Preview Of The Boring Week Ahead

Tyler Durden's picture

From Goldman Sachs

Politics and policy were paramount last week. In the US, President Obama gained reelection with a remarkably clear margin after a hard-fought campaign. Stock markets took a nosedive the next day even though the probabilities of an Obama victory had been estimated to be quite high in the days prior. While Republicans retained their lead in the House, Democrats remained in power in the Senate and even extended their majority there. This preserves the pre-election split in the distribution of power, a fact which has raised further concerns about a timely solution to the fiscal cliff at year-end. While we see a fair chance that the debate could drag into January 2013, we continue to anticipate a year-end agreement (although a “grand bargain” is unlikely during the lame-duck session). Meanwhile, the Greek parliament very narrowly passed a new round of budget cuts and structural reforms, helping to pave the way for the disbursement of the next €31.5 bn loan tranche.

At their meetings last week, central banks left policy rates broadly unchanged. The ECB did not signal a shift towards additional easing, although there were some noteworthy changes in the statement suggestive of greater concern about the economic outlook. We think that further ECB action will target the monetary policy transmission mechanism rather then policy rates overall, as the key problem remains that the ECB’s policy stance is not being transmitted evenly across the Euro area. In the UK, the BoE also left policy rates unchanged and did not extend its official QE program. It did, however, announce that coupon payments accumulated by the BoE’s Asset Purchase Facility (£35 bn by March 2013) will be transferred to the Treasury to pay down government debt, a step Governor King described as “having an effect similar” to further asset purchases. Monetary policy was also left unchanged in Korea, Indonesia, and Malaysia, in line with consensus expectations except in the latter case, where a cut was expected.

The upcoming week comes less loaded with policy events. The only major one is the Eurogroup meeting on Monday, however EU officials have already confirmed that no decision on the next Greek aid tranche will be made before the Troika’s next report on Greece’s adherence to the bailout conditions. Greece has scheduled an auction for Tuesday in order to roll over €3.1 bn in T-bills expiring by the end of the week. Additionally, in the US, the President has invited leadership of both parties for a first round of talks on the fiscal cliff. The data calendars also look lighter, with the publication of the FOMC minutes on Wednesday, and US Philly Fed on Thursday.

In China, the leadership transition congress will end on Wednesday, with the personnel decisions to be made public on Thursday, We are also expecting data on M2 growth and CNY loans this week after the recent data releases were quite positive. Apart from a benign October CPI reading, Industrial Production and FAI (particularly the infrastructure subcomponent) also showed good momentum, while the Trade Balance beat market expectations. The only central bank meeting of the week will be in Chile on Tuesday, while the BoE will publish its inflation report on Wednesday.

The Week Ahead:

Monday, November 12

  • Eurogroup meeting
  • Also Interesting: Russia GDP, Israel Trade Balance, Czech Republic CA, Poland CA, Mexico IP

Tuesday, November 13

  • UK CPI: A slight uptick to 2.3%yoy from last month’s reading of 2.2%yoy is forecast.
  • Greece T-Bill Auction
  • Chile Monetary Policy Meeting: no change in the policy rate, currently at 5.0%, is forecast.
  • Also Interesting: Italy HCPI, Spain HCPI, Hungary Consumer Prices, UK CPI

Wednesday, November 14

  • China National Congress scheduled to end
  • US Retail Sales: Our expectation is for a reading of -1.2%, down from 1.1% last month, and lower than consensus at -0.2%.
  • US PPI: We expect a more subdued rise of 0.3%, in line with consensus expectations after a rise of 1.1% last month.
  • UK ILO Unemployment Rate (Sept): Our forecast is for the rate to remain stable from August at 7.9%.
  • UK BoE Inflation Report
  • Also Interesting: France HCPI, UK Employment Growth, Euro area IP, Poland Consumer Prices, Argentina CPI

Thursday, November 15

  • US Philadelphia Fed: We forecast a plus of 2.0, higher than consensus at 1.5 and lower than last month at 5.7.
  • US CPI: After last month’s rise of 0.6%, we forecast a stable reading from last month at 0.2%, in line with consensus.
  • US Empire Manufacturing Index
  • UK Retail Sales: Our forecast is for a decline to 2.2%yoy from last month’s 2.9%yoy.
  • Also Interesting: Russia Gross International Reserves, Turkey CA, Norway Trade Balance, Euro area GDP, Euro area HCPI, Canada
  • Manufacturing Sales, Canada Existing Home Sales

Friday, November 16

  • US IP: In line with consensus, we forecast a rise of 0.2% after a plus of 0.4% last month.
  • US Treasury International Capital (TIC)
  • Also Interesting: Italy Trade Balance, Hungary IP, Euro area Trade Balance, US Capacity Utilization, Mexico Real GDP

* * *

And for those who missed it before, here is a detailed calendar of Europen events until the end of the year from Deutsche.


