.50%
3.00%
3.00%
2.50%
2.50%
2.00%
2.00%
1.50% May 11
Nov 11
May 12
swap 10y usd3m
swap 10y eur6m
Source: Danske Bank
DKK-EUR swaps widened 25bp
25bp
20bp
20bp
15bp
15bp
10bp
10bp
5bp
5bp
0bp
0bp
-5bp
-5bp
-10bp
-10bp
-15bp May 12
Aug 12 3y dkk6m - 3y eur6m
Source: Danske Bank
Senior Analyst Lars Tranberg Rasmussen +45 4512 8534 [email protected]
10 |
02 November 2012
1.50%
www.danskeresearch.com
-15bp
Weekly Focus
FX: US election in focus The FX market will use the next week to scrutinise the implications of the US presidential election. As we write in the Research article: US Election update – political uncertainty to continue, we expect that a possible risk-on (USD negative through the risk-on channel) move due to a Romney win could be temporary as focus will quickly shift to the so-called fiscal cliff. An Obama victory will probably be knee-jerk dollar-positive as it might disappoint the equity market slightly but we do not expect any significant impact. The political process ahead of the fiscal cliff is likely to resemble last year’s debt ceiling debate. Hence, the market is likely to increasingly price in tail risks the closer we get to 1 January and due to the dollar’s status as the world’s reserve currency this would cause a near-term USD appreciation if rising market stress triggers sell-offs. In this scenario we expect EUR/USD and USD/JPY to decline while the traditional commodity currencies AUD, NZD and CAD would tend to depreciate versus USD. Also EM currencies will suffer in this scenario and we expect FX volatilities to temporarily spike from current low levels.
US election a downside risk for EUR/USD 1.350
1.350 EUR/USD
1.325
1.325
1.300
1.300
1.275
1.275
1.250
1.250
1.225
1.225 1.200
1.200 Jan
Feb
Mar
Apr
May
Jun 12
Jul
Aug
Sep
Oct
Source: Reuters EcoWin
However, as we elaborate in the research mentioned above, there are several possible outcomes when we take into account changes to seats at the Senate and the House of Representatives. The best-case scenario for short-term improvement in risk appetite will be if Romney becomes the new President and the Republicans gain control in both the Senate and the House of Representatives, as this would increase the likelihood of a quick handling of the fiscal cliff (USD negative through the risk-on channel). On the other hand, a Romney victory could cause Bernanke´s QE commitment to be questioned. This will be EUR/USD negative (USD positive through relative rates and risk) if the market starts to price in a less aggressive Fed policy. In our main scenario we expect risk appetite to continue to improve after the fiscal cliff has been solved and in our view the case for a higher EUR/USD remains intact. We doubt that the Fed policy will be changed significantly if Romney wins, although the market initially might fear such a development.
Divergent outlook in Scandinavia supports NOK/SEK
Further upside for NOK/SEK 1.21
1.21
1.20
1.20
1.19
1.19
NOK/SEK
1.18
1.18
1.17
1.17
1.16
1.16
1.15
1.15
1.14
1.14
1.13
The past week underlined the economic and monetary policy divergence between Norway and Sweden that we have been calling for this summer and autumn. Swedish PMI in October surprised negatively for the third time in a row falling to 43.1, whereas the Norwegian PMI fell only marginally to 48.7. The data underline why the Riksbank has signalled a rate cut in December and why Norges Bank still says that rates will go up in 2013. The divergence in monetary policy and the announcement that Norges Bank will not purchase any foreign currency (sell NOK) in November on behalf of the Petroleum fund supports our view that NOK/SEK could still move higher throughout November.
11 |
02 November 2012
1.13
1.12
1.12 Jan
Feb
Mar
Apr
May
Jun 12
Jul
Aug
Source: Reuters EcoWin
Chief Analyst Arne Lohmann Rasmussen +45 45 12 85 32 [email protected]
www.danskeresearch.com
Sep
Oct
Weekly Focus
Commodities: Trapped despite Sandy Commodities have been trapped in narrow ranges recently as markets remain in wait-andsee mode ahead of the US election – even some fairly upbeat PMIs out of China confirming a moderate recovery in a region key for commodities have not been able to rock the boat much, see Flash China, 1 November 2012. While superstorm Sandy left a trail of human and material damage behind, oil prices did not react much: US crack spreads rose a little prior to the storm making landfall as refiners in New Jersey closed down but crude oil production was little affected and crack spreads have already come down again. For now, all eyes are on the outcome of the US election next Tuesday. No matter how the election falls out, we think there is still potential for commodities – not least base metals – to get a boost from the improving data flow out of Asia going forward.
