Month: December 2014

Following last week’s holiday-shortened week, which was supposed to be quiet and peaceful and was anything but thanks to OPEC’s shocking announcement and a historic plunge in crude prices, we have yet another busy week of macroeconomic reports to look forward to.

DB’s quick roundup:

The highlight of the week is the payrolls report in the US at the end of the week. Kicking off this morning in Europe, we’ve got November flash manufacturing PMI’s in Spain, Italy and Greece to look forward to as well as the final read on France, Germany, and Euro-area numbers today. In terms of the former, the market is expecting a slight improvement in both Spain and Italy, but generally unchanged prints through the latter regions. Looking ahead to this afternoon in the US, the market is expecting a slight drop in the November ISM to 58 (vs. 59 previously) – although noting that it will remain at the higher end of its post-recession range.

There’s no shortage of central bank speak today, with ECB’s Costa and Mogherini speaking as well as the Fed’s Dudley and Fischer. Tuesday is a relatively quiet day data-wise in Europe, with just Euro-area PPI to look forward to, along with Spanish unemployment and the UK construction PMI. Across the pond, we are expecting vehicle sales data, construction spending as well as the NY ISM where the market is looking for a modest improvement. Perhaps of more interest, the Fed’s Yellen will be speaking in the evening so we will keep an eye out for anything of interest there.

We start Wednesday off in Asia, with both non-manufacturing and services PMI prints due out of China as well as the services and composite PMI readings for Japan. Closer to home, we’ve got a host of further services and composite PMI prints to keep an eye out for in Europe – covering Italy, France, Germany, Spain, UK and the Euro-area, as well as October retail sales for the latter where the market expects the yoy print to jump to +1.6% from +0.6% previously. In the US in the afternoon, we will get the ADP employment print which as always will provide some hints into Friday’s payrolls. DB’s Joe Lavorgna is forecasting a slightly more bullish 240k reading (vs. 224k market consensus), up from 230k previously. As well as the ADP print, we also get revisions to Q3 productivity/unit labour costs and the November non-manufacturing ISM survey. Also of note for Wednesday will be the release of the Beige Book in the US.

Thursday’s focus will be in Europe with just claims data in the US to look forward to. Away from the ECB meeting, we’ve got German and Euro-area retail PMI’s, as well as employment data in France. The end of the week brings the aforementioned payrolls report in the US. Before we get there however, we’ve got the leading index print in Japan expected first thing, followed by factory orders in Germany and industrial output in Spain. In terms of the payroll print, the market is looking for a +225k non-farm print whilst our US team has a +250k forecast. Our US colleagues noted that the employment component of the Richmond survey rose to a record high in November, boding well for both the non-manufacturing ISM and nonfarm payrolls print. In terms of unemployment, our colleagues expect the 5.8% unemployment rate to remain unchanged.

Rounding out the week, the Fed’s Fischer and Mester will be speaking on Friday.

* * *

And a more detailed summary from Goldman:

In DMs, highlights of next week include US Nonfarm Payrolls and ISM Manufacturing, DM Manufacturing PMIs including US, Eurozone and Japan, MP Decisions in Australia, Canada, Eurozone and UK.

• [Monday] US ISM Manufacturing, DM Manufacturing PMIs including in US, Eurozone and Japan
• [Tuesday] Australia MP Decision (expect rates on hold)
• [Wednesday] Canada MP Decision, Eurozone and Australia GDP
• [Thursday] MP Decision in Eurozone (expect rates on hold) and UK (expect rates on hold)
• [Friday] US Nonfarm Payrolls (expect 220K), Unemployment (expect 5.8%) and Trade Balance, IP in Denmark, Norway, Spain and Sweden.

In EMs, highlights of next week include MP Decisions in India, Poland, Brazil and Mexico, EM Manufacturing PMIs including China, Chile Minutes.

• [Monday] EM Manufacturing PMIs including in China, CPI in Indonesia, Thailand and Peru
• [Tuesday] India MP Decision (expect rates on hold), Brazil IP
• [Wednesday] MP Decisions in Poland (expect rates on hold) and Brazil (expect 25bp hike), Chile Minutes
• [Thursday] South Korea GDP
• [Friday] Mexico MP Decision (expect rates on hold)

FULL CALENDAR

Monday, December 1

• Events: Speeches by Fed’s Dudley, ECB’s Costa, RBNZ’s Wheeler.
• United States | [MAP 5] ISM Manufacturing (Nov): GS 58.0, consensus 58.2, previous 59
• Denmark | Danish PMI Survey (Nov): Previous 51.7
• Italy | GDP WDA YoY (3Q F): Previous -0.40% (-0.10% qoq)
• DMs | Manufacturing PMI (Nov): United States (consensus 55, previous 54.7), Canada (previous 55.3), Eurozone (GS 50.4, consensus 50.4, previous 50.6), France (GS 47.6, consensus 47.6, previous 48.5), Germany (GS 50.0, consensus 50.0, previous 51.4), Italy (previous 49.0), Norway (previous 50.7), Spain (previous 52.6), Switzerland (previous 55.3), Sweden (previous 52.1), United Kingdom (GS 53.0, previous 53.2), Japan (previous 52.1)
• EMs | Manufacturing PMI (Nov): China (GS 50.4, consensus 50.5, previous 50.8), China HSBC Manufacturing PMI (Consensus 50, previous 50), India (previous 51.6), Indonesia (previous 49.2), South Korea (Previous 48.7), Taiwan (Previous 52), Czech Republic (previous 54.4), Hungary (previous 54.9), Poland (previous 51.2), Russia (previous 50.3), Turkey (previous 51.5), Brazil (previous 49.1), Mexico (previous 53.3)
• Indonesia | CPI YoY (Nov): Consensus 6.80%, previous 4.80% (0.47% mom)
• Thailand | CPI YoY (Nov): Consensus 1.30%, previous 1.50% (-0.10% mom)
• South Africa | [MAP 5] Kagiso Manufacturing PMI (Nov): Previous (r) 50.1
• Peru | CPI YoY (Nov): GS 0.00% (3.30% mom), previous 3.09% (0.38% mom)
• Also interesting: [DM] UK Money Supply; Japan Vehicle Sales and Capital Spending; Australia TD Securities Inflation; New Zealand Terms of Trade Index [EM] Retail Sales in Hong Kong; Trade Balance in Indonesia, South Korea and Brazil; Mexico Remittances and IMEF Manufacturing Index

