Weekly Recap, And Upcoming Calendar - All Eyes On December 7 And The Irish Budget/European Bank Run

Tyler Durden's picture

From Goldman Sachs

Week in Review

The European / IMF bail-out package for Ireland – announced one week ago – was somewhat smaller than expected at €85 bn and failed to calm market jitters spreading to other Euro zone periphery countries early in the week, most alarmingly to Spain and Italy. It was only with the ECB’s announcement that full allotment liquidity operations would continue through Q1 2011 and with a jump in ECB purchases of Portuguese government bonds on Thursday that stress in the Euro zone periphery abated somewhat.

United States labor market data were weaker than expected, with the unemployment rate jumping to 9.8%, even as the participation rate failed to rise from its very low level of 64.5%. The broadest measure of underemployment (U-6) remains stuck close to its peak level at 17.0%. After much market criticism of QE2, the weak state of the labor market in Friday’s data was seen as validating the Fed’s resumption of large scale asset purchases.

We published our global forecasts last week, as well as an initial batch of our top trades for 2011. The key feature of our forecast revisions is an upgrade to US growth to 2.7% in 2011 from 2.0% previously. This puts us slightly above consensus. On the back of this forecast revision, and with a view that the Fed will likely stay on hold through end-2012, our top trades have a decidedly pro-cyclical flavor. In FX, our top trade is short $/CNY via 2yr NDF.

Week Ahead

Central bank meetings Central banks will be meeting this week in Australia, Brazil, Canada, New Zealand, South Korea and the UK. We expect all of these meetings to keep policy rates on hold. Perhaps the most interesting meeting will be Brazil, where the central bank last week announced several measures to tighten domestic liquidity, perhaps indicating a shift to a more hawkish stance. We will be watching carefully for the minutes of the meeting, which will be published next week. In addition, it is also worth noting that this will be Governor Henrique Meirelles’ last Copom meeting, before his successor Alexandre Tombini takes over in January.

Euro zone crisis Following last week’s turbulence on the periphery, this week’s key event will be the Irish parliament vote on the 2011 budget, which is scheduled for Dec 7. A failure to pass the budget could quickly exacerbate tensions across the Euro zone periphery, by highlighting the political costs of needed budget cuts.

Monday 6th

Chile monthly indicator of economic activity (Oct) We expect this indicator to register growth of 6.0% yoy, above consensus of 5.8% yoy but down from 6.5% yoy in September.

Also interesting Taiwan CPI inflation for Nov, given our focus on food price inflation in EM

Tuesday 7th

Australia central bank meeting We expect the RBA to stay on hold at 4.75%, in line with consensus. Bank bill futures are pricing essentially a zero probability of a rate hike as well. We think the RBA will be confident about tightening monetary policy again from March next year, as the data flow should improve from what we see as a mid-cycle slowdown going into 2011.

UK industrial production (Oct) We expect IP to expand 0.3% mom, in line with consensus, after an expansion of 0.4% mom in September.

Irish parliament votes on 2011 budget

Chile CPI (Nov) We expect CPI inflation of 2.5% yoy, in line with consensus and up from 2.0% yoy in October. Consensus expects CPI excluding perishables and fuel to be flat mom, after a -0.1% mom drop in October.

Chile trade balance (Nov) We expect a trade surplus of $980 mn, below consensus which is looking for a surplus of $1,311 mn. Either way, there will be a big jump from October’s surplus of $215 mn.

Canada central bank meeting In line with consensus we think the Bank of Canada will remain on hold. Indeed, even though we upgraded our Canada growth forecast this week, we continue to believe that the Bank of Canada will remain on hold throughout 2011, as it looks over its shoulder at the Fed’s QE2.

Also interesting Philippines CPI for Nov, given our focus on food price inflation in EM

Wednesday 8th

Germany industrial production (Oct) We expect a strong print of 1.2% mom, slightly above consensus of 1.0% mom after a relatively weak reading of -0.8% mom in September.

Turkey industrial production (Oct) We expect a reading of 7.0% yoy, above consensus of 6.4% yoy, but down from 10.4% yoy in September.

Brazil IPCA inflation (Nov) Following the elevated reading for the IPCA-15, we expect IPCA inflation in November to be 0.92% mom, which is above consensus of 0.86% mom.