Weekly changes LIFFE Wheat Gold Copper Aluminium API2 coal ICE Brent -1
Romney policy could increase oil’s geopolitical premium On the back of a tense geopolitical situation in the Middle East with US and EU sanctions against Iran and the riots against the Assad regime in Syria, the approach of the US president to the Middle East remains a key factor for oil prices. Indeed, movements in the geopolitical risk premium on oil has been a key driver of crude oil prices since the ‘Arab Spring’ was kicked off early 2011. While both Obama and Romney have said that a nuclear Iran is unacceptable, Romney has stressed that he would impose crippling sanctions on the country (Obama claims such are already in place) and it is likely that Romney’s stance would be somewhat more harsh and confrontational than the current one. Notably, Romney has accused Obama of taking an ‘apology tour’ in the Middle East region, allegedly touring the region apologising for foreign policy under the Bush administration while, at the same time, not paying a visit to US ally Israel. Romney has said that he will work with Iranian dissident groups in order ‘to encourage regime change’ in Tehran. In addition, Romney has criticised Obama for not standing up against the Assad regime in Syria. Finally, Romney has said that his administration would respect Israel’s right to make a military strike on Iran in a preemptive move against Iranian nuclear activities. On the whole, spot oil prices may rise should Romney assume power as the geopolitical risk premium would possibly rise a little. The Brent oil curve may also see a slightly steeper backwardation as the risk of a near-term conflict increases with a Republican president, everything else equal; however, the chance of a longer-term solution to tensions in the region is not likely to increase much. Having said that, the concrete measures that Romney has been pointing to on Middle East policy are in fact not too different from those employed by the Obama administration, suggesting the initial market reaction in oil should be muted. And for now, polls lean towards an Obama victory.
0
1
Five-day change, % Source: Bloomberg, Danske Bank Markets
Middle East oil and gas pipelines
Source: Bloomberg
Geopolitical risk premium in oil 175 USD/bbl 150 Actual (ICE Brent) 125 Geopol risk prem
100 Model 75 50
+/- 2 std. dev.
25 06
07
08
09
10
11
12
13
Source: Reuters EcoWin, Danske Bank Markets
Senior Analyst Christin Tuxen +45 45 13 78 67 [email protected]
12 |
02 November 2012
www.danskeresearch.com
Weekly Focus
Credit: Tighter standards Market commentary The credit market has been stepping sideways and the major indices are more or less unchanged from last week.
iTraxx Europe (investment grade) 250
Of noteworthy interest were the Q3 credit surveys from the ECB and the Federal Reserve. In the eurozone the credit tightening continues – especially for enterprises. Going forward, banks expect further credit tightening and hence stricter access to credit remains an impediment to European growth for the moment. On the other hand, eurozone banks reported an improvement in their access to funding across all funding categories (not surprising given the credit spread developments in Q3). In the US the picture remains more upbeat with banks reporting slightly less restrictive lending standards compared to the previous quarter. European lending standards
US lending standards and default rates
70
70
Loans and credit lines to SME's
60
Tightening
50
60 50 40
30
30
20
20
10
10
0
0
Easing
-10 -20
-20 03
04
05
06
07
08
09
10
11
12
Source: Reuters EcoWin, Danske Bank Markets
% 20.0
15.0
50
12.5
40
10.0
30
7.5
20
5.0
10
2.5
0
0.0
-10
-2.5
-20
-5.0
-30 90
-7.5 92
94
96
98
00
02
04
150
100
50
0 Jun/09
Dec/09
Jun/10
Dec/10
Jun/11
Dec/11
iTraxx Crossover (high yield)
06
1,200
bp
08
10
12
Source: Reuters EcoWin, Danske Bank Markets
1,000 800 600 400 200 0 May/09 Nov/09 May/10 Nov/10 May/11 Nov/11 May/12
Source: Bloomberg, Danske Bank Markets
From a credit perspective the development in lending standards is of interest as a tightening of standards has historically been a leading indicator for default rates of corporate bonds. Based on this relationship we should thus expect a minor increase in default rates for Europe and largely unchanged default rates in the US. Note though, that to some degree the tightening of lending standards is offset by an increasing usage of the corporate bond market by non-financial issuers. This will to some degree mitigate the stricter access to credit. However, for companies that lack the size required to make a capital market transaction (i.e. the SMEs) this is not a possibility and hence such companies may experience stricter credit conditions. In the primary market Banco Espirito Santo (Portuguese bank) was able to issue a 3Y EUR750m senior unsecured bond. In our view, a successful issuance from a periphery bank illustrates that the credit market is relatively receptive to new issuance.
