TradeTheNews.com European Market Update: Eurogroup conference call eyed for clarity on Greece

Wednesday, February 15, 2012 5:55:25 AM
 TradeTheNews.com European Market Update: Eurogroup conference call eyed for clarity on Greece
***Economic Data****** - (EU) ECB: €1.2B borrowed in overnight loan facility v €1.1B prior; parked in deposit facility (second highest amount) vs. €510.2B prior - (JP) Japan Jan Final Machine Tool Orders Y/Y: -6.9% v -6.6% prelim
- (PH) Philippines Dec Overseas Workers Remittances: $1.8B v $1.8B prior; Y/Y: 6.2% v 10.6% prior
- (FR) France Q4 Preliminary Gross Domestic Product Q/Q: +0.2% v -0.2%e; Y/Y: 1.4% v 1.1%e
- (FI) Finland Dec GDP Indicator: 1.9% v 1.3% prior
- (DE) Germany Q4 Advanced GDP Q/Q: -0.2% v -0.3%e; Y/Y: 1.5% v 1.8%e; GDP wda Y/Y: 2.0% v 1.9%e
- (CZ) Czech Q4 Preliminary GDP Q/Q: -0.3% v 0.0%e; Y/Y: 0.5% v 0.7%e
- (HU) Q4 Preliminary GDP Q/Q: 0.3% v 0.4% prior; Y/Y: 1.4% v 0.9%e
- (AT) Austria Q4 GDP Q/Q: -0.1 v 0.2% prior; Y/Y: 1.2% v 2.5% prior
- (CZ) Czech Dec Export Price Index Y/Y: 3.5% v 5.8% prior; Import Price Index Y/Y: 5.1% v 7.6% prior
- (TR) Turkey Nov Unemployment Rate: 9.1% v 9.1% prior
- (ES) Spain Jan Consumer Price Index M/M: -1.1% v -1.1%e; Y/Y: 2.0% v 2.0%
- (ES) Spain Jan CPI EU Harmonized M/M: -1.7% v -1.6%e; Y/Y: 2.0% v 2.0%e
- (ES) Spain Jan CPI Core M/M: -1.7% v -1.7%e; Y/Y: 1.3% v 1.5%e
- (DK) Denmark Jan Wholesale Prices M/M: 0.8 v 0.1% prior; Y/Y: 3.4 v 4.1% prior
- (FI) Finland Dec Current Account: €90M v €210M prior
- (NL) Netherlands Q4 Preliminary GDP Q/Q: -0.7% v -0.3%e; Y/Y: -0.7% v +0.3%
- (SE) Sweden Q4 Industry Capacity: 87.5% v 88.9% prior
- (IT) Italy Q4 Preliminary GDP Q/Q: -0.7% v -0.6%e; Y/Y: -0.5% v -0.2%e
- (NO) Norway Jan Trade Balance (SEK): 44.1B v 41.2B prior
- (UK) Jan Jobless Claims Change: +6.9K v +3.0Ke; Claimant Count Rate: 5.0% v 5.0%e
- (UK) Dec Average Weekly Earnings 3M/Y: 2.0% v 1.9%e; Weekly Earnings ex-Bonus 3M/Y: 2.0% v 1.9%e
- (UK) Dec ILO Unemployment Rate: 8.4% v 8.4%e
- (IT) Italy Dec General Government Debt: €1.898T v €1.905T prior
- (EU) Euro Zone Q4 Advanced GDP Q/Q: -0.3% v -0.4%e; Y/Y: 0.7% v 0.7%e
- (CH) Swiss Feb Credit Suisse ZEW Expectations Survey: -21.2 v -50.1 prior
- (BR) Brazil Feb FGV Inflation IGP-10 M/M: 0.0% v 0.2%e
- (MA) Malaysia Q4 Current Account Balance (MYR): 22.0B v 26.6B prior
- (MA) Malaysia Q4 GDP Y/Y: 5.2% v 4.8%e; Annual GDP 2011: 5.0%e v 7.2% prior year
- (EU) Euro Zone Dec Trade Balance (Seasonally Adj): €7.5B v €6.1B prior; Euro-Zone Trade Balance: €9.7B v €6.9B prior
- (PT) Portugal Q4 YTD Labour Costs: -1.7% v +1.0% prior
- (ZA) South Africa Dec Retail Sales Constant M/M: 1.3% v 1.5%e; Y/Y: 8.7% v 6.5%e
- (IE) Ireland Dec Trade Balance (First Estimate): €3.5B v €4.3B prior

Fixed Income - (EU) ECB allotted $3.7B in 7-Day USD Liquidity Tender at fixed 0.63% vs. $4.1B prior
(SE) Sweden sold total SEK10B in Bills, avg yield 1.529%
- (PT) Portugal Debt Agency (IGCP) sold total €3.0B vs. €2.5-3.0B indicated range in 3-month, 6-month and 12-month Bills
- Sold €300M in 3-month Bills; Avg Yield 3.845% v 4.068% prior; Bid-to-cover: 10.3x v 2.8x prior
- Sold €1.2B in 6-month Bills; Avg Yield % v 4.463% prior; Bid-to-cover: 2.5x v 2.6x prior
- Sold €1.5B in 12-month Bills; Avg Yield % v 5.902% prior; Bid-to-cover: 2.0x v 2.1x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Risk appetite aided by China pledge of resources to Europe and more involvement in EFSF
- Eurogroup teleconference on Greece later today
- Greek bailout talks entered a new round of brinkmanship
- Major European GDP data beats expectations, Germany still contracts for the first time in 3 years
Equities:
- European shares rose after PBOC's Governor Zhou committed to holding assets of EU sovereign debt. Meanwhile,European leaders cancelled their meeting in Brussels today and will, instead, hold a conference call to push Greece to commit to its austerity measures in exchange for its aid package of €130B. Greek leaders said they would provide written austerity promises in exchange for a EU bailout.