Brazil central bank meeting We expect the Copom to remain on hold at this meeting, in line with consensus. Last week’s reserve requirement hike and other measures could be seen as a shift to a more hawkish stance by the central bank, but whether or not this raises the probability of a hike this week depends on whether one sees this as a substitute or complement to a hike. Our economists think the latter and believe the probability of a rate hike has gone from something like 25% before last week’s measures to 45% now.

Thursday 9th

Australia employment report (Nov) We expect the unemployment rate to drop to 5.2% from 5.4% in October, in line with consensus, as we think the participation rate drops back from its higher level after last month’s jump. We think the strong trend of employment growth will continue. We are looking for +25k employment change, above consensus of +20k.

New Zealand central bank meeting In line with consensus, we expect the RBNZ to remain on hold this week.

South Korea central bank meeting We maintain our view of no rate hikes in the December and January Monetary Policy Committee meetings. We expect the next rate hike, 25 bps, to be in February 2011.

UK central bank meeting We expect the Bank of England to keep rates unchanged.

Brazil GDP (Q3) We are looking for growth of 0.5% qoq, above consensus of 0.4% qoq but below the strong pace of 1.2% qoq in Q2.

United States initial claims (Dec 4) Consensus expects initial claims of 425k, following 436k last week.

Friday 10th

China trade balance (Nov) We expect November export growth to accelerate to 27.0% on a yoy basis, from 22.9% yoy in October. Meanwhile, we believe import growth will rise to 26.0% yoy, from 25.3% yoy in October. This implies net exports will likely stay at a high level of around US$25.0 bn, slightly lower than US$27.1 bn in October. Our estimate for the trade balance is thus above consensus ($21 bn).

Turkey GDP (Q3) Consensus expects growth of 6.5% yoy, down from 10.3% yoy in Q2.

United States trade balance (Oct) We expect the trade deficit to narrow to -$40.5 bn, against consensus which expects the trade deficit to remain unchanged from the September reading at -$44.0 bn.

United States U. of Michigan consumer confidence (Dec) Consensus expects this preliminary reading to be 72.5, up from 71.6 for the November reading.

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BobPaulson's picture

A bank run would be nice to see but I'm afraid there are too many tools in the infinitely elastic currency world to allow this.

Herd Redirection Committee's picture

A sustained bank run could easily take these guys out.  It is a House of Cards.  Sure, they will do everything to maintain appearances, but fiat currency relies on the faith of those using it.  Once that faith starts to crumble... Look out below!  At some point backdoor bailouts will become even more unpalatable, and when the politicians and the bankers turn on each other that is when you know they are getting REALLY desperate.

Once the pension funds start being liquidated, or allocating more capital to gold that will be a massive nail in the coffin.  The Emperor has no clothes!

Read our latest PsychoNews story: "Funny Money, Manic Markets, and Obsolete Media"

"Senator Bernie Sanders from Vermont delivered an amazing speech in the Senate on December 2nd that was right on the money in regards to the problems America (and by extension, the world) faces.

To quote:

"There is a war going on, and I'm not referring to the war in Iraq and Afghanistan"

"Against the disappearing and shrinking middle class of this country."

"Their [billionaires/Oligarchy] greed has no end"

"[there seems to be] very little concern for the people if it gets in the way of accumulating more and more power"

"top 1% of all earners earn 23% of all the income in this country"

"Exxon made $19 billion last year and paid $0 in taxes.  They got a refund..."
(12 minutes into video)

Sounds like Senator Bernie Sanders has been reading PsychoNews! 

http://psychonews.site90.net

westboundnup's picture

We've not had any bank runs (as opposed to long lines) in the U.S. for generations.  That changes the minute that the populace realizes that their deposits are not actually insured by the FDIC.  And the run won't be on just 1 or 2 banks, but virtually all of them.  Look for the Federal government to suspend withdraws for a temporary period, followed by withdraws of limited amts. over a 6 - 12 mo. period.

Landrew's picture

I guess you have a short memory! Did you ever hear of the bank run on IndyMac? Have you been a sleep for a few years? 80'S Pennsylvania, 70's Continental IL.

westboundnup's picture

A run on the bank is where depositors run to the bank to withdraw their deposits.  None of the examples you gave were equivalent to what occured in the 1930's, which were actual runs on the bank.  Yes, people formed lines to withdraw their funds, but they were usually met by FDIC representatives who convinced most to stay put.

