HEADLINERS
-World Bank Raises China Forecast from 8.1 to 8.4 pc in 2013
-Nikkei Closes above 10000 on Stimulus Talk
-UBS to pay CHF1.4bn in LIBOR settlement
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MARKET COMMENTARY
-300 Europe Opens
French CAC 40 index up 0.4% to 3,661.78
FTSE 100 index up 0.3% to 5,953.56
Stoxx Europe 600 index up 0.2% to 281.01
| EUR/USD | 1.3241 | +0.0012 | +0.09% |
| Gold | 1676.35 | +5.65 | +0.34% |
German 10y 1.43+0.03, -1.95%
Italy 10yr 4.39-0.01, 0.20%
Spain 10yr 5.29-0.01, 0.19%
-One of the world’s most prominent hedge funds is sitting on a $500 million profit after making a bet that Greece would not be forced to leave the euro zone, bucking the trend in a difficult year for the industry. Third Point, headed by the billionaire US investor Dan Loeb, tendered the majority of a $1 billion position in Greek government bonds, built up only months earlier, as part of a landmark debt buyback deal by Athens on Monday, according to people familiar with the firm.The windfall marks out the New York-based firm as one of the few hedge fund managers to have profited from the eurozone crisis. Standard and Poor’s, the rating agency, raised its assessment of Greece’s sovereign debt by several notches on Tuesday, citing the euro zone’s”strong determination” to keep the country inside the common currency area. Mr Loeb is one of only a handful of hedge fund titans to have made big returns this year. The $2 trillion hedge fund industry – made famous by investors such as George Soros, who bet against the British pound and ‘broke the Bank of England’ on Black Wednesday in 1992 – has struggled to find its confidence after two years of lackluster returns. FT
-Swiss bank UBS will pay $1.5 billion in penalties after admitting to fraud in its role in manipulating global benchmark interest rates. The guilty plea follows a far-reaching investigation by regulators and law enforcement officials around the world into the setting of the London Interbank Offered Rate, or Libor, and related interbank rates.UBS said the payment would settle claims with US, UK and Swiss authorities The investigation revealed extensive misconduct over a period of six years by at least 45 UBS staff, including senior managers, who sought to influence rates to benefit the bank’s trading positions and make it look stronger during the financial crisis.UBS said it will pay $1.2 billion to the U.S. Department of Justice (DoJ) and the Commodity Futures Trading Commission (CFTC), 160 million pounds to the UK’s Financial Services Authority and 59 million Swiss francs from its estimated profit to Swiss regulator Finma. CNN/Reuters/FT
UBS trader on Libor: “I need you to keep it as low as possible … if you do that …. I’ll pay you, you know, $50,000, $100,000″. From court records. There was no mention of criminal charges or agreements in the news releases.
-Defense Secretary Leon Panetta said Tuesday the United States plans to deploy F-35 fighters at the U.S. Air Force’s Iwakuni base in Japan’s Yamaguchi Prefecture in 2017, the first overseas stationing of the stealth aircraft. Kyodo News Services
-The World Bank has raised its growth forecast for China, saying stimulus measures and approval of infrastructure projects will help boost growth.It added that the pick-up in factory output and investment “suggested that China’s economy was bottoming out”.The bank said it now expects China’s economy to grow by 8.4% in 2013, up from its earlier projection of 8.1%. BBC
-Microsoft Corp. Chief Executive Officer Steve Ballmer, on a swing through Taiwan this month, made time to meet with Peter Chou, his counterpart at HTC Corp. On Chou’s agenda: the low screen resolution that prompted HTC to scrap plans for a bigger smartphone using Microsoft’s mobile software, a person familiar with the matter said this week. BBN
-Danske Bank’s EMU poll: Only one in eight Danes would definitely vote Yes to euro
-Futures Markets point to a .1 to .25 pc opening in Europe and the USA at the close of the Japanese trading.
