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Daily US Opening News And Market Re-Cap: October 10
From RanSquawk:
- Risk-appetite gathered pace during the European session after Germany and France demonstrated a united front in tackling the ongoing Eurozone crisis. Meanwhile, Russia said that it may help the EU and Spain with the debt crisis, and is ready in principle to buy the Spanish government debt
- S&P affirmed France's ratings at AAA, with a stable outlook, and affirmed Belgium's ratings at AA+, with a negative outlook
- Slovak government party SAS turned down a compromise offer from coalition partners on the EFSF ratification, however the Slovak Parliamentary Budget Committee recommended the EFSF approval
- Weakness in the USD-Index provided support to EUR/USD and GBP/USD
- The governments of Belgium and France agreed to nationalise the Belgian subsidiary of Dexia
Market Re-Cap
European equities traded higher for a vast majority of the European session after Germany and France demonstrated a united front in tackling the ongoing Eurozone crisis, together with enhanced prospects of an approval of changes to the EFSF by the Eurozone members despite hurdles in the Slovakian parliament. The appetite for risk strengthened further following comments from Russia that it may help the EU and Spain with the debt crisis, and is ready in principle to buy the Spanish government debt. Weakness in the USD-Index provided support to oil & gas and basic materials sectors, however financials underperformed on concerns over further recapitalisation of the European banks and after ECB's lending to the European banks registered its highest level this year. In fixed income, the Eurozone 10-year government bond yield spreads with respect to Bunds widened across the board following sovereign rating downgrade of Italy and Spain by Fitch late on Friday, allied with Moody's placing Belgium on review for a potential downgrade. In the forex market, weakness in the USD-Index helped EUR/USD and GBP/USD, whereas the former received further support after S&P affirmed the sovereign ratings for France and Belgium. Also, NZD strengthened partly on the back of comments from Moody's that it is comfortable with the country's AAA rating.
Looking forward the economic calendar remains thin, however markets will watch closely any developments in relation to the Eurozone debt situation. In fixed income, French T-Bill auctions, the ECB's bond purchase announcement, and the BoE's asset purchase operation in the maturity range of 2015-2020 are scheduled for later in the session.
Asian Headlines
China should keep interest rates at ‘reasonable’ and ‘appropriate’ levels to stabilise prices and manage inflation according to three officials from the PBOC. The chances that China will increase interest rates and the reserve requirements for banks in Q4 is very small, with monetary policy possibly entering an ‘observation period’. (China Securities Journal)
EU and UK Headlines:
German Chancellor Merkel said France and Germany want common criteria for bank recapitalisation and that the two nations have a shared position on all subjects. President Sarkozy said that Europe must solve its problems by G-20 meeting in early November and that he wants accelerated economic co-ordination in Eurozone. Sarkozy added that there was no disagreement with Germany on EFSF. (RTRS/Sources)
• Eurozone Sentix Investor Confidence (Oct) M/M -18.5 vs. Exp. -19.0 (Prev. -15.4)
• German Trade Balance (EUR) (Aug) M/M 11.8bln vs. Exp. 9.0bln (Prev. 10.4bln, Rev. to 10.5bln)
• German Exports (Aug) M/M 3.5% vs. Exp. 1.1% (Prev. -1.8%, Rev. to -1.2%)
• German Imports (Aug) M/M 0.0% vs. Exp. 0.6% (Prev. -0.3%, Rev. to 0.5%)
• Italian Industrial Production SA (Aug) M/M 4.3% vs. Exp. 0.2% (Prev. -0.7%, Rev. -0.3%)
• Italian Industrial Production WDA (Aug) Y/Y 4.7% vs. Exp. -2.7% (Prev. -1.6%, Rev. -1.1%)
• Italian Industrial Production NSA (Aug) Y/Y 4.6% vs. Prev. -4.6% (Rev. 4.2%) (RTRS)
• German 6-month Bubill auction for EUR 3.68bln, bid/cover 2.0 vs. Prev. 2.40 (yield 0.291% vs. Prev. 0.180%) (RTRS)
EQUITIES
European equities traded higher for a vast majority of the European session after Germany and France demonstrated a united front in tackling the ongoing Eurozone crisis, together with enhanced prospects of an approval of changes to the EFSF by the Eurozone members despite hurdles in the Slovakian parliament. The appetite for risk strengthened further following comments from Russia that it may help the EU and Spain with the debt crisis, and is ready in principle to buy the Spanish government debt. Weakness in the USD-Index provided support to oil & gas and basic materials sectors, however financials underperformed on concerns over further recapitalisation of the European banks and after ECB's lending to the European banks registered its highest level this year.