ViewfromUndertheBridge's picture

Spot silver went to 29.63 on the open tonight...

szjon's picture

I'm not holding too much hope for the bank run. So far only 218 confirmed on the Ireland facebook site. Then again, me and the wife aren't on facebook and we're doing it but trying to get other people interested in it is like pissing in the wind. It's like trying to get people to vote. (exceptions for any reality tv shows)

 

Hopefully the french will make the biggest move, if they can get things moving it might just gather steam.

KenShabby's picture

Isn't December 7th also "Take Your Money Out Of The Bank Day in France/Europe?

lineskis's picture

Yes, it's supposed to be Dec 7th in France.

Facebook event here (need to be logged in):

http://www.facebook.com/event.php?eid=101996426533405

37,270 attendees so far... Might need more than that... unless some rich folks are in there... ^^

Ludwig Von Miso Soup's picture

Any plans of an American bank run on December 7th? I'm planning to pull all my money out of TBTF this Tuesday.

Somewhere Murray Rothbard is smiling.

RobotTrader's picture

Any news of a bank run will trigger mass liquidation of all sorts of trades.

And, by default, 100% of such proceeds will be immediately piled into:

NFLX, DECK, PCLN, AAPL, CMG, et al....

Spalding_Smailes's picture

Or Transocean .... That pig is going over $100 easy.

RobotTrader's picture

Yep, I'm watching for a big rotation out of the land-based service companies into DO, RIG, NE, etc.

DO has a huge short interest, there should be some real fireworks on that one.

 

unky's picture

This planed bankrun will not have a great impact, as just lets say 100,000 people will participate. More people need to be informed first if we will do it once again

Caviar Emptor's picture

There won't be a run, but a real one would not benefit your stox

Atomizer's picture

National Ocean Council

By Cassandra Anderson
July 28, 2010

Thirty states will be encroached upon by Obama's Executive Order establishing the National Ocean Council for control over America's oceans, coastlines and the Great Lakes. Under this new council, states' coastal jurisdictions will be subject to the United Nations' Law Of Sea Treaty (LOST) in this UN Agenda 21 program. America'a oceans and coastlines will be broken into 9 regions that include the North East, Mid-Atlantic, South Atlantic, the Gulf Coast, West Coast, the Great Lakes, Alaska, the Pacific Islands (including Hawaii) and the Caribbean.

 Because of the decades of difficulty that the collectivists have had trying to ratify the Law Of Sea Treaty (LOST), Obama is sneaking it in through the back door, by way of this Executive Order establishing the Council. Because LOST is a treaty, Obama's Executive Order is not Constitutional as treaty ratification requires 2/3 approval from the Senate. Michael Shaw said that the Agenda 21 Convention on Biodiversity treaty of 1992 failed to pass Congress so it was executed through soft law and administratively on local levels, and Obama's Executive Order is a similar soft law tactic to enact the LOST treaty.

In fact, our Constitutional form of government is being completely destroyed because buried in the CLEAR Act (HR 3534) there is a provision for a new council to oversee the outer continental shelf- it appears that this Regional Outer Shelf Council will be part of the National Ocean Council. This means that if Congress makes the CLEAR Act into law, then the implementation of the UN Law Of Sea Treaty, as part of the National Ocean Council's agenda, will be "ratified" in a convoluted and stealth manner, in full opposition to the Constitution and its intent.

The excuse for this extreme action is because of the emergency in the Gulf of Mexico. Obama and Congress have always had the legal...

Max Hunter's picture

I see Dr. Evil and the Legion of Doom never sleep.

Reese Bobby's picture

 It seems like a stretch to expect a rational market anytime soon.  If our crooked Government is aligned with Wall Street and the MSM, supported by the wold's CB's what is the trigger for a correction?  This all ends badly but I am losing faith that those who control capital flows will do anything more than ride the Bernake put.  What am I missing?

sabra1's picture

the elitists control the ECB, IMF, and the FED. without questioning their decisions, these banks must obey. when they say crash, they obey!

wiskeyrunner's picture

Every weekend they come up with some new news to pump the market up. Here is this weekends scheduled release, as expected. 

http://www.bloomberg.com/news/2010-12-04/trichet-challenges-eu-as-spain-...   