| Futures Index | Value | % Change | Open | High | Low | Time |
|---|---|---|---|---|---|---|
| Americas Futures | ||||||
| DJIA INDEX FUTURE Mar13 | 13,291.00 | +0.11% | 13,280.00 | 13,295.00 | 13,276.00 | 02:07:34 |
| S&P 500 FUTURE Mar13 | 1,442.20 | +0.08% | 1,440.50 | 1,442.70 | 1,440.00 | 02:08:32 |
| NASDAQ 100 FUTURE Mar13 | 2,705.75 | +0.16% | 2,704.50 | 2,706.00 | 2,704.50 | 02:07:34 |
| Europe | ||||||
| EURO STOXX 50 Dec12 | 2,653.00 | +0.23% | 2,654.00 | 2,655.00 | 2,653.00 | 02:04:04 |
| FTSE 100 IDX FUT Dec12 | 5,954.50 | +0.13% | 5,954.50 | 5,957.00 | 5,950.50 | 02:03:56 |
| DAX INDEX FUTURE Dec12 | 7,668.00 | +0.08% | 7,673.00 | 7,673.50 | 7,665.50 | 02:04:0 |
-0210 Asian Market
Asian markets were higher, with the exception of Indonesia and Korean markets (which were closed) on the fiscal cliff ‘thaw’ and Plan ‘B in the USA. Good results from Oracle in the USA, after the close added confidence to Asian markets. The Korean financial markets were closed today due to the presidential elections with both candidates, the main opposition rival Moon Jea-in and ruling Saenuri candidate Park Geun-hye, in a dead heat. Regardless of the outcome, the election is expected to have minimal impact on the markets. Exit polls are expected to be released when voting ends at 09:00 London, with formal results expected early on Thursday. The Nikkei225 rose by more than 2.0% bringing it over the 10,000 mark as speculation mounts that the Bank of Japan (BoJ) will add more easing at Thursday’s rate decision. The newly elected Japanese government will try and push for more bond purchases and a higher inflation target by the central bank. The USD extended its run against the JPY as Japan reported a trade deficit for the fifth consecutive month, also posting a record trade deficit with the EU as the Chinese/Japan territorial dispute hit Japan trade hard. Companies that do business in the U.S. gained, with Canon soaring 6.5 percent to 3,455 yen .Techtronic Industries Co. (669), which generates 72 percent of its sales in North America, added 6.7 percent to HK$15.34. The Nikkei closed at 10,160.4. The world bank raised its FY2013 China GDP growth forecast from 8.1 to 8.4 pc saying the economy had bottomed. Chinese is targeting high tech and industrial USA and European industry as its next conquest on the road to world economic domination, being advised by the City of London.
Commodities and FX
| EUR/USD | 1.3242 | +0.0014 | +0.10% | |||
| GBP/USD | 1.6269 | +0.0017 | +0.11% | |||
| USD/JPY | 84.29 | +0.09 | +0.10% | |||
| USD/CHF | 0.9123 | -0.0007 | -0.08% | |||
| AUD/USD | 1.0529 | -0.0006 | -0.05% | |||
| USD/CAD | 0.9856 | 0.0000 | -0.01% | |||
| EUR/GBP | 0.8140 | +0.0001 |
| Gold | 1676.95 | +6.25 | +0.37% | |||
| Silver | 31.755 | +0.086 | +0.27% | |||
| Copper | 3.658 | +0.012 | +0.34% | |||
| Crude Oil | 88.38 | -0.03 | -0.03% | |||
| Natural Gas | 3.383 | -0.013 | -0.37% | |||
| US Cotton No.2 | 75.58 | -0.47 | -0.62% | |||
| US Coffee C | 143.55 | -1.55 | -1.07% |
Bonds
Japan 10yr 0.79+0.02, – 3.13
U.S. 10yr 1.81-0.01, 0.73%
CDS Sovereigns
| Price | Change | %Change | ||
|---|---|---|---|---|
| ATCD5 | 42.20 | -0.30 | -0.71% | |
| BECD5 | 80.00 | UNCH | 0% | |
| CNCD5 | 173.57 | 19.34 | 12.54% | |
| DKCD5 | 30.315 | -0.105 | -0.35% | |
| DUCD5 | 222.58 | -2.42 | -1.08% | |
| EGCD5 | 495.00 | UNCH | 0% | |
| FICD5 | 27.74 | -0.25 | -0.89% | |
| FRCD5 | 87.50 | UNCH | 0% | |
| DECD5 | 38.50 | 0.11 | 0.29% | |
| GRCD5 | 4462.1001 | -13.40 | -0.30% | |