Senior Analyst Henrik Arnt +45 45 12 85 04 [email protected]
13 |
02 November 2012
Jun/12
Source: Bloomberg, Danske Bank Markets
17.5
US default rate =>
60
200
22.5
<= Lending standards for C&I loans
80 70
40
-10
90 %
bp
www.danskeresearch.com
Weekly Focus
Financial views Equities •
Global equities have reacted negatively since QE3 and the policy move was not the magic bullet many had thought it would be. Macro data are mixed with some lead data starting to suggest that a global business cycle trough is near. The equity market has already discounted a moderate recovery in the business cycle and we see a risk of further market correction on weak Q3-Q4 corporate earnings and clear uncertainty regarding the economic effects of the overall global policy mix (fiscal and monetary policy) from the start of 2013. In late August we lowered our recommendation on equities to Neutral and before we can take steps to over- or underweight equities we need more clarity on the 2013 scenario. For now, we recommend overweighting European equities, particularly Healthcare, Telecoms and Consumer Cyclicals.
Fixed income •
•
In the long term, we see room for steeper swap curves, driven mainly from the very long end of the curves. We see more upside to rates in USD than in EUR and expect short rates to be nailed towards zero, as central banks remain on an easing bias. We are overweight Scandinavia versus Euroland.
Credit •
Cash bonds remain well bid, reflecting ample liquidity and a search for yields. Furthermore, investment grade credit continues to benefit from offering a relatively safe harbour that still offers a pick-up to depressed government bond yields.
•
On the back of a strong investor bid, our base case is that further spread tightening is the most likely scenario for the rest of 2012. However, the spread tightening potential from current levels is not significant as we see it. Given the relatively steep credit curves, we see most value beyond three- to four-year maturities.
•
1500 Index
4.0 3.5 3.0
1300
2.5 1200
2.0
1100
1.5
<
1.0
1000 10
11
12
Source: Reuters EcoWin
EUR/USD and USD/JPY 155 150 USD/JPY>> 145 140 135 130 125 120 <
95.0 92.5 90.0 87.5 85.0 82.5 80.0 77.5 75.0 Jan
May Sep 12
The euro has lost some of the support it gained after the ECB and Fed meetings. In our view, the Fed delivered much more than expected and the ECB has removed a lot of tail risk from the euro. The open-ended easing by the Fed is, in our opinion, dollar negative and we believe it is just a matter of time before EUR/USD starts to move higher once again. However, until the outcome of the US election is clear it may be difficult for investors to shed the dollar and notably positive US data surprises may continue to support the greenback, although we think this is somewhat premature due to the strong policy commitment of the Fed. There is still a lot of uncertainty about the eurozone crisis and low global growth indicates that the expected euro rebound might be somewhat bumpy and that EUR/USD will move lower over the course of 2013 once again. SEK has recently been under pressure due to growing signs that the Swedish economy is now being hard hit by the low growth in the eurozone and the strengthening of the SEK over the summer. The Riksbank kept its policy rate unchanged at the October meeting but embarked on a clear easing bias. We expect a rate cut in December. Short term, SEK might continue to be under pressure. NOK should continue to be supported by a lack of FX purchases in November and by Norges Bank’s policy despite the less
Credit spreads 25.0 % points 22.5 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 09 08
% points 6.5 6.0 5.5 5.0 << Eur high yield spread 4.5 4.0 US credit spread (Baa)>> 3.5 3.0 2.5 2.0 12 10 11
Source: Reuters EcoWin
Commodity prices 110 USD/barrel <
Index 4400 4200
100
4000
95
3800
90
3600
85
3400
80 75 Jun
LME metal prices >> Aug
Oct 11
Dec
Feb
Apr 12
Source: Reuters EcoWin
14 |
%
US 10-year gov bond >>
1400
Source: Reuters EcoWin
FX •
Equities and US 10Y yield
02 November 2012
www.danskeresearch.com
3200 3000
Weekly Focus
hawkish than expected October Monetary Policy Report. EUR/DKK is trading close to the central parity at 7.46038. The Danish central bank is expected to keep the cross from moving any higher through intervention before resorting to an independent rate hike.