Tuesday, December 2

• Events: Speech by ECB’s Stournaras.
• United Kingdom | Markit/CIPS UK Construction PMI (Nov): Previous 61.4
• Australia | MP Decision: We expect rates on hold (Cash Rate Target at 2.50%, in line with consensus). We will be looking for signs that the RBA is more convicted on the non-mining recovery and/or more worried about commodity prices, the AUD, and external risks
• Singapore | [MAP 2] Purchasing Managers Index (Nov): Previous 51.9
• India | MP Decision: We expect rates on hold (RBI Repurchase Rate at 8.00%, in line with consensus). Since the last policy meeting on September 30, when the RBI mentioned risks to its January 2016 inflation target as being to the upside, headline inflation has significantly surprised to the downside. The October print was 5.5% compared to the RBI’s projection of 7.2% as per the central point of the CPI fan chart. Inflation has been lower across the board, with food, fuel, and core inflation coming off. Meanwhile, activity data has been softer than expected, and our current activity indicator has fallen from over 8% in July to below 7% in September. Moreover, oil prices have fallen more than US$20/bbl since the last policy meeting. While these have increased the probability of a rate cut to about 30% in our view, the RBI may wait for more data due to sticky inflation expectations, uncertainty about the sustainability of the current positive commodity shock, and the move to the 6% Jan 2016 target. We therefore expect the RBI to pause in December but cut by 25bps each in February and April, to bring the repo rate down to 7.5% from 8% currently. We expect the RBI’s tone to be more dovish than at the September policy meeting, and flag that risks to the January 2016 targets are more balanced. We also expect it to reduce its forecast trajectory of inflation.
• South Korea | CPI YoY (Nov): GS 1.00%, consensus 1.20%, previous 1.20% (-0.30% mom)
• Brazil | [MAP 4] Industrial Production YoY (Oct): GS (0.30% mom), previous -2.10% (-0.20% mom)
• Also interesting: [DM] US Vehicle Sales, Construction Spending and ISM New York; Eurozone PPI; Sweden CA; Japan Monetary Base; Australia Building Approvals and CA; New Zealand ANZ Commodity Price [EM] Romania PPI

Wednesday, December 3

• Events: U.S. Federal Reserve Beige Book
• United States | [MAP 3] ADP Employment Change (Nov): GS 190K, consensus 226K, previous 230K
• United States | Nonfarm Productivity (3Q F): GS 2.5%, consensus 1.80%, previous 2.00%
• United States | Unit Labor Costs (3Q F): GS -1.4%, consensus 0.50%, previous 0.30%
• Canada | MP Decision
• Eurozone | [MAP 5] GDP SA QoQ (3Q P): Previous 0.20% (0.80% yoy)
• Switzerland | GDP YoY (3Q): Previous 0.60% (0.00% qoq)
• Australia | [MAP 5] GDP SA QoQ (3Q): GS 0.5%, previous 0.50% (3.10% yoy)
• DMs | Composite PMI (Nov): US (previous 56.1), Eurozone (GS 51.4, consensus 51.4, previous 52.1), France (GS 48.4, consensus 48.4, previous 48.2), Germany (GS 52.1, consensus 52.1, previous 53.9), Italy (previous 50.4), Spain (previous 55.5), United Kingdom (GS 56.3, previous 55.8), Japan (previous 49.5)
• DMs | Services PMI (Nov): US (previous 56.3), Eurozone (GS 51.3, consensus 51.3, previous 52.3), France (GS 48.8, consensus 48.8, previous 48.3), Germany (GS 52.1, consensus 52.1, previous 54.4), Italy (previous 50.8), Spain (previous 55.9), Sweden (previous 57.7), United Kingdom (GS 57.0, previous 56.2), Japan (previous 48.7)
• EMs | Composite PMI (Nov): China (Previous 51.7), India (previous 51), Russia (previous 49.1), Brazil (previous 48.4), South Africa (previous 52.7)
• EMs | Services PMI (Nov): China (Previous 52.9), India (previous 50), Russia (previous 47.4), Brazil (previous 48.2)
• China | Non-manufacturing PMI (Nov): Previous 53.8
• Hong Kong | HSBC Hong Kong PMI (Nov): Previous 47.7
• Hungary | [MAP 5] GDP NSA YoY (3Q F): Previous 3.20% (0.50% qoq)
• Poland | MP Decision: We expect rates on hold (Base Rate at 2.0%) unchanged since the 50bp cut in October. We also expect the Polish MPC to cut the base rate by an additional 50bps by end-2015H1, and for the MPC to take a cautiously dovish tone and keep the door open to further easing, but without committing to specific rate guidance or timing. In our view, this cautiousness of the MPC, as well as a deep division in views, remain the key upside risks to the rate forecast
• Romania | GDP YoY (3Q P): Previous 3.20% (1.90% qoq)
• Turkey | CPI YoY (Nov): GS 9.5%, previous 8.96% (8.96% mom)
• Brazil | MP Decision: We expect a 25bp hike (Selic Rate to 11.50%, in line with consensus)
• Chile | Minutes from MP Decision
• Also interesting: [DM] US MBA Mortgage Applications, ISM Non-Manf. Composite and Nonfarm Productivity; Eurozone Retail Sales [EM] Hungary Trade Balance and Retail Sales; Colombia Exports