| HUCD5 | 287.50 | -1.985 | -0.69% | |
| INOCD5 | 122.975 | -0.69 | -0.56% | |
| IECD5 | 215.23 | -1.44 | -0.66% | |
| ITCD5 | 263.00 | -1.01 | -0.38% | |
| JPCD5 | 75.00 | -0.75 | -0.99% | |
| KRCD5 | 59.68 | 0.01 | 0.02% | |
| NLCD5 | 44.49 | 0.125 | 0.28% | |
| PNCD5 | 90.30 | -0.93 | -1.02% | |
| PTCD5 | 434.39 | 7.87 | 1.85% | |
| SKCD5 | 93.50 | -3.99 | -4.09% | |
| ESCD5 | 282.00 | -1.00 | -0.35% | |
| SECD5 | 17.415 | 0.165 | 0.96% | |
| CHCD5 | 54.78 | -14.87 | -21.35% | |
| GBCD5 | 37.57 | -0.145 | -0.38% | |
| USCD5 | 33.50 | -1.105 | -3.19% |
-Japan Iron and Steel Federation: Reports Japan Nov crude steel production m/m: 8.50M v 8.84M tons prior; -2.3% y/y
- Japan LDP senior official: A supplementary budget of ¥10T is needed. Japan govt. panel approves Japan Post housing loans with conditions – Yomiuri News
- China top-4 banks’ new yuan loans in H1 of Dec seen at nearly CNY79B; 2012 loans seen around CNY8.2T v CNY8.0T official target . China expected to allow Qualified Foreign Institutional Investors (QFII) to trade index futures by end of next month. China to pay approx CNY8.6B subsidies to renewable energy projects -.The first high-level talks between Chinese and US officials since both countries underwent leadership transitions in November will be held in Washington Dec 18-19. Trade disputes and the US fiscal cliff are expected to top the agenda. China sets sights on being high tech and industrial leader to eclipse USA and Germany as WTO gutting of American industry fails to add new jobs. The number of import / export items to be taxed in 2013 has reached 8,238, after 44 items were added for the new year. China Press
- Moody’s: Outlook for the New Zealand banking system is Stable
-NZ Finance Minister Bill English: ” the nation’s growth outlook is attracting foreign bond investors, helping propel the year’s strongest-performing Group of 10 currency and leaving the government powerless to steer it to lower levels.’
- Australia MOF (AOFM) official Nicholl: European interest is growing in Australia govt bonds, including pension, mutual funds – financial press interview
- Philippines Budget Sec Abad: To release main portion of the 2013 budget in H1; May frontload the budget by PHP20B in Q1 – financial press
-Economic Release Summary Asia Session
(JP) JAPAN NOV MERCHANDISE TRADE BALANCE TOTAL: -¥953.4B V -¥1.04TE; ADJUSTED MERCHANDISE TRADE BALANCE: -¥868.5B V -¥848.2BE (20th consecutive deficit); Exports y/y: -4.1% v -5.5%e; Imports y/y +0.8% v -1.5%e
(JP) JAPAN OCT ALL INDUSTRY ACTIVITY INDEX M/M: 0.2% V 0.2%E
(JP) Japan Oct Final Leading Index CI: 92.8 v 91.8 prelim; Coincident Index CI: 90.7 v 91.3 prelim
(US) North America NOV SEMI book to bill ratio: 0.79 v 0.75 prior (8th straight reading below parity, 1st m/m rise since March)
(US) API PETROLEUM INVENTORIES CRUDE: -4.10M V -1.0ME (largest draw since early Sept); GASOLINE: +4.18M V +1.5ME; DISTILLATE: -1.88M V +1ME; UTILIZATION: 91.6% V 90.5% W/W
(AU) AUSTRALIA NOV DEWR INTERNET SKILLED VACANCIES M/M: -3.5% (eight straight monthly decline) V -3.1% PRIOR
(AU) AUSTRALIA OCT WESTPAC LEADING INDEX M/M: 0.1% V 0.7% PRIOR (8-month low)
(NZ) NEW ZEALAND NOV SKILLED JOB VACANCIES M/M: -4.1%; TOTAL JOB VACANCIES M/M -2.7%
(NZ) NEW ZEALAND Q3 CURRENT ACCOUNT BALANCE (NZ$): -4.42B V -4.40BE (1-year high deficit); CURRENT ACCOUNT TO GDP RATIO YTD: -4.7% V -4.8%E
-Geopolitical Headliners
-UK FSA: “Every LIBOR and EURIBOR submission in currencies and tenors in which UBS traded is at risk of having been improperly influenced.”
- ORCL: Reports Q2 $0.64 v $0.61e, R$9.11B v $9.03Be; Guides Q3 Non-GAAP EPS $0.64-0.68 v $0.66e, Non-GAAP Rev +2-6% y/y v +4.6%e (implies $9.22-9.58B v $9.46Be)-After hours
-Welcome Back
| Time | Cur. | Imp. | Event | Actual | Forecast | Previous | |
|---|---|---|---|---|---|---|---|
| 03:30 | EUR | Spanish industrial New Orders (YoY) | -3.5% | -5.7% | |||
| 04:00 | EUR | Current Account | 6.0B | 0.8B | |||
| 04:00 | EUR | German Business Expectations | 96.3 | 95.2 | |||
| 04:00 | EUR | German Current Assessment | 108.0 | 108.1 | |||
| 04:00 | EUR | German Ifo Business Climate Index | 102.0 | 101.4 | |||
| 04:00 | EUR | Italian Industrial New Orders (MoM) | -2.3% | -4.0% | |||
| 04:00 | EUR | Italian Industrial Sales (MoM) | -4.20% | ||||
| 04:30 | GBP | MPC Meeting Minutes | |||||
| 06:00 | GBP | CBI Distributive Trades Survey | 25 | 33 | |||
| 07:00 | USD | MBA Mortgage Applications (WoW) | 6.2% | ||||
| 07:30 | BRL | Brazilian Bank lending (MoM) | 1.40% | ||||
| 08:00 | NOK | Norwegian Interest Rate Decision | 1.50% | 1.50% | |||
| 08:30 | CAD | Wholesale Sales (MoM) | 1.0% | -1.4% | |||
| 08:30 | USD | Building Permits | 0.875M | 0.868M | |||
| 08:30 | USD | Housing Starts | 0.873M | 0.894M | |||
| 09:00 | MXN | Mexican Retail Sales (YoY) | 3.4% | 3.8% | |||
| 09:30 | BRL | Brazilian Foreign Exchange Flows | -1.35B | ||||
| 10:30 | USD | Crude Oil Inventories | -1.122M | 0.843M | |||
| 10:30 | USD | Gasoline Inventories | 1.844M | 5.000M | |||
| 13:00 | USD | 7-Year Note Auction | 1.045% | ||||
| 16:45 | NZD | GDP (QoQ) | 0.4% | 0.6% | |||
| 19:00 | NZD | Business Confidence | 26.40 | ||||
| 19:30 | AUD | RBA Bulletin | |||||
| Tentative | JPY | Interest Rate Decision | 0.10% | 0.10% | |||
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NEWSLINKS
-Why a recession may be coming no matter what fiscal-cliff deal is reached
-Greek Bond Bet Pays off for Hedge Fund
http://www.cnbc.com/id/100325392
-Benefits of China’s joining the WTO dwindling
http://usa.chinadaily.com.cn/business/2012-12/19/content_16030505.htm
-Apple Analysts Grow More Bearish on Rising Samsung Threat
-House Republicans to vote on “fiscal cliff” bill Thursday: Cantor
http://www.reuters.com/article/2012/12/19/us-usa-fiscal-cantor-idUSBRE8BI00620121219
-Republicans put squeeze on Obama in “fiscal cliff” talks
http://www.reuters.com/article/2012/12/19/us-usa-fiscal-idUSBRE8A80WV20121219
-US Benghazi attack: security was ‘grossly inadequate’ by State Deparment
World Bank raises China growth forecast
http://www.bbc.co.uk/news/business-20778454