Commodities •
15 |
Commodities are still caught between a structural slowdown and the potential for cyclical factors to start improving. With a little help from the game-changing moves of major central banks and a stabilisation in Chinese activity, we continue to see some upside for prices in the near term. Next year is set to be rather weak in terms of demand and with the Saudis set to continue their oil equivalent of quantitative easing, oil prices should peak around new year (geopolitics aside).
02 November 2012
www.danskeresearch.com
Weekly Focus
Macroeconomic forecast Macro forecast, Scandinavia Year
GDP 1
Private cons.1
Public cons.1
Fixed inv.1
Stock build.2
Exports1
Imports1
Inflation1
Unemploym.3
Public budget4
Public debt4
Current acc.4
Denmark
2011 2012 2013
0.8 0.1 1.2
-0.8 0.9 1.1
-1.3 0.0 0.7
0.2 1.5 1.2
0.3 -0.1 0.1
7.0 1.9 2.5
5.2 2.7 2.6
2.8 2.5 2.0
6.2 6.2 6.4
-1.8 -3.8 0.3
46.6 45.6 42.8
6.6 6.0 5.7
Sweden
2011 2012 2013
3.9 1.0 1.3
2.1 1.6 1.7
1.7 0.4 0.6
6.7 3.3 1.5
0.5 -0.7 0.2
7.1 0.0 2.6
6.3 0.2 3.5
3.0 1.1 0.8
7.5 7.7 8.0
0.1 -0.4 -1.0
38.4 38.6 39.0
6.9 6.6 6.8
Norway
2011 2012 2013
2.5 3.5 3.3
2.4 3.5 3.8
1.5 1.9 2.4
6.4 8.1 8.6
0.3 -0.2 -0.2
-1.4 2.7 0.9
3.5 0.5 4.3
1.2 1.0 1.6
3.3 3.1 3.0
13.8 13.6 12.5
49.5 49.5 49.5
-
Macro forecast, Euroland Year
GDP 1
Private cons.1
Public cons.1
Fixed inv.1
Stock build.2
Exports1
Imports1
Inflation1
Unemploym.3
Public budget4
Public debt4
Current acc.4
Euroland
2011 2012 2013
1.5 -0.4 0.5
0.2 -0.6 0.0
-0.3 0.0 -0.4
1.6 -2.9 0.2
0.2 -0.7 0.0
6.4 1.3 2.3
4.2 -1.6 1.2
2.7 2.5 1.8
10.2 11.2 11.7
-4.1 -3.4 -3.2
88.0 91.9 92.9
0.1 0.5 0.8
Germany
2011 2012 2013
3.1 0.9 1.4
1.4 0.7 0.6
1.1 1.3 0.7
8.1 -2.4 3.0
-0.1 0.1 0.0
8.4 2.5 3.5
7.9 1.3 3.1
2.5 2.0 1.8
7.1 6.9 6.9
-1.0 -1.1 -0.8
81.2 82.4 81.1
5.1 4.5 4.3
France
2011 2012 2013
1.7 0.1 0.4
0.2 -0.2 0.4
0.2 1.0 0.1
3.5 0.5 0.8
0.0 0.4 -0.1
5.5 2.4 2.9
5.2 0.9 3.1
2.3 2.1 1.7
9.6 10.2 10.4
-5.2 -4.7 -4.0
85.8 90.8 92.8
-2.7 -2.5 -2.2
Italy
2011 2012 2013
0.5 -2.1 -0.3
0.2 -2.9 -1.0
-0.9 -0.9 -0.5
-1.2 -7.1 0.2
0.0 -1.0 0.0
6.3 0.9 3.5
1.0 -6.5 2.4
2.9 3.0 2.0
8.4 10.6 11.1
-4.1 -2.4 -1.3
120.1 124.2 122.3
-3.1 -2.5 -1.5
Spain
2011 2012 2013
0.4 -1.5 -1.5
-0.8 -2.1 -1.7
-0.5 -3.4 -1.7
-5.5 -9.1 -4.3
-0.6 0.5 0.0
7.6 1.2 2.5
-0.9 -5.4 0.7
3.0 1.9 1.7
21.7 24.9 26.4
-8.5 -7.0 -5.5
68.5 84.5 92.0
-3.5 -2.8 -0.5
Finland
2011 2012 2013
2.7 0.0 1.0
2.5 1.5 1.0
0.1 0.2 0.5
4.6 -1.0 1.5