FX
Weakness in the USD-Index helped EUR/USD and GBP/USD, whereas the former received further support after S&P affirmed the sovereign ratings for France and Belgium. Also, NZD strengthened partly on the back of comments from Moody's that it is comfortable with the country's AAA rating. In other news, CAD received support on the back of news that Sinopec will acquire Daylight Energy for CAD 2.2bln in cash, together with strength in WTI and Brent crude futures.
COMMMODITIES
WTI and Brent crude futures traded higher during the European session on the back of risk appetite together with weakness in the USD-Index.
Oil & Gas News:
• Saudi oil Minister sees no decline in Global oil demand and the Kingdom’s exports. He added that demand for Saudi oil will rise in next 2 years.
• Senior oil ministry official says two bombs hit pipelines on Friday transporting crude from Iraq's biggest oilfield Rumalia.
• The Japanese government plans to increase its bases for stockpiling crude oil and petroleum products to reinforce preparations for possible major disasters, government sources said Saturday.
• Iran has confirmed Gazprom will not be involved in the development of a major on-shore oilfield, accusing the Russian state energy giant of dragging its feet over the project, the semi-official Fars news agency reported.
• Iran OPEC governor says no need to cut OPEC output quotas at the next meeting.
• Oman 2011 oil production to average about 870,000 BPD according to Oman oil ministry's Jashmi. Oman also sees oil prices at USD 90-100 per barrel in 2012 according to a senior government oil official.
• Russian economy minister sees oil drop to USD 90 by the end of 2012 according to Interfax.
Geopolitical News:
• Yemeni president Saleh made vague comments that he is willing to leave power in his first major speech since returning to Yemen, but he gave no concrete plan for the future of the country. Yemen's opposition cast doubt that the embattled leader was serious.
• The National Transitional Council forces said they had managed to take control of a central neighbourhoods and Sirte university on Sunday, but faced stiff resistance from Gaddafi loyalists.
For a full energy briefing please refer to the Daily Energy Commentary report sent to your inbox earlier today or the RANsquawk website.
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Thumbs up if you're short in this market (and hanging on for dear life)!
Short everything. Except PM's, Hair Salons, Coffin fitters and Farmers.
"No thanks Turkish, I'm sweet enough"
Futures are rallying on the realisation that Europe is beginning to nationalize banks and turn them over to economic experts in governments and central banks. As nationalized entities these banks will have access to the expertise of some of the most avid intellectuals in the world, who will be able to micromanage European economies to optimal prosperity using the most advanced mathematical models. I just hope our officials in the US are learning a valuable lesson about the success of central planning, so that we too can enjoy the fruits of the genius economic analysis that is produced at Ivy League economics departments throughout America.
Anyone with a clue is sitting with cash on the sidelines, waiting for the shorting opportunity of a lifetime.
...I get wood just thinking about it.
The continuing European debt crisis has so dominated the headlines for the last few weeks
that little attention has been paid to the budget struggles of the U.S.
http://www.usdebtclock.org/
Again, an October 1 deadline for Congress to pass a spending budget came and went. This marks the 14th year in a row that this deadline has been missed. Instead, a “continuing resolution” was passed on October 4 to extend federal funding through November 18. Meanwhile, the Congressional debt-reduction “Super Committee” is still meeting behind closed doors, trying to create a new budget that will reduce the deficit and increase employment. It needs to be agreed upon by a profoundly divided and fractious Congress.
With unemployment remaining at 9.1% and the broader U-6 unemployment rate running at 16%, the low readings on the Bloomberg Consumer Comfort Index are not surprising. This last week’s reading of -50.2 continues the trend of the index being stuck below -40 since February. Readings below the -40 level are associated with recessions and their aftermaths.
The “Occupy Wall Street” protests have been growing, with increasing numbers of people showing up in cities around the country to express their anger at the widespread corruption and unfairness in the U.S. financial system. (See an excellent interview by The Real News Network with Michael Hudson on the OWSers and their mission.)
http://www.zerohedge.com/contributed/stock-world-weekly-darker-shade-clo...