  • 10 November: VVD-PvdA (Liberal-Labour) government to assume power in the Netherlands.
  • 11 November: Greek 2013 Budget to be voted on in parliament.
  • 12 November: Merkel visits Portugal.
  • 12/13 November: Eurogroup/ECOFIN finance ministers’ meetings. Chances are EU finance  ministers will still be discussing how to finance an extension of the Greek loan programme. Cyprus had aimed to agree its aid programme with the Troika in time for this meeting, but with international lenders resuming talks with Cyprus only on 9 November, the Eurogroup on 3 December now looks to be the likely timetable target.
  • 13 November: Italy auction. Bills.
  • 13 November: Greece auction. Bills.
  • 14 November: Portuguese strike. The CGTP (General Confederation of Portuguese Workers), the largest trade union confederation in Portugal, is to stage a strike against the government’s austerity measures.
  • 14 November: Italy auction. Bonds.
  • 15 November: Q3 GDP reports. Eurostat will publish the flash estimate of euro area GDP growth for Q3 2012. DB's current estimate is -0.2% qoq11.
  • 18 November: France UMP party leadership election. France’s main opposition party, the centreright UMP, is to elect its new leader. The congress is the party’s first since former French president (and then UMP leader) Nicolas Sarkozy lost the presidential elections in spring 2012. Francois Fillon, the moderate pro-European former prime minister under the presidency of Sarkozy, is favourite to be elected with Jean-Francois Cope, the Secretary General of UMP, being the other candidate.
  • 19-20 November: ECB workshop on excess liquidity and money market functioning. ”The workshop organised by the ECB intends bringing together central bankers, practitioners and academics to discuss the current state of health of money markets, the impact on their functioning of the recently implemented non-standard measures and the possible side effects of large amounts of excess liquidity currently present in many developed economies” (European Commission). The market will watch this closely for any suggestions about the operations of the OMT and/or prospects for policy rates to fall into negative territory.
  • 20 November: Spain auction. Bills.
  • 21 November: Spain auction. Bonds.
  • 22-23 November: EU Leaders’ Summit. Officially to discuss the EU Budget for 2014-2020, but also an occasion to address crisis  policies (including Greece, Spain and Cyprus if necessary). Following the UK parliament’s rejection of the Cameron government  position of a real-term freezing of the EU budget at worst — the opposition and rebels wanted a realterms cut — it appears unlikely the EU will yet reach a comprehensive agreement on the new Budget.
  • 25 November: Catalonia regional election. Early elections for the parliament of the autonomous region called by Arturo Mas, head of the Catalan regional government.
  • 25 November: Italy centre-left primaries, first round. The centre-left coalition led by the Italian Democratic Party (PD) is due to  elect a leader for the Italian parliamentary elections to be held no later than April 2013. PD’s incumbent leader Pierluigi Bersani looks  to be the favourite. with Matteo Renzi, the Mayor of Florence, likely to be his main challenger. Nichi Vendola, the governor of Puglia and leader of the junior coalition party SEL12, is the other prominent candidate. The first round is due to be held on 25 November. Should no candidate secure 50% of the vote, a second round run-off will be held on 2 December. PD is currently leading in the  opinion polls with 25%-29% support in the opinion polls held in October.
  • 27 November: Spain auction. Bills.
  • 27 November: Italy auction. Bonds.
  • 28 November: Italy auction. Bills.
  • 29 November: Italy auction. Bonds.


  • 2 December (tentative): Italy centre-left primaries, second round. See 25 November entry.
  • 3-4 December: Eurogroup/ECOFIN meetings. The regular meeting of the euro area 17 finance ministers followed by the EU 27  ministers.
  • 4-6 December: German SPD Annual Party Conference.
  • 5 December: Spain auction. Bonds.
  • 5-7 December: German CDU Annual Party Congress.
  • 6 December: ECB Governing Council meeting, followed by the interest rate announcement and press conference.
  • 9 December: German SPD Party Special Conference to elect challenger for 2013 federal elections.
  • 11 December: Spain auction. Bills.
  • 12 December: Italy auction. Bills.
  • 13-14 December: European Council summit. The final gathering of 2012 of the EU 27 heads of state and Government. One intention is to sign off on the legislation embodying the common bank supervisory regime under the ECB.
  • 13 December: Spain auction. Bonds.
  • 13 December: Italy auction. Bonds.
  • 16 December (tentative): Italy PDL primaries. The centre-right Italian People of Freedom (PDL) party is planning to hold primaries  to select its leader for the upcoming Italian parliamentary elections to be held no later than April 2013. The party was previously led by ex-Prime Minister Silvio Berlusconi, who announced on 24 October that he would not be running in the PDL primaries and would not be seeking re-election as Prime Minister.
  • 18 December: Spain auction. Bills.
  • 27 December: Italy auction. Bills.
  • 28 December: Italy auction. Bonds.

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I am Jobe's picture

Great I can catch up with Desperate Single Moms and their pathetic life

knukles's picture

But they're all reruns...

Might as well try out ObamaDon'tCare and see if the ER is doing a better job with suicides, now.

VonManstein's picture

EUR going much higher soon

slaughterer's picture

ES looking RED right now before the overnight levitation.

THX 1178's picture

In terms of the Dollar? So the Dollar is going much lower real soon?

VonManstein's picture

Yes i mean EURUSD and i dont think SPX will benfit all that much. The months of media hype regarding EZ total meltdown and US recovery has priced in the top and bottom of both markets i would say, at least for now. But either way the US has much (much) more downside than EZ

akak's picture

EUR going much higher soon


In terms of the Dollar? So the Dollar is going much lower real soon?

Shhhhh ... don't you know you aren't supposed to think that way?

The proper response is to babble about the spurious US Dollar Index (DXY) and wave your arms around a lot.

The.Oracle's picture

How can you look at the market and draw that conclusion? What timeframe are you looking at?

Yen Cross's picture

 One can only hope that some windows get broken...

  Wishfull thinking, {Leon Panneta},

knukles's picture

Hopefully Krugman's with him in the spralling zone

DoChenRollingBearing's picture

Krugman is quoted in this weeknd's Barron's as saying (to the effect of) that the Republicans were too aggresive against Obama re the economy, using blackmail!

Review of Barron's -- Dated 12 November 2012:

spastic_colon's picture

....and the bond marketless, aimless, Monday equity levitation.  Which of course will be attributed to progress in the fiscal cliff talks.


all hail o'blather!

Yen Cross's picture

 Have to admit, think you guys are right.   I think the euro is going to retest the top of the range...

 Don't trade it directly, but lack of news is good news.

Pairadimes's picture

US economic indicators at stall speed, fiscal cliff approaching, Obamacare-triggered layoffs increasing, the EZ is in a high-speed wobble and the President will be working on his short game. Should be a quiet week, alright. I think I'll just sleep in.

Yen Cross's picture

 Just like that food stamp# that got released Friday? One tiny bit of positive news will send the markets UP...

 Every fund manager is just looking for an excuse to go parabolic. The euro is trading the bottom of a 4 month range.

 Have at it big boy.

lolmao500's picture

Just breaking for this week...

Exclusive: Hu Jintao set to step down as military chief

Outgoing leader decides to retire and clear way for Xi Jinping, breaking from the unpopular precedent set by his predecessor Jiang Zemin


Jintao was only supposed to give his post in a year or so... that means, next week, Xi Jinping, who is much more hawkish, will be in charge of the Chinese military... Look out Japan....

ekm's picture

Roughly speaking:

- 25% of american voters voted for Romney, meaning that they prefer that everybody should work for his/her own income

- 25% of american voters voted for Obama, meaning that the other 25% that voted for Romney should work for them, so they can stay home and collect welfare.

- 50 % of american voters did not vote, meaning that they do not mind what the 25% that voted for Obama intends to do.


Conclusion: 75% of american wants the remaining 25% to work for everybody.

Now, this is boring.

Oldwood's picture

I think that most people would be happy to live off of the work of others, if they just knew they could count on them. Few seem to have any qualms about it because we have been indoctrinated to be takers, the entitled. Except for older white men, which as has been pointed out, seem to be taking/keeping the remaining jobs out there. We may well end up with an excelleration to this situation as more people are "going Gault's gultch". While it may not be possible to find some capitalistic paradise in the Colorado mountains, the alternative is to minimize, withdraw from the corrupt aspects of the "economy", living off of the land and whats left of their savings. While this might be applauded by some as opening up new opportunities for others, many will find it difficult to start their own businesses as the climate is hard enough for those currently operating, much less starting from scratch, and its not like startup capital is just lying around. There also a knowledge gap as I think many have developed the idea that business ownership is just luck or chronyism. They will be shocked at the difficulties that lay ahead, and many will fail. Things are going toget rough.

GraveyardSpiral's picture

Yaaaaaaaaaaaaaaaaawn!  Isn't Dances with the Stars on this week, I didn't see it listed?

Lore's picture

Watch November 16.  Greece to be permitted to default FINALLY???

Crude oil falls after Greece budget vote

"Greece’s unrelenting debt problems will top the agenda today when Euro Zone finance ministers discuss whether Athens has met all the conditions set by its international creditors to provide funds so it can stay afloat. Without fresh funds, Greece risks default on November 16, when the Government must repay a three-month treasury bill worth €five billion."