 

Atomizer's picture

Many should study history.

Joseph Tainter; The Collapse of complex Civilisations

http://www.youtube.com/watch?v=GzuviYRse3E

Bet you would understand a manufactured crisis in more detail. Without carbon presence, we would not exist on this planet. I'll bet if the earths shelf moved on Washington DC, the problem would be solved.

Mother nature has a funny way of dealing with fraud & deceit.

RobotTrader's picture

ES is now right at the highs....

Bears need to stop it here or they are in big trouble.

Spalding_Smailes's picture

Robo- Its going up, book it.

 

 

...."American Iron & Steel Industries reported that, in the week ending November 27th 2010, US domestic raw steel production was 1.652 million tons while the capability utilization rate was 68.3%. Production was 1.469 million tons in the week ending November 27th 2009, while the capability utilization then was 61.4%. The current week production represents a 12.5% YoY increase from the same period in the previous year.

Production for the week ending November 27th 2010 is down by 2.8% WoW from the previous week ending November 20th 2010 when production was 1.699 million tons and the rate of capability utilization was 70.3%.

Adjusted YTD production through November 27th 2010 was 80.307 million tons, at a capability utilization rate of 70.2%. That is a 40.7% YoY increase from the 57.059 million tons during the same period last year, when the capability utilization rate was 50.5%."....

...."The American Trucking Associations' advance seasonally adjusted (SA) For-Hire Truck Tonnage Index rose 0.8 percent in October after increasing a revised 1.8 percent in September. The latest gain put the SA index at 109.7 (2000=100) in October from 108.9 in September.

 

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 112.9 in October, up 0.3 percent from the previous month.  

Compared with October 2009, SA tonnage climbed 6.0 percent, which was better than September's 5.3 percent year-over-year gain. Year-to-date, tonnage is up 6.1 percent compared with the same period in 2009."....

 

The numbers have been getting better for months.

...."And let's not forget that CSX Corp. (NYSE:CSX) nailed last quarter's earnings as well, bringing home $1.07 per share versus an anticipated 98 cents. Revenue was up 22%, while shipping volume was up 13%"....

....."Union Pacific (NYSE:UNP) got the ball rolling on Thursday morning, announcing record-breaking earnings of $1.40 per share, and topping Wall Street's estimate of $1.21. Frankly though, that's not even the compelling part of the picture. The railroad also reported that all six of its business segments (automotive, intermodal, chemicals, etc.) increased revenue as well as earnings."......

...."We've seen this trend developing for a long time, but it ramped up its pace last month. Intermodal traffic (shipments of goods in giant cargo containers that are just hoisted off a train car and onto a flatbed truck trailer, and vice versa) in June of 2010 totaled an average of 220,000 per week. That was not only about 19% higher than intermodal numbers from the same quarter a year ago, but even higher than May 2010 totals"....

Implicit simplicit's picture

Your forgetting about the vote on Thursday. The markets must have a panic sell-off of some sorts to insure the tax cuts go through. I'd guess Tuesday would be the day, with tomorrow a primer.

  

Mr Lennon Hendrix's picture

Gold to test resistence at $1420 on Monday, it will test support on Tuesday at $1401 and stay there on Wednesday.  Thursday, it should move back to $1420 and then breakout on Friday to $1440.  This not considering any swans.

Silver should continue its move higher, with less of a downside risk when compared to gold.  Silver is also primed to break out to $36 this month.  There will be a major move in silver during the next three weeks.  It should take gold, platinum, and oil with it, and at the same time, crush the dollar.  The next three weeks could be the biggest month of the year for gold.

NoTTD's picture

Tyler - Any chance this could become a regular feature?  Or is it already one and I've just missed it?

Implicit simplicit's picture

Ireland will suprise people on Tuesday. They will negate the bailout.

bigkahuna's picture

I hope they do. It is time someone takes a stand. I suspect that the if the Irish do not -- then we are all screwed.

BigDuke6's picture

Hey Dork of Cork - how are ya?

i got your clever response about golf courses - aye lad, i hate the new fancy pant country club manicured dumps as well.  i'd napalm 'em.

i grew up in scotland and there they have played golf almost as long as people have fished so who knows who is right with the really old courses.

i wish you and the paddys all the best for getting through the bullshit ahead.