- In individual earnings, BNP Paribas [BNP.FR] rose after bank beat the estimates. Bank also noted that it had reached its capital ratio target six months ahead of the European Banking Authority's June deadline. Heineken [HEIA.NV] also beat estimates and announced new cost-saving measures. Peugeot [UG.FR] reported a significant lower net profit on a yearly basis, hurt by European crisis. However, the shares rose as the carmaker noted that it was planning asset disposals of up to €1.5B.
Speakers: - EU conference call on Greece said to be scheduled for 11:00 ET (1600 GMT)
- Greece Fin Min: Few remaining issues will be clarified at the Eurogroup conference call today. Greece has fulfilled overwhelming part of its bailout obligations. Few in the eurozone are 'playing with fire' and might even want Greece out of the EMU
- Greece PM Papdemos said to have sent the letter of commitment to EU/IMF (as speculated)
- Renewed reports that Greece coalition member Samaras (ND) would commit to austerity measures in letter at one point today with him working feverishly on a draft at this time
- Four Greek banks are said to provide €800M collateral to satisfy Finland's demand for bailout participation
- ECB's Weidmann commented that any Greece exit from EMU could cause contagion and added that it was hard to assess effects of such a scenario. He also reiterated central bank view that there was no inflation danger at this time but situation could change
- German Fin Min Schaueble commented in the press that he had doubts that Greece had met its bailout conditions and that was not sure if all Greek parties were aware of their responsibilities. He stressed that Greece must guarantee that it will stick to pledges after elections. Germany could help Greece, but such help would not be unlimited. Negotiations with banks over PSI were at an advance stage.
- German FDP (coalition) member Schaeffler to oppose Greek support
- ECB's Asmussen: Conditions for Finance Ministers to agree on Greek aid could be met by the Eurogroup meeting Monday, Feb 20th. He noted that if aid was approved the then bond exchange could begin immediately and still be completed on time. Direct ECB contribution to Greek second aid package was not possible. The ECB to pass any bond purchase profits to national central banks and States, which then can be passed to Greece as aid
- India Divestment Sec: Not possible to achieve INR400B divestment target for FY12 - China Central Bank (PBoC) Monetary Policy Report commented that the European debt crisis could not be solved in the short-term. The Debt crisis was spreading to the whole of EU and that a a global banking risk was rising with threats to the real economy. The report highlighted that China continued to face upward price pressure which would not stabilize by themselves. The PBoC also reiterated the view of downside pressure on its domestic economy. To have flexibly use interest rates and other tools to manage inflation and to fine tune monetary policy at appropriate time. The PBoC also reiterated to use a mix of policy tools to keep credit reasonable and again pledged to increase CNY currency's two-way flexibility and keep the yuan within a reasonable range. Latly it vowed to continue to closely monitor capital flows
- China State Council: To push forward fiscal and tax reform to reverse the widening income gap
- Bank of England Inflation Report echoed recent BOE commentary and data that inflation rate to be below the 2.% target for a good part of the forecast period with risks to target to be broadly balance by the end of 2014. The forecast did suggest there might be need for further stimulus. Extent and pace Of inflation decline was uncertain.
- BOE Gov King commented that there was substantial headwind hurting the UK economic recovery and reiterated that further declines in inflation werere expected. There were "challenging times" for the UK economy. A rate hike at this time would cause a recession.
- OECD commented on Norway and stated that the Norges central bank was right to cut interest rates back in December and it saw room for further easing if necessary. The OECD was concerned that high household debt and housing prices were a threat to Norway
- Hungary Central Bank was said to be planning new mortgage bond purchase scheme, introduces new central bank facilities
Currencies:
- The Euro benefited by continued rhetoric out of China in its support for Europe as PBoC Gov Zhou pledged that the country's central bank  would increase its holdings of euro-denominated assets.