-
2.6 -2.0 1.5
5.7 -1.0 1.0
3.4 2.9 2.6
7.8 7.7 7.9
-0.6 -0.7 -0.5
49.1 52.5 54.0
-1.2 -1.2 -0.7
Macro forecast, Global Year
GDP 1
Private cons.1
Public cons.1
Fixed inv.1
Stock build.2
Exports1
Imports1
Inflation1
Unemploym.3
Public budget4
Public debt4
Current acc.4
USA
2011 2012 2013
1.8 2.2 2.0
2.5 1.9 1.7
-3.1 -2.1 -1.0
6.6 9.0 6.5
-0.2 0.2 0.0
6.7 4.3 7.4
4.8 3.8 5.4
3.1 2.3 1.5
8.9 8.2 7.9
-8.6 -7.7 -6.3
97.0 102.0 106.0
-3.1 -3.3 -3.3
Japan
2011 2012 2013
-0.7 2.3 1.6
0.0 1.6 1.0
2.1 2.1 1.1
0.6 4.4 2.1
0.1 0.0 -
0.0 6.2 6.8
5.8 4.7 5.2
-0.3 -0.2 0.1
4.5 4.3 4.2
-10.1 -9.2 -8.0
229.7 235.0 240.6
3.5 2.2 2.7
China
2011 2012 2013
9.2 7.7 8.6
-
-
-
-
-
-
5.4 2.7 2.9
4.3 4.3 -
-1.2 -1.5 -1.0
33.0 26.0 22.2
2.8 2.5 2.9
UK
2011 2012 2013
0.7 -0.2 1.2
-0.8 0.3 1.0
0.3 0.5 -1.1
-2.0 2.0 2.0
1.1 1.3 1.3
4.2 -0.4 2.0
2.0 3.3 3.5
4.5 2.7 2.0
8.5 8.8 8.5
-8.3 -8.0 -6.5
82.5 88.4 91.4
-2.0 -1.5 -1.2
Source: OECD and Danske Bank. 1) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP.
16 |
02 November 2012
www.danskeresearch.com
Weekly Focus Sweden
Financial forecast Bond and money markets USD
02-Nov +3m +6m +12m 02-Nov +3m +6m +12m 02-Nov +3m +6m +12m 02-Nov +3m +6m +12m 02-Nov +3m +6m +12m 02-Nov +3m +6m +12m 02-Nov +3m +6m +12m 02-Nov +3m +6m +12m
EUR
JPY
GBP
CHF
DKK
SEK
NOK
Key int. rate 0.25 0.25 0.25 0.25 0.75 0.75 0.75 0.75 0.10 0.10 0.10 0.10 0.50 0.50 0.50 0.50 0.00 0.00 0.00 0.00 0.20 0.40 0.40 0.40 1.25 1.00 1.00 1.00 1.50 1.50 1.50 1.75
3m interest rate
2-yr swap yield
10-yr swap yield
Currency vs EUR
0.31 0.30 0.30 0.35 0.20 0.20 0.20 0.20 0.19 0.20 0.20 0.20 0.53 0.55 0.50 0.50 0.03 0.05 0.05 0.05 0.33 0.40 0.45 0.45 1.48 1.40 1.40 1.40 1.85 2.05 2.10 2.30
0.38 0.35 0.35 0.35 0.46 0.50 0.50 0.50 0.26 0.30 0.30 0.30 0.69 0.70 0.70 0.75 0.09 0.15 0.15 0.20 0.69 0.70 0.70 0.75 1.32 1.30 1.30 1.50 2.16 2.35 2.35 2.65
1.76 1.85 2.00 2.30 1.77 1.85 2.00 2.15 0.78 0.80 0.90 1.05 1.95 2.00 2.10 2.30 0.92 1.05 1.10 1.20 1.91 2.00 2.15 2.30 2.05 2.10 2.10 2.30 3.21 3.35 3.45 3.55
128.8 135 135 130 103.4 108 111 108 80.0 82.0 84.0 80.0 120.7 123 123 121 745.9 746 746 745 860.7 850 840 840 735.2 730 725 715
Currency vs USD 128.8 135 135 130 80.3 80 82 83 161.0 165 161 163 93.7 91 91 93 579.2 553 553 573 668.3 630 622 646 570.9 541 537 550
Currency vsSEK 668.29 630 622 646 860.7 850 840 840 8.3 8 8 8 1075.8 1037 1000 1050 713.1 691 683 694 115.4 114 113 113 117.1 116 116 117
Risiko profil 3 mdr.