Thursday, December 4

• Events: Speeches by BOJ’s Sato and ECB’s Coeure.
• Eurozone | MP Decision: We expect rates on hold (ECB Main Refinancing Rate at 0.05%), and we do not expect further specific measures to be announced. That said, President Draghi will likely reinforce the dovish stance adopted in his Frankfurt speech last Friday.
• United Kingdom | MP Decision: We expect rates on hold (Bank Rate at 0.50%)
• South Korea | [MAP 5] GDP YoY (3Q F): Consensus 3.20% (0.9.% qoq), previous 3.20% (0.90% qoq)
• Also interesting: [DM] US Initial Jobless and Continuing Claims; France ILO Unemployment Rate; Retail PMI in France and Italy; Australia Trade Balance and Retail Sales [EM] Indonesia Consumer Confidence; Brazil Vehicle Sales

Friday, December 5

• Events: Speech by ECB’s Weidmann
• United States | [MAP 5] Change in Nonfarm Payrolls (Nov): GS 220K, consensus 228K, previous 214K
• United States | [MAP 5] Unemployment Rate (Nov): GS 5.8%, consensus 5.70%, previous 5.80%
• United States | [MAP 2] Trade Balance (Oct): GS -$42.0B, consensus -$41.0B, previous -$43.0B
• United States | Average Hourly Earnings MoM (Nov): GS 0.2%, consensus 0.20%, previous 0.10% (2.00% yoy)
• United States | Factory Orders (Oct): GS 0.3%, consensus -0.10%, previous -0.60%
• Denmark | Industrial Production MoM (Oct): Previous -4.60%
• Norway | Industrial Production MoM (Oct): Previous 4.40%
• Spain | Industrial Output SA YoY (Oct): Previous 1.00%
• Sweden | Industrial Production NSA YoY (Oct): Previous -4.30% (-1.10% mom)
• Philippines | CPI YoY (Nov): Previous 4.30% (0.10% mom)
• Taiwan | CPI YoY (Nov): Consensus 1.10%, previous 1.10%
• Hungary | [MAP 4] Industrial Production WDA YoY (Oct P): GS 4.0%, previous 5.20% (2.70% mom)
• Ukraine | CPI YoY (Nov): Previous 19.80% (2.40% mom)
• Brazil | IBGE Inflation IPCA YoY (Nov): GS 6.62% (0.57% mom), consensus 6.63% (0.55% mom), previous 6.59% (0.42% mom)
• Chile | [MAP 5] Economic Activity YoY (Oct): GS 1.30%, previous (r) 1.40% (-0.20% mom)
• Colombia | CPI YoY (Nov): GS 3.7% (0.17% mom), consensus 3.51% (0.03% mom), previous 3.29% (0.16% mom)
• Mexico | MP Decision: We expect rates on hold (Overnight Rate at 3.00%, in line with consensus)
• Also interesting: [DM] US Consumer Credit; Canada Unemployment; Germany Factory Orders; Japan Leading and Coincident Indexes [EM] Malaysia Trade Balance; Philippines Bank Lending; Czech Republic Retail Sales; Mexico Consumer Confidence

via Zero Hedge http://ift.tt/1B5nKqx Tyler Durden

The Nigerian Nairu and Russian Ruble have been the hardest hit in the last few days as oil-producing nations across the world see their currencies come under increasing pressure. With both hitting new record lows against the USDollar (with the Nairu at 184.5,  already exceeding the recently devalued currencies upper peg band at around 176 per USD), chatter this morning is that the Russian central bank is actively intervening in the Ruble market after it hit 53.9 in early US trading.

 

The currency carnage since oil prices peaked

 

and desk chatter is the Russian Central Bank is intervening as RUB neared 54 to the USD

 

As Bloomberg reports, it’s not all terrible news for Russia,

A weaker ruble benefits the budget because it boosts export revenue in local-currency terms, helping offset the slide in Brent. Russia relies on oil and gas for 50 percent of budget revenue.

 

Bank of Russia probably won’t intervene as the “ruble’s devaluation balances out the falling oil price,” Evgeny Shilenkov, the head of trading at Veles Capital LLC in Moscow, said by phone Nov. 28. “The currency market is more realistic after the free-float and reflects the actual oil price.”

 

Nabiullina is weighing policy options as she seeks to keep lending flowing in an economy on the brink of recession, while avoiding a deeper currency slump that could spark a rush among citizens to switch their ruble savings into dollars.

 

Russia faces a 70 percent chance of recession, a survey of economists from Oct. 30 showed. The economy of the world’s biggest energy exporter has been weakened by U.S. and European sanctions over President Vladimir Putin’s role in Ukraine, where pro-Russian rebels battle government troops.

 

“The pressure on the ruble is less about the conduct of Russian monetary policy and more about plunging oil prices,” Nicholas Spiro, head of Spiro Sovereign Strategy in London, said by e-mail Nov. 28.