- The Eurogroup finance ministers put off the talks in Brussels, which they had scheduled for Wednesday, and replaced them with a teleconference, saying Greek political leaders had yet to give clear pledges on the implementation of fresh austerity measures.
Political/ In the Papers:
- In its annual report, the Belgium Central Bank noted that GDP this year will contract by 0.5% against the expected growth of 0.5% previously. It will need to find an additional €2B in savings to achieve its budget deficit goal of 2.8%, where it is currently seen at 3.1% of GDP.
- Credit agency S&P made comments today on the European risks to the Asia Pacific banks. Under the base-case scenario, S&P assumed the global economy will avoid a severe recession. While it expects the EMU to grow at 0.4% in 2012, it also sees a mild recession for the group. Other notable economies include the US which it expects to avoid a recession. China is expected to manage a soft landing with 2012 growth in the range of 7.7-8.0%.
- The UK Treasury has filed to sue the ECB in relation to the central bank's 'location policy' per reports in the London Telegraph. The original lawsuit was filed in the fall of 2011 and sought to block the EU's proposal aimed at banning clearing houses outside of the euro area from handling more than 5% of the trade in any one euro-denominated instrument. London handles about 40% of global over-the-counter derivative trades.
- The Telegraph's Evans-Pritchard commented on how weaker than expected growth in Greece is making it more difficult for the government to reach its deficit targets. Citing recent Greek data, the economy contracted at a rate of 7% in the fourth quarter. According to the head of the Greek Confederation of Labour, GDP could contract by an additional 7% in 2012. This suggests that the €325M in cuts that Greece needs to undertake could target defense and salary reductions.
- Reports out of Ireland revealed that the government has won concessions from troika. Some proceeds from the program of asset sales will be now be reinvested in the economy, and not strictly used to lower debts. As a reminder, last month the Irish press reported that the Irish government and troika disagreed on the use of funds from any asset sales. The government wanted to use majority of the funds to facilitate employment and exports, while the troika preferred to immediately pay down debts.
***Looking Ahead***
- (PE) Peru Dec Economic Activity Index Y/Y: 4.5%e v 5.0% prior
- (PE) Peru Jan Unemployment: No est v 7.0% prior
- (PT) EU/IMF begins third review of Portugal
- 6:00 (CZ) Czech Republic to sell 4.60% 2018 Bonds and Floating 2023 Bonds
- 8:00 (RU) Russia to sell RUB20B in OFZ 2-17 Bond
- 7:00 (US) MBA Mortgage Applications w/e Feb 10th: No est v +7.5% prior
- 8:00 (HU) Hungary Central Bank's Minutes
- 8:00 (PL) Poland Jan CPI M/M: 0.8%e v 0.4% prior; Y/Y: 4.3%e v 4.6% prior
- 8:30 (US) Feb Empire Manufacturing: 15.00e v 13.48 prior
- 9:00 (EU) Eurogroup Finance Minister meeting
- 9:00 (IT) Italy PM Monti in Parliament
- 9:00 (BE) Belgium Dec Trade Balance: No est v -€679.5M prior
- 9:00 (US) Dec Total Net TIC Flows: No est v $48.6B prior; Net Long-term TIC Flows: $45.0Be v $59.8B prior
- 9:00 (PL) Poland Jan YTD Budget Performance: No est v % prior
- 9:15 (US) Jan Industrial Production: 0.7%e v 0.4% prior; Capacity Utilization: 78.6%e v 78.1% prior
- 9:15 (US) Fed's Fisher speaks in San Marcos, TX
- 9:30 (EU) EU President Van Rompuy and EU Barroso with China President Hu
- 9:30 (BR) Brazil Central Bank weekly Currency Flows
- 9:45 (UK) BOE to buy £1.5B in 2019-2025 Gilts in reverse auction
- 10:00 (US) Treasury Sec Geithner testifies in House Ways & Mean Committee
- 10:00 (US) Feb NAHB Housing Market Index: 26e v 25 prior
- 10:30 (US) Weekly DOE Energy Inventories
- 11:00 (EU) Eurogroup Finance Ministers conference call on Greece
- 11:00 (US) Fed to sell $8.00-8.75B in Notes
- 11:30 (IS) Israel Jan Consumer Prices M/M: -0.2%e v 0.0% prior; Y/Y: 1.9%e v 2.2% prior
- 14:00 (US) Fed Releases Minutes from Jan. 24-25 FOMC Meeting
- 16:00 (NZ) New Zealand Jan ANZ NZ Job Ads M/M: No est v -2.3% prior
- 16:30 (NZ) New Zealand Jan Business PMI: No est v 51.9 prior
Legal disclaimer and risk disclosure
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.