Pris trend 3 mdr.
Pris trend 12 mdr.
Regionale rekommendationer
Medium Medium High Medium
-5% to +5% -5% to +5% -5% to +5% -5% to +5%
5%-10% 5%-10% 10%-15% 5%-10%
Underweight Neutral Overweight Neutral
Equity markets Regional USA Emerging markets (USD) Europe (ex. Nordics) (EUR) Nordics
Relativt dyrt Kinesisk återhämtning inväntas Eurokrisen avtar Starka externa och fiskala saldon
Commodities 2012 NYMEX WTI ICE Brent Copper Zinc Nickel Steel Aluminium Gold Matif Mill Wheat CBOT Wheat CBOT Corn CBOT Soybeans
02-Nov 86 108 7,826 1,889 16,300 355 1,940 1,708 268 869 750 1,547
Q1 103 118 8,329 2,042 19,709 522 2,219 1,690 210 643 641 1,272
Q2 93 109 7,829 1,932 17,211 457 2,019 1,612 212 641 618 1,426
Q3 92 109 7,730 1,908 16,432 380 1,952 1,656 259 872 782 1,675
2013 Q4 94 108 7,900 1,875 16,750 385 1,975 1,681 250 841 775 1,625
Q1 94 106 8,000 1,865 16,850 380 1,965 1,706 240 793 765 1,575
Q2 94 104 8,100 1,855 16,950 375 1,955 1,731 230 745 755 1,525
Q3 92 100 8,200 1,845 17,050 370 1,945 1,756 220 713 745 1,475
Average Q4 94 100 8,300 1,835 17,150 365 1,935 1,781 210 680 735 1,425
2012 96 111 7,947 1,939 17,525 489 2,041 1,660 233 749 704 1,500
Source: Danske Markets
17 |
02 November 2012
www.danskeresearch.com
2013 94 103 8,150 1,850 17,000 373 1,950 1,743 225 733 750 1,500
Weekly Focus
Calendar Key Data and Events in Week 45 Monday, November 5, 2012 -
OTH
Period
Danske Bank
Consensus
Previous
G20 finance ministers and central bankers meet in Mexico (starts Sunday)
-
OTH
Earnings: Toyota, HSBC
1:30
AUD
Trade balance
AUD m.
Sep
-1550
-2027
1:30
AUD
Retail sales
m/m
Sep
0.4%
0.2%
2:45
CNY
HSBC Services PMI
Index
Oct
9:00
EUR
Ireland PMI services
Index
Oct
10:30
GBP
PMI services
Index
Oct
10:30
EUR
Sentix Investor Confidence
Net bal.
Nov
16:00
USD
ISM (NAPM) non-manufacturing
Index
Oct Period
Tuesday, November 6, 2012
54.3 54.2
52.7 52.0
52.2
-19.2
-21.1
-22.2
54.7
54.5
55.1
Danske Bank
Consensus
Previous
3.25
3.00
3.25
91.8
93.2
-
USD
Presidental election
-
OTH
Earnings: BMW
-
DKK
Fyringsvarsler
4:30
AUD
Reserve Bank of Australia (cash rate target decision)
6:00
JPY
Leading economic index, preliminary
Index
Sep
8:15
ESP
PMI services
Index
Oct
9:00
DKK
Forced sales (s.a.)
Number
Oct
9:00
DKK
Bankruptcies (s.a.)