Charts: Bloomberg

via Zero Hedge http://ift.tt/1v3RAU3 Tyler Durden

• Moody’s Downgrades Japan’s Credit Rating (WSJ)
• China Factory Gauge Drops as Shutdowns Add to Slowdown (BBG)
• Euro zone factory growth stalls in November as new orders sink (Reuters)
• Espírito Santo Faces Money-Laundering Investigations (WSJ)
• Oil at $40 Possible as Market Transforms Caracas to Iran (BBG)
• Hong Kong warns protesters not to return after clashes close government HQ (Reuters)
• Bond Secrets Decoded 9,539 Miles From Wall Street in Lot (BBG)
• Ruble Rally Turns to Rout as Fortunes Tied to Sinking Oil (BBG)
• Loans Made in Blink as Banks, Funds Vie for LendingClub Clients (BBG)
• In fight for influence, Russia can play good cop too (Reuters)
• OPEC Inaction Spurs Survival of Fittest as Oil Below $65 (BBG)
• Vox Media Valued at Nearly $400 Million After Investment (NYT)
• Bond Funds Load Up on Cash (WSJ)
• Funding Deadline Tops Congress’s Agenda (WSJ)
• E.ON to Split Into Two Companies (WSJ)

 

Overnight Media Digest

WSJ

* Large bond funds are holding the most cash since the financial crisis as portfolio managers brace for potential price swings and unruly trading ahead of an expected Federal Reserve rate increase in 2015. (http://on.wsj.com/1FH47mw)

* Retail spending over the Thanksgiving weekend fell 11 percent, the National Retail Federation said, a sign the four-day shopping bonanza may be losing its punch. (http://on.wsj.com/1vF2bbT)

* Lawmakers returning to Capitol Hill on Monday will have less than two weeks to figure out how to keep the government funded amid an acrimonious fight between Republicans and the White House over immigration. (http://on.wsj.com/1rLb2oC)

* German utility E.ON SE said late Sunday it would split into two companies, with one focused on renewables and the new one on conventional energy, as the power giant aims to address rapid changes in the energy market and facilitate the valuation of its assets. (http://on.wsj.com/1v8TKqw)

* Freeport-McMoRan Inc is nearing a settlement to resolve allegations its board and executives had conflicts of interest while negotiating the natural-resource company’s purchase of two affiliates last year. (http://on.wsj.com/1yrCgp9)

* Investment firm Centerbridge Partners LP is nearing a deal to buy IPC Systems Inc, a communications company for financial trading, for more than $1.1 billion including debt, according to people familiar with the matter. (http://on.wsj.com/1v7Ibjs)

* New pressure from OPEC will cause a lot of pain for U.S. energy companies, but they probably will not slash American oil output anytime soon, experts said this weekend. (http://on.wsj.com/1tCDuZq)

* Automakers could report their highest November U.S. sales in more than a decade after new-car shoppers feasted on early Black Friday promotions. (http://on.wsj.com/1FH8aiX)

 

FT

* Germany’s biggest utility E.ON announced plans on Sunday to split in two and spin off most of its power generation, energy trading and upstream businesses as the earnings of the company have been squeezed and it looks forward to a new strategy.

* Telecoms group Altice SA has agreed to buy the Portuguese operations of Brazil’s Grupo Oi for about 7.4 billion euros ($9.2 billion), it said in a statement on Sunday after it beat out a rival bid from private equity funds Apax and Bain.

* Swiss voters overwhelmingly rejected proposals on Sunday to boost gold reserves and impose strict new curbs on immigration. The “Save our Swiss gold” initiative was rejected by 77 percent of voters and a separate proposal to cut annual immigration put forward by Ecopop, was rejected by 74 percent of voters.

* Lloyds Banking Group Plc’s insurance unit Scottish Widows has put its offshore investment and tax planning business up for sale. Several parties have already expressed interest in the Isle of Man-based operation business which Lloyds inherited when it acquired HBOS.

 

NYT

* Vox Media, a publisher with a fast-growing portfolio of online lifestyle and news brands, will announce on Monday that it has just closed a $46.5 million round of financing from investment firm General Atlantic, the New York Times reported, citing a person with knowledge of the deal. (http://nyti.ms/1rJ3kAP)

* Three years after his death, Steve Jobs is very much a presence in courtrooms across the country. And that’s not necessarily good news for Apple Inc. In December, the company is set to go to trial in the third major antitrust lawsuit it has faced since Jobs died. His emails will play an important role in the case, as they did in the last two. But lawyers will probably have to work hard to give his statements a positive spin. (http://nyti.ms/15M2SaY)

* Sales, both in stores and online, from Thanksgiving through the weekend were estimated to have dropped 11 percent, to $50.9 billion, from $57.4 billion last year, according to preliminary survey results released Sunday by the National Retail Federation. Sales fell despite many stores opening earlier than ever on Thanksgiving Day. The web failed to attract more shoppers or spending over the four-day holiday weekend than it did last year. (http://nyti.ms/1tCvJTm)

* Deadly coal mining disasters are nothing new to West Virginia, but a 2010 explosion is different in one important respect: A Chief Executive, Donald L. Blankenship, is being charged over the 29 lives lost. Legal experts call the case against Blankenship, a figure both feared and renowned for his power in West Virginia, a turning point after a century in which the power of coal barons over politicians, courts and the economy protected them. (http://nyti.ms/1ya9jQM)

* Peggy Young used to drive for United Parcel Service , delivering envelopes and small packages. Then she got pregnant, and her doctor recommended that she avoid lifting anything heavy. The company responded by placing her on unpaid leave. She sued under the federal Pregnancy Discrimination Act, and the Supreme Court will hear her case on Wednesday. (http://nyti.ms/1FH5ZvD)

* Media enterprises have not figured on the list of billion-dollar deals backed by the Hong Kong-based investor Jho Low in recent years, but his family’s charitable foundation is putting up $25 million to save an ailing United Nations-owned news service that is in the business, he says, of saving lives. (http://nyti.ms/1vZ66Du)

 

Britain

The Times

To Gfinity and beyond, as eSports comes to AIM

Gfinity, which runs tournaments in which gamers are watched while playing at sports stadiums and entertainment venues, is to raise funds to help to build a dedicated “eSports” stadium near London. (http://thetim.es/1A5dawu)

Co-operative Bank set to fail latest stress test

The Co-operative Bank is set to fail a key test of its financial strength this month and is expected to be forced at least to accelerate its recovery plan to keep regulators onside. (http://thetim.es/11G2IzA)

The Guardian

Barclays rolls out face-to-face video banking

Barclays Plc is to offer a “video banking” service that allows customers to have a “face-to-face” conversation with an adviser via their smartphone, tablet or computer, wherever they are in the world, whatever the time of day. The bank said the move was “a UK banking first”. (http://bit.ly/1rHwNeu)

Christmas shopping frenzy moves online for Cyber Monday

After Black Friday’s pitched supermarket battles over discounted TVs and domestic gadgets, the retail frenzy moves online to a day the industry has christened Cyber Monday, with nearly 650 million pounds ($1.01 billion) expected to be spent with the click of a mouse.(http://bit.ly/1y9Mg8F)

The Telegraph

United Cacao sweetens Aim with 23 mln pounds float

United Cacao <IPO-UCLS.L> is to float on London’s junior Aim market today, making it the first publicly-listed pure-play cocoa bean plantation in the world. The listing comes at a time of unprecedented global demand for chocolate, with production problems in the major supplier countries prompting concerns about an impending chocolate shortage. (http://bit.ly/12avtVU)

Banks remove barriers to business loans

Royal Bank of Scotland Plc, Lloyds Banking Group Plc , Barclays Plc and HSBC Holdings Plc have introduced common standards meaning it will take no more than seven working days to process applications allowing rival lenders to secure loans against businesses’ assets. (http://bit.ly/12i7EL1)

Sky News

Retailers hope Black Friday feeling will last

Retailers are hoping to cash in on further price cuts this weekend after the frenzy of Black Friday saw shoppers scrambling to bag pre-Christmas bargains. Online retailers are also preparing their systems for similar success on Cyber Monday, another sales event originating in the U.S. and adopted by the UK (http://bit.ly/1Cw1mZ0)

Ex-BP boss Tony Hayward boosted by Kurdish payout

Genel Energy, an oil explorer founded by Tony Hayward, a former BP Plc chief executive, will disclose that it has received a multimillion pound payment after a months-long delay prompted partly by Islamic State incursions into Kurdistan. (http://bit.ly/1vDjda5)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Markit manufacturing PMI for November at 9:45–consensus 55.0
ISM manufacturing index for November at 10:00–consensus 57.8

ANALYST RESEARCH

Upgrades

Alcoa (AA) upgraded to Buy from Neutral at Citigroup
Amedisys (AMED) upgraded to Sector Perform from Underperform at RBC Capital
Deere (DE) upgraded to Market Perform from Underperform at Wells Fargo
Deere (DE) upgraded to Neutral from Underweight at JPMorgan
Deere (DE) upgraded to Outperform from Neutral at RW Baird
E2open (EOPN) upgraded to Outperform from Market Perform at Northland
Groupon (GRPN) upgraded to Buy from Neutral at BofA/Merrill
Navistar (NAV) upgraded to Buy from Neutral at Longbow

Downgrades

American Water (AWK) downgraded to Neutral from Outperform at RW Baird
Bank of Montreal (BMO) downgraded to Neutral from Buy at Citigroup
Big Lots (BIG) downgraded to Neutral from Overweight at JPMorgan
CONSOL (CNX) downgraded to Neutral from Buy at Citigroup
Carnival (CCL) downgraded to Neutral from Buy at Goldman
Diamond Offshore (DO) downgraded to Neutral from Buy at Guggenheim
Dover (DOV) downgraded to Underweight from Neutral at JPMorgan
Dr Pepper Snapple (DPS) downgraded to Underperform from Sector Perform at RBC Capital
Extended Stay America (STAY) downgraded to Neutral from Overweight at JPMorgan
ITC Holdings (ITC) downgraded to Hold from Buy at Wunderlich
InterContinental (IHG) downgraded to Sell from Neutral at UBS
Monster Beverage (MNST) downgraded to Outperform from Top Pick at RBC Capital
NorthWestern (NWE) downgraded to Neutral from Outperform at RW Baird
Seadrill (SDRL) downgraded to Neutral from Buy at Guggenheim
Xcel Energy (XEL) downgraded to Neutral from Outperform at RW Baird

Initiations

21st Century Fox (FOXA) reinstated with a Buy at Goldman
Antero Midstream (AM) initiated with a Buy at Citigroup
Antero Midstream (AM) initiated with an Outperform at Credit Suisse
Antero Midstream (AM) initiated with an Outperform at RW Baird
Antero Midstream (AM) initiated with an Outperform at Wells Fargo
Antero Midstream (AM) initiated with an Overweight at Barclays
Antero Midstream (AM) initiated with an Overweight at JPMorgan
Arista Networks (ANET) initiated with an Underperform at Jefferies
Chefs’ Warehouse (CHEF) initiated with a Neutral at JPMorgan
Dynamic Materials (BOOM) initiated with a Buy at Roth Capital
FMSA Holdings (FMSA) initiated with a Buy at Jefferies
Nevro (NVRO) initiated with an Outperform at JMP Securities
Nevro (NVRO) initiated with an Overweight at JPMorgan
Volvo (VOLVY) initiated with an Outperform at Credit Suisse
Yahoo (YHOO) reinstated with a Neutral at Credit Suisse
YuMe (YUME) initiated with an Equal Weight at Barclays

COMPANY NEWS

Boeing (BA), Ryanair (RYAAY) finalized order for 100 737 MAX 200s, valued at $11B
Novartis (NVS) fingolimod PPMS Phase III trial did not meet primary endpoint
Moody’s downgraded Japan to A1 from Aa3; outlook stable
ChannelAdvisor said Black Friday online sales grew 22% (EBAY, AMZN)
Amazon (AMZN) announced that Black Friday sales of Kindle e-readers and Fire tablets on Amazon.com grew significantly year over year. Fire tablet sales on Amazon.com were up over 3x year over year this Black Friday; Kindle e-reader sales on Black Friday grew nearly 4x year over year

EARNINGS
Fifth Street Finance (FSC) reports Q4 net investment income 25c, consensus 26c

NEWSPAPERS/WEBSITES

New Google Glass (GOOG) device to feature Intel (INTC) chip, WSJ reports (TXN)
Samsung’s (SSNLF) key executives to maintain positions at company, WSJ says
Google (GOOG) Chromebook gains on Apple (AAPL) iPads in U.S. schools, FT reports
Sony (SNE) enlists FireEye’s (FEYE) Mandiant in cyber attack repair, Reuters reports
Sony (SNE) exploring whether North Korea hackers are behind attack, Re/code reports
GSK (GSK) plans reorganization, including U.S job cuts, Bloomberg reports
Oaktree Capital (OAK) shares look like a bargain, Barron’s says
Accenture (ACN) could rise 40% in three years, Barron’s says

via Zero Hedge http://ift.tt/12e7Uvy Tyler Durden

Less than two weeks ago we were delighted to remind S&P that about a year ago, the laughable rating agency which is now terrified of being sued any time it tells the truth, promised it would downgrade Japan the moment things for the insolvent nation turn up to be, well, just as they are. And yet, so far S&P has been very quiet on the downgrade front, most likely because as it has its hands full on the litigation front with the DOJ for downgrading the US back in 2011. So overnight we were not exactly surprised when that “other” rating agency, Moody’s, shocked the world and headline scanning algos when it downgraded Japan by 1 notch from Aa3 to A1.

Here are the reasons why Moody’s just did what it did, just two weeks ahead of the all-important for Abenomics snap election, in which should support for Abe tumble, then all bets on Abenomics, and the global stock market reflation game, are off.

The key drivers for the downgrade are the following:

1. Heightened uncertainty over the achievability of fiscal deficit reduction goals;
2. Uncertainty over the timing and effectiveness of growth enhancing policy measures, against a background of deflationary pressures; and
3. In consequence, increased risk of rising JGB yields and reduced debt affordability over the medium term.

The full Moody’s report  below (link)

The A1 rating reflects the government’s significant credit strengths, including a large, diverse economy with a strong external position, very high institutional strength and a very strong domestic funding base.

The stable outlook reflects the broad balance between upside risks including significant fiscal consolidation and a resumption of economic growth, and downside risks including intensification of deflationary pressures and loss in economic momentum.

The rating action does not affect Japan’s Aaa foreign currency, local currency country and bank deposit ceilings. Those ceilings act as a cap on ratings that can be assigned to the obligations of other entities domiciled in the country.

RATIONALE FOR DOWNGRADE

DRIVER 1: HEIGHTENED UNCERTAINTY OVER REACHING FISCAL TARGETS AND CONTAINING DEBT

The first driver for the downgrade of the Japan government’s debt rating to A1 is the rising uncertainty over whether the government’s medium-term deficit reduction goal is achievable, and whether policy makers can overcome the tensions inherent in promoting growth while simultaneously stabilizing and reversing the rising debt trajectory.

The Bank of Japan remains committed to monetary expansion, with some positive impact on core CPI inflation. However, while monetary expansion has boosted domestic aggregate demand to some extent, the consumption tax increase on April 1 2014 has exerted even more powerful downward pressure. At least in the short term, deficit reduction is undermining the growth revitalization objective of Prime Minister Shinzo Abe’s economic policy strategy.

The government’s response, to announce a delay in the second step in the consumption tax increase, appears to represent a shift in policy towards stemming re-emerging deflationary pressures on economic growth and away from near-term fiscal deficit reduction. This strategy could have merits. In our view, the government’s target of halving the primary deficit balance, excluding budgetary interest payments, by fiscal 2015 from its fiscal 2010 level will be difficult to achieve without more robust nominal GDP growth and hence improved buoyancy in tax revenues. In their absence, reaching the long-term target of a primary balance surplus by 2020 will be even more challenging.

However, the strategy also poses risks to fiscal consolidation and, over the longer-term, to debt affordability and sustainability. Japan’s deficits and debt remain very high, and fiscal consolidation will become increasingly difficult to achieve as time passes given rising government spending, particularly for social programs associated with a rapidly ageing population.

The government acknowledges that additional but as yet unidentified economic and fiscal reforms will be needed for Japan to achieve its primary balance target in the second half of this decade. But the postponement of the second stage of the increase in the consumption tax has resulted in the delay of the 2015 budget, and a concrete plan to meet fiscal targets is not likely to emerge until the second half of 2015. The trajectory of government debt, projected at 245% of GDP in 2014 according to the IMF, will only start to decline under the most favorable combination of economic and fiscal reforms, including tax and social security system reforms and total factor productivity improvements, an end to deflation and achievement of annual nominal GDP growth of more than 3.5%. Given current domestic circumstances and lackluster external demand for Japan’s exports, achieving these conditions will be challenging.

DRIVER 2: ECONOMIC GROWTH POLICY UNCERTAINTIES AND CHALLENGES IN ENDING DEFLATION

The second driver for the downgrade is the rising uncertainty over the government’s ability to enhance medium term growth through structural economic reform — the third ‘arrow’ of Abenomics — success in which will be crucial to achieve fiscal consolidation. While some indicators suggest a pick-up in economic activity over the past year, potential economic growth remains low.

GDP growth sharply contracted in the second quarter of this year following the introduction on 1 April of the first step of the consumption tax increase, to 8% from 5%. Output was also affected by adverse weather in the summer to some extent. And both real and nominal GDP contracted again in the third quarter of the year, putting Japan’s economy in recession for the third time since global financial crisis.

Moreover the relapse of the GDP deflator, the broadest measure of price movements, into negative territory in the third quarter of this year highlights the difficult nature of ending more than a decade of deflation. Although the ratcheting up by the Bank of Japan of its quantitative easing policies in October may once again move the deflator back onto positive ground in the fourth quarter of 2014, the task ahead for economic revitalization and price reflation is looking more challenging than envisaged by Prime Minister Abe when he introduced his three-arrow economic policy package in March 2013.

Looking further ahead, the most notable structural reform measure to be implemented to date is a reduction in corporate taxation beginning in fiscal 2015. The details have yet to be announced, and the implications for business investment are therefore still unclear. It is not yet clear what further measures the government will choose, or be able, to take to address the deep-rooted structural problems of Japan’s economy, including broadening labor force participation, enhancing corporate governance and dealing with the challenges posed by demographic trends.

DRIVER 3: EROSION OF POLICY EFFECTIVENESS AND CREDIBILITY COULD UNDERMINE DEBT AFFORDABILITY

The third driver for the downgrade is the potential implications of the first two drivers for the affordability and sustainability of Japan’s huge debt load. Debt sustainability will rest on the continued willingness of domestic investors to provide funding at affordable rates for the government. This looks likely to remain the case as long as investor confidence is not undermined. The JGB market has been characterized by low and stable interest rates despite the exceptional rise in debt since the 1990s. And JGB interest rates have remained low and stable through a number of crisis episodes, including Japan’s 1997-1998 financial crisis, the 2008 global financial crisis and the 2011 tsunami and Fukushima nuclear power plant disaster.

Nonetheless, the Bank of Japan’s efforts to raise inflation to 2% may eventually put pressure on government bond yields and thereby raise government borrowing costs. Rising interest rates would increase expenditure and offset gains from revenue buoyancy. Rising uncertainty regarding the government’s capacity to deliver on its policy objectives could raise yields without any commensurate rise in revenues. Either outcome would further undermine the government’s ability to meet its fiscal deficit targets and reduce its debt burden over the medium term, and eventually start to undermine debt sustainability.

RATIONALE FOR A1 RATING AND STABLE OUTLOOK

JAPAN’S CREDIT STRENGTHS SUPPORTED BY A DEEP DOMESTIC BOND MARKET, STRONG INSTITUTIONS, LOW VULNERABILITY TO EXTERNAL SHOCKS

Whatever the challenges facing the government, Japan retains very significant credit strengths. Its A1 rating and stable outlook are supported by its large, diverse economy, which we characterize as having ‘High’ economic strength. And even with the very significant debt burden, we believe that Japan exhibits only ‘Low’ susceptibility to event risk. A marked home bias on the part of resident investors provides a strong funding base —domestic investors retain a marked preference for government bonds, which has allowed fiscal deficits to be funded at the lowest nominal rates globally over the past two decades. Private sector fiscal surpluses remain more than adequate to fund government deficits, without the government resorting to external funding. We believe that very high institutional and structural strengths, including a decisive and powerful central bank, currently sustain this funding advantage and are very unlikely to diminish over the rating horizon.

Although Japan’s government gross financing requirements are far larger than other advanced country governments’, contingent risks which could elevate further such financing needs are low and remote. Japan’s banking and corporate sectors have restored their health in recent years in terms of capitalization and deleveraging. Household debt is at a moderate level and has remained stable over the past decade. And despite low economic growth, Japan’s labor market is relatively sound in regard to key features, such as low unemployment level, the recent pick-up in employment and nominal wages and a labor force participation rate broadly comparable with other advanced economies.

Related to Japan’s home bias is its strong external payments position, which reflects the accumulated system-wide savings. At more than 60% of GDP in 2013, Japan’s net international investment position is much larger than any advanced industrial G-20 economy, insulating its economy and capital market from global shocks. Income earned from Japan’s sizable external assets has helped to sustain the current account surpluses, although this has diminished owing to a shift into a trade deficit which is in large part driven by the demand for energy imports following the shutdown in the nuclear power industry after the 2011 tsunami and Fukushima nuclear power plant disaster.

WHAT COULD MOVE THE RATING DOWN / UP

While the stable outlook indicates that we believe the rating is well positioned for the next twelve to eighteen months, factors that could prompt a negative rating action include significant divergence from the path toward achieving fiscal targets; an intensification of deflationary pressures; a severe loss in economic momentum; or a shift in the external current account surplus into persistent deficit.

Moody’s would consider a positive rating action if Japan were to implement policies that we concluded were likely to restore economic momentum and improve prospects for significant fiscal consolidation and debt reduction.

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Another day full of global macroeconomic disappointments is certain to send the S&P500 to all time-higherest records as 100,000 or so E-mini contracts exchange hands between central banks and Citadel’s algos.

It started with the shocking NRF announcement that US holiday sales cratered 11% over the extended Thanksgiving weekend (which the NRF blamed on an “improving economy”, to which even Goebbels bows down his head), but also China’s latest manufacturing print miss expectations for the 2nd month in a row and drop to 8 month low, and moments thereafter, Eurozone releasing a downward revision to its October PMI data, with the all-important German PMI now openly in contraction, revised down from 50.0 to 49.5. And the punchline: the basket case that is Japan was finally downgraded by Moody’s to A1 from Aa3 by Moody’s which sent the USDJPY first to a new 7-year high at 119.14, only for USD/JPY to fall to new session low at 118.08 as everyone now realizes the Japanese endgame is just around the corner. Perhaps that is why after sliding 2% overnight, gold and silver have retraced all losses and are now higher from the Friday close, which however is more than can be said for copper down over 3% (thanks China) and of course crude, with both Brent and WTI declines continuing this morning as concerns of a sweeping global recession will sink future energy demand.

Looking at Europe’s PMI, the final number printed at 50.1 in November, 0.3pt below the Flash estimate (and the consensus) and 0.5pt below the October reading. The German final Manufacturing PMI for November was revised down 0.5pt to 49.5, contracting for the first time in years, while the French Manufacturing PMI recorded a 0.8pt upward revision to 48.4. The Italian Manufacturing PMI was unchanged from the level recorded in October (49.0), against expectations of a small increase (Cons: 49.4). By contrast, the Spanish Manufacturing PMI rose forcefully by 2.1pt to 54.7, against expectations of a slight contraction (Cons: 52.1).

The breakdown in November was weak. New orders receded by 1.7pt (to 48.7) and stocks fell by 0.9pt (to 49.0), leaving the forward-looking order-to-stock ratio stable in November; following gradual declines during 2014, this ratio now stands at the lowest level since April 2013. Both production and employment declined by 0.3pt in November, respectively. With today’s final print, the Euro area Manufacturing PMI is now estimated to have fallen in November (0.5pt), unwinding the small increase seen in October. The Euro area Manufacturing PMI is now at its lowest level in more than a year, having risen sharply from July 2012 to January 2014 reverting trend since then.

As a result, European shares fall with the basic resources and oil & gas sectors underperforming and utilities, travel & leisure outperforming. Crude oil continues decline. China November manufacturing PMI below estimates, Euro-zone PMI revised lower, German PMI revised to 49.5, U.K. PMI above estimates. U.S. post-Thanksgiving sales fall 11%. The Italian and U.K. markets are the worst-performing larger bourses, the German the best. The euro is little changed against the dollar. Greek 10yr bond yields fall; Japanese yields increase. Commodities decline, with natural gas, WTI crude underperforming and gold  outperforming. U.S. manufacturing PMI, ISM manufacturing due later.

Market Wrap

• S&P 500 futures down 0.5% to 2057
• Stoxx 600 down 0.6% to 345.2
• US 10Yr yield up 1bps to 2.17%
• German 10Yr yield down 0bps to 0.7%
• MSCI Asia Pacific down 0.7% to 139.7
• Gold spot up 0.1% to $1174.1/oz

Bulletin headline summary from Bloomberg:

• Treasuries decline, with 30Y yield retreating from lowest closing levels this year; oil led commodities to a five-year low as energy producers declined the most in a global stock rout.
• China’s official manufacturing PMI fell to 50.3 in Nov., an eight-month low, as factory shutdowns aggravated a pullback in the economy
• Germany’s manufacturing PMI unexpectedly shrank last month, falling to 49.5 from 51.4, in a slump that dragged factories in the euro area to the brink of stagnation
• U.S. retail sales tumbled an estimated 11% over the weekend, according to the National Retail Federation, as consumers were unmoved by aggressive discounts, longer hours; more than 6m shoppers who had been expected to hit stores never showed up
• Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union
• The “shock therapy” of a steep drop in crude prices, which have fallen to a five-year low, is no solution for OPEC’s loss of market share to U.S. shale  producers, Iran’s Oil Minister Bijan Namdar Zanganeh said
• U.K. manufacturing growth unexpectedly accelerated in November, with Markit’s manufacturing PMI rising to 53.5 from 53.3, as domestic demand strengthened
• Moody’s cut Japan’s credit rating, a setback to Prime Minister Shinzo Abe a day before he begins campaigning for an election that he wants to focus on the economy.
• Sovereign yields mixed. Asian stocks mostly lower; European stocks, U.S. equity-index futures decline. Brent crude falls, WTI tumbles below $65/bbl to lowest since July 2009; gold higher, copper plunges 3.2%

DB’s Jim Reid as is customary concludes the weekend recap

Wrapping up Friday’s market moves, the further sell-off in Oil weighed on the broader market tone although overall equity and credit markets were relatively resilient. For Oil we saw WTI (-10.23%, playing catch up after Thanksgiving) and Brent (-3.35%) close at $66.15/bbl and $70.15/bbl, respectively. They have also moved lower overnight (more below). The S&P 500 (-0.27%) was dragged down by the Energy (-6.26%) component on the day but this was somewhat offset by gains in Consumer Staples (+1.22%), Consumer Discretionary (+1.17%) and Utilities (+1.07%). Airlines in particular were also a key beneficiary of this move lower in Oil as the sector sub-index rallied nearly 6% on Friday. Speaking of Consumers, the post Thanksgiving weekend also marks the unofficial start of the Holiday shopping season. Early estimates are in for retail sales in the US over the four day Cyber Monday weekend, with the National Retail Federation reporting an estimated 11% fall compared to 2013 to $50.9bn. It appears that sales at bricks and mortar stores have held in firmer however, with ShopperTrak reporting a 0.5% fall to $12.29bn on Thursday and Friday. The FT reports that the downward trend might not tell the entire picture however, with many stores commencing sales in mid-November in a bid to catch customers early and triggering an earlier shift in spending patterