Daily UK and Europe Highlights - 14 August 2009

Finally, the best day of the week is here.  This morning we do not have
much data out of UK, Central Europe or Asia.  Most of the numbers worth
talking about are out of Eastern Europe.  Eurozone core and non-core
CPI numbers are out today as well.  The UK Conservatives party released
a whopper of their own today by reporting that they will deduct 25% of
ministers pay if the party comes to power at the next general election,
which is in 2010; the move has ruffled some serious amount of feathers
in the UK political landscape.  Let us put this move down to classic
textbook political jaw boning for the moment.  Everyone is singing,
dancing and shagging over the meagre GDP improvement numbers out of
France and Germany yesterday... oh well may be it's a Friday thing.

Quick
Asia update - the markets mostly mixed right now with the Shanghai
Composite registering biggest fall of the day at 2.98% as of this
writing.  A report out from Deutsche Bank's chief economist
a few days ago is an interesting read, which talks about how the
markets may be spooked if Australia plans to hike rates early as
October.  The rest of the report rambles on about the problems of the
Dollar which most of us with even a single iota of brainpower can
figure out for ourselves.  Japanese Services demand unexpectedly rose
(0.1% vs. -0.3%) in June on stimulus injections.  The Japanese Monetary
Policy Meeting minutes are out at noon today.  Hosoda of Japan's ruling
LDP told the wires today that it would inject more stimilus if
necessary.  A report out of Bloomberg today has observed that India's
proposal to limit stakes of controlling shareholders
may spark $39 bln of share sales which is approximately equal to five
years of equity offerings.  The Yen has pulled out its samurai sword
and slicing through most crosses with one most hurt being GBP/JPY as of
this reading, down by roughly 120 points at 156.82, continuing its down
draft pattern from the 163 highs of few days ago.

So, the
Hungarian and Romanian Q2 GDP were quite disappointing yesterday.  The
Hungarian central banker Banfi has signalled that Hungary needs more
rate cuts to stem the decline.  The GDP print out Czech today was the
biggest decline registered on record for the country, not that we got
much respite from the retail sales figure (-4.9% y/y vs. -3.8% y/y) out
either.  The Czech economy contracted -4.9% in Q2 due to declining
exports and rising level of unemployment, which has hit previously
maintained private consumption levels.  Hungarian industrial production
declined slower than previous print (-18.8% vs. -22.1%), but this could
just be a breather instead of a starting trend in improvement.  The Q2
unemployment numbers out of Estonia get the award today for being the
most ugliest in eight years.  Estonian official unemployment rate rose
to 13.5% from 11.4% in Q1.  The increase attributed to weaker export
demand and austerity measures put in place by the Government.  If this
rate of increase continues in unemployment and GDP, I fully expect the
country to forget its dreams of joining the Euro and it may lose the
peg with it as well.  All those "real investments" are now in the
doldrums and the banks which are heavily invested in the Eastern block
are going to start taking it up in the hind as well, not that they haven't
already but the pain is about to increase.

OTP Bank Nyrt., Hungary's biggest bank reported that Q2 profit declined by -43% percent as bad loan provisions tripled:

Central and eastern European banks have raised provisions as bad loans increased amid slowing economic growth. At
OTP loans overdue more than 90 days rose to 7.4 percent from 5.7
percent, forcing it to more than triple provisions to 55.5 billion
forint.

Someone was caught talking their own book
today.  The Irish Banking Federation (IBF) told the wires that the
Irish property market is close to bottoming out
due to the number of mortgages drawn up in Q2.  They then go and water
their propaganda manoeuvre by saying this is a consistent seasonal
pattern.  The home loan figures are still -64% below last year folks
with mortgage lending down -71% in Q2.  Just ask the Irish Hotel Federation (IHF) for their views on the property market and they shall tell you to piss off with the green herb theory.

• Must read: Repossessions to rise sharply according to Council of Mortgage Lenders (Telegraph)
• Must read: IVG Posts Loss on Property Writedowns, Lower Revenue (Bloomberg)
• Must read: UK banks including RBS and HBOS exposed to failed property empire (The Independent)
• Must read: U.K. Buy-to-Let Mortgage Delinquencies Fall on Record Low Rates, S&P Says (Bloomberg)
• World's richest families eye bid for British Land, shares jump (Telegraph)
• David Cameron backs NHS amid US healthcare row (Telegraph)
• Bucket shop now to be baptised - Peter Cruddas prepares for CMC Markets flotation (Telegraph)
• Enterprise Inns in danger of debt hangover (Telegraph)
• Allied Carpets' administrators shut 142 stores, 850 jobs lost (Telegraph)
• Volkswagen agrees to buy 42pc of Porsche for £2.8bn (Telegraph)
• Enjoy Eurozone's fragile stabilisation while it lasts (Telegraph)
• Must read: Banks May Reach Point of No Return as Toxic Loans Exceed 5% of Holdings (Bloomberg)
• Man Group sells last of MF Global stake - Nomura buys 18% of derivatives broker (FT)
• Iceland seeks help from UK fraud office (FT)
• Mandelson considers legal action to curb City bonuses (Guardian)
• Union fights Magna and backs rival bidder for Vauxhall (Guardian)
• Mobile-phone group seals deal to be bank for millions in Africa (Guardian)
• Asda continues to defy downturn - basking with higher sales, profits and general euphoria (Guardian, The Independent)
• Thomas Cook hit by swine flu as it scraps 2010 forecast (The Independent)
• IBF says property market is close to bottoming out (The Independent IE)
• Hotels facing worst industry crisis in decades (The Independent IE)
• Northern Ireland recession to last longer than rest of UK (The Independent IE)
• Czech Economy Contracted Record 4.9% in Second Quarter From Year Earlier (Bloomberg)
• OTP Bank’s Second-Quarter Profit Falls on Provisions (Bloomberg)
• Hungary's Industrial Production Declined in June at Slower Annual Pace (Bloomberg)
• Must read: Estonian Jobless Rate Jumped to Highest in Eight Years in Second Quarter (Bloomberg)
• Polish Government Plans to Save $1 Billion on Public Job Cuts, rp.pl Says (Bloomberg)
• Finnish Operator `Very Worried' About Crew of Missing Freighter Arctic Sea (Bloomberg)
• Spanish Economy Contracts by 1.0%, More Than Forecast, in Second Quarter (Bloomberg)
• Washing their hands off - Hochtief Is Considering Initial Public Offering for Concessions Division (Bloomberg)
• Off-topic but nice to hear: Cancer Stem Cells Killed by Drug Compound, May Advance Push for Treatment (Bloomberg)
• French Non-Farm Payrolls Decline Less Than Expected as Economy Exits Recession (Bloomberg)
• Italy Statistics Office Sees Positive Signs From Exports, Il Sole Reports (Bloomberg)
• Irish Cost of living tumbles by 5.9pc in year due to falls in mortgages and rents (The Independent IE)
• Allied Irish Banks (AIB) and Bank of Ireland (BoI) lending may be hindered for 10 years (The Independent IE)
• IMF boost of €500m to State's currency reserves (The Independent IE)
• Unemployment rate in South now double that in North (The Independent IE)
• Must read: Bank Shares May Be Poised to Drop After 74% Surge in Six Months (Bloomberg)
• Iran's OPEC governor says crude output ceiling increase not on agenda at next meeting
• ECB says EUR 78mln borrowed using overnight loan facility, EUR 118.913bln deposited
• ECB says Eurosystem covered bond purchase program totals EUR 6.605bln
• UK home repossessions fall to 11,400 in Q2 from 12,700 in Q1 2009 - CML (see link above)
• England and Wales mortgage repossessions orders down 31% Y/Y to S/A 19,064 in Q2 2009 (see link above)

Economic Calendar:

• French non-farm payrolls (Q2 P) Q/Q -0.5% vs. Exp. -0.8% (Prev. -1.2%)
• Spain GDP (Constant SA) (Q2 P) Q/Q -1.0% vs. Exp. -0.9% (Prev. -1.9%)
• Swedish AMV Unemployment Rate (Jul) M/M 5.0% vs. Exp. 5.2% (Prev. 5.0%)
• Eurozone CPI (Jul) Y/Y -0.7% vs. Exp. -0.6% (Prev. -0.6%)
• Finnish June Current Account Turns To Surplus In June - EUR 0.4 bln, EUR 1.14 bln year ago
• Austrian July CPI -0.3% Y/Y vs. -0.1% Y/Y in July
• Slovak July HICP inflation 0.6% Y/Y vs. 0.7% Y/Y in June
• Czech Q2 GDP -4.9% vs. -3.4% in Q1
• Hungarian June Industrial Output fell -18.8% Y/Y revised up from -18.6% initial estimate
• Estonia Q2 jobless rate 13.5% vs. 11.4% in Q1, 4% year ago
• Finland Trend Indicate of Output drops -11.1% Y/Y in June vs. -11.4% in May.
• Decline in Latvian reserve money accelerates to 35.5% y/y in July
• Czech National Bank will release Minutes of the Bank Board Meeting
• Poland Foreign Trade in Euros (not released yet, 1200 GMT)

Interesting articles from other Blogs, this morning:

• Must read: UK housing market, the untold story - nice work by Izabella Kaminska as always! (FT Alphaville)
• Ambrose Evans-Pritchard: Keynes rescues France and Germany; Club Med lost (Telegraph)
• Fun commercial real estate figures and charts (Reuters Commentaries)
• Who is funding the Afghan Taliban? You don’t want to know (Reuters Global News Blog)
• British dead and wounded in Afghanistan, month by month (Guardian Data Blog)
• Data undermine US lawmakers' claims of oil market exploitation (FT Energy Source)
• Comment: Why a single energy market is critical to Europe’s renewables goals (FT Energy Source)
• Citi trader in tussle over award - Mr. Hall wants his promised sour dough (FT Alphaville)

Make sure you to watch the RAN Squawk 'EU Morning Briefing' video and visit the RAN Squawk News page  .

Comments

[Anonymous]

Just a comment on "the Euro that will never die"
I may be hard to understand the Euro from an economical perspective,...but I don´t think people understand the extent that it is a political mechanism.
The Euro will never die,..even if we have to go to poverty banana republic levels of living,..for the simple reason,..WAR!,..not just 1939-45,..but all of them,..its the glue that keeps the germans and french form fighting each other and the rest of us being forced to join the ball.
Anything is better then war,..therefore,. forget the money arguements (you may be right,.but) its a different horse!

[rigger mortice]

'The Euro will never die,..even if we have to go to poverty banana republic levels of living,..'

I agree,Germany and France are more than willing to take a one way trip to poverty while the PIGS siesta on.

[myspace (not verified)]

sleazy linking practices; borderline fraud ..http://www..
hat tip: gay porn and deceitful, slimy operators

[Anonymous]

So in this financial climate, OTP Bank in Hungary still makes a profit; and they didnt receive trillions in taxpayor guarantees? Hey! thats better than AIG, Goldman, Bear,Leman Bros, CITI,CIT, FNMA, Corus, Merril, FMAC, GE Financial, Harvard Endowment Fund,etc. ! And I bet the OTP Bank boys didnt go to Harvard either! The real bubble bust? The american "miseducation" system! Maybe the OTP Bank hungarians could advise wall street how to invest. could they do any worse?

[Carina]

The news is so overwhelmingly positive.  It may sends the markets into a swoon.  We're ants perched on top of a toothpick.  Today may be the day.  I've nearly exhausted funds for purchasing USD and Treasury call options...  I'm feeling lucky.

[Anonymous]

wow! billy mayes is still on CNBC doing his thing just like always. i assure you. a little thing like dying will not slow this man down...:) man it is weird to see him doing commercials now. not sure how effective continuing to use his old tapes to run commercials is going to be....

[Raymond Shaw]

Yes Mr. Dufresne.  English accent it is.

I posted a reply to your comment on yesterday's briefing:

http://www.zerohedge.com/article/daily-uk-and-europe-highlights-13-augus...

[Raymond Shaw]

Thanks for your reply Andy, I will pursue your other reply momentarily. I get lost keeping track as well, it would be nice if there was some sort of thread notification system which made use of e-mail or a notifications page in the Account section.

I will see what can be done about that.

Have a good weekend Mr. Dufresne. ;-)

[Carina]

....and don't you just love the word "shagging"....  One of my personal favorites.

[Anonymous]

just now on Bloomberg TV

BofA - "it's time to buy C"

I can't wait for the sequel - how long will the investing public be duped by this wall street game of Three Card Monte

[wcvarones]

Blogger catches FDIC employees madly googling "BlackRock + Colonial"

Think there's a shotgun wedding coming?

http://www.jrdeputyaccountant.com/2009/08/blackrock-to-buy-colonial-bank...

[Anonymous]

And yet the euro refuses to die. I always enjoy your updates, thanks.

[. . .]

news link for you:  mankiw says replace bernanke with a skeptic of finance.  http://www.business-standard.com/india/news/dani-rodrik-let-finance-sceptics-take-over/366591/

[George the baby...]

Here in Sweden we had a contraction of only -6.4%. This is of course better then the expected -6.5% so the party continues.

Thanks for the links. Always a fun filled journey in financial wizardry and poetic book keeping.

[-273]

Thank you.