Number
Oct
430
9:30
SEK
Service production
m/m|y/y
Sep
0.3%|1.2%
9:45
ITL
PMI services
Index
Oct
44.9
9:50
FRF
PMI services, final
Index
Oct
46.3
46.2
9:55
DEM
PMI services, final
Index
Oct
49.4
49.3
49.3
10:00
EUR
PMI composite, final
Index
Oct
45.9
45.8
45.8
46.3
Persons
Oct
%
1639
41.5
41.1 410
44.5 46.2
10:00
EUR
PMI services, final
Index
Oct
10:30
GBP
Industrial Production
m/m|y/y
Sep
-0.4%|-1.3%
-0.5%|-1.2%
10:30
GBP
Manufacturing production
m/m|y/y
Sep
0.1%|-1.0%
-1.1%|-1.2%
11:15
EUR
ECB announces allotment in 7-day (MRO)
12:00
EUR
PPI
m/m|y/y
Sep
12:00
DEM
Factory orders
m/m|y/y
Sep
13:00
EUR
ECB announces allotment in 7-day term deposits
16:00
CAD
Ivey PMI
Index
Oct
0.8%|…
46.2
0.2%|2.7%
0.9%|2.7%
-0.5%|-0.8%
-1.3%|-4.8%
58.1
60.4
Source: Danske Markets
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02 November 2012
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Weekly Focus
Calendar - continued
Wednesday, November 7, 2012
Period
Danske Bank
-1.0%
-
EUR
Merkel addresses European Parliament
-
EUR
EU releases recommendations on Spain
-
OTH
Earnings: BNP Paribas, ING, Munich Re
9:00
DKK
Industrial production
m/m
Sep
9:00
DKK
Industrial orders
m/m
Sep
9:15
CHF
CPI
m/m|y/y
Oct
9:30
SEK
Riksbank Minutes
9:30
SEK
Budget balance
10:00
NOK
Industrial production
10:00
NOK
Manufacturing Production
11:00
EUR
Retail sales
11:00
EUR
EU releases autumn economic forecasts
11:00
EUR
ECB announces allotment in 3-month (USD)
12:00
DEM
Industrial production
13:00
USD
MBA Mortgage Applications
13:10
EUR
ECBs Draghi speaks in Frankfurt
21:00
USD
Consumer credit
Consensus
Previous
-2.3% -27.5% 0.2%|-0.2%
0.3%|-0.4%
SEK bn
Oct
2.8
m/m|y/y
Sep
0.3%|1.9%
y/y
Sep
-1.0%|…
m/m|y/y
Sep
-0.5%|…
0.4%|-0.3%
0.1%|-1.3%
m/m|y/y
Sep
-0.2%|…
-0.6%|0.8%
-0.5%|-1.4%
USD bn.
Sep
10.000
18.123
Consensus
Previous
Thursday, November 8, 2012
Period
Danske Bank
0.9%|5.6%
-
CNY
18th National Congress of the Communist Party of China (CPC) starts
-
NOK
Speech by Øystein Olsen
-
OTH
Earnings: Deutsche Post, Swiss Re, Walt Disney, Societe Generale, Commerzbank, Siemens
-
JPY
Eco Watchers Survey: Current (Outlook)
0:50
JPY
Machine orders
0:50
JPY
Current account balance, s.a.
0:50
JPY
Bank lending
0:50
JPY
Money supply M2+CD
y/y
1:30
AUD
Employment change
1000
7:45
CHF
Unemployment, s.a.
%
Oct
3.0
8:00
DEM
Current account
EUR bn
Sep
Index
Oct
40.5 (…)
41.2 (43.5)
m/m|y/y
Sep
-2.1%|-4.9%
-3.3%|-6.1%
JPY bn
Sep
206.2
722.3
y/y
Oct Oct
2.4%
2.4%
Oct
0.5
14.5 2.9 11.1
8:00
DEM
Trade balance
EUR bn
Sep
16.0
16.3
10:30
GBP
Trade balance
GBP bn
Sep
-3500
-4169
13:00
GBP
BoE rate announcement
%
0.50%
0.50%
13:00
GBP
BoE announces asset purchase target
GBP bn
375
375
13:45
EUR
ECB announces interest rates
0.75%
0.75%
14:30
USD
Trade balance
-45.0
-44.2
% USD bn
0.75% Sep
Source: Danske Markets
19 |
02 November 2012
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Weekly Focus
Calendar - continued
Friday, November 9, 2012
Period
Danske Bank
2.0%
Consensus
Previous
-
OTH
Earnings: AP Moeller - Maersk
2:00
USD
Fed's Bullard (non-voter, neutral) speaks
2:30
CNY
CPI
y/y
Oct
2:30
CNY
PPI
y/y
Oct
6:00
JPY
Consumer confidence
Index
Oct
6:30
CNY
Industrial production
y/y
Oct
9.6%
6:30
CNY
Fixed assets investments
y/y
Oct
20.8%
6:30
CNY
Retail sales value
y/y
Oct
14.0%
14.3%
14.2%
8:00
DEM
HICP, final
m/m|y/y
Oct
…|2.1%
0.0%|2.1%
0.1%|2.1%
8:45
FRF
Industrial production
m/m|y/y
Sep
-1.5%|…
-1.0%|-0.1%
1.5%|-0.9%
8:45
FRF
Central government balance
EUR bn
Sep
9:00
DKK
Current account
DKK bn
Sep
9:00
DKK
Exports (s.a.)
m/m
Sep
9:30
SEK
Industrial production s.a.
m/m|y/y
Sep
0.4%|3.2%
9:30
SEK
Industrial orders
m/m|y/y
Sep
-1.4%|-6.5%
10:00
NOK
Consumer prices
m/m|y/y
Oct
10:00
NOK
Core inflation(CPI-ATE)
m/m|y/y
Oct
10:00
NOK
Producer prices
m/m|y/y
Oct
1.9%
1.9%
-2.7%
-3.6%
39.5
40.1 9.2% 20.5%
-97.7 15.0
14.3 4.1%
0.9%|0.5% …|1.2%
1.1%|1.1% -1.1%|1.4%
10:00
ITL
Industrial production
m/m|y/y
Sep
-1.8%|…
1.7%|-5.2%
14:30
USD
Import prices
m/m|y/y
Oct
0.0%|…
1.1%|-0.6%
15:55
USD
University of Michigan Confidence, preliminary
Index
Nov
82.3
82.5
82.6
Period
Danske Bank
Consensus
Previous
During the week Sun 04 - 05
OTH
G20 finance ministers and central bankers meet in Mexico
Mon 05 - 09
GBP
Halifax house prices
m/m|3Ms/YoY
Oct
Sat 10
CNY
Trade balance
USD bn
Oct
27.00
27.67
Sat 10 - 15
CNY
New yuan loans
CNY bn
Oct
600.0
623.2
-0.4%|-1.2%
Sat 10 - 15
CNY
Money supply M2
y/y
Oct
14.5%
14.8%
Sat 10
CNY
Exports
y/y
Oct
10.0%
9.9%
Sat 10
CNY
Imports
y/y
Oct
3.0%
2.4%
The editors do not guarantee the accurateness of figures, hours or dates stated above For furher information, call (+45 ) 45 12 85 22. Source: Danske Markets
20 |
02 November 2012
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Weekly Focus
Disclosure This research report has been prepared by Danske Reseach, a division of Danske Bank A/S ("Danske Bank"). The authors of the research report are Allan von Mehren, Chief Analyst and Steen Bocian, Chief Economist. Analyst certification Each research analyst responsible for the content of this research report certifies that the views expressed in the research report accurately reflect the research analyst’s personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report. Regulation Danske Bank is authorized and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske Bank is subject to limited regulation by the Financial Services Authority (UK). Details on the extent of the regulation by the Financial Services Authority are available from Danske Bank upon request. The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts’ rules of ethics and the recommendations of the Danish Securities Dealers Association. Conflicts of interest Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high quality research based on research objectivity and independence. These procedures are documented in the research policies of Danske Bank. Employees within the Danske Bank Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to the Research Management and the Compliance Department. Danske Bank Research Departments are organised independently from and do not report to other business areas within Danske Bank. Research analysts are remunerated in part based on the over-all profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions. Financial models and/or methodology used in this research report Calculations and presentations in this research report are based on standard econometric tools and methodology as well as publicly available statistics for each individual security, issuer and/or country. Documentation can be obtained from the authors upon request. Risk warning Major risks connected with recommendations or opinions in this research report, including as sensitivity analysis of relevant assumptions, are stated throughout the text.
Disclaimer This research has been prepared by Danske Markets (a division of Danske Bank A/S). It is provided for informational purposes only. It does not constitute or form part of, and shall under no circumstances be considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options, warrants, rights or other interests with respect to any such financial instruments) ("Relevant Financial Instruments"). The research report has been prepared independently and solely on the basis of publicly available information which Danske Bank considers to be reliable. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness, and Danske Bank, its affiliates and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this research report.
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Weekly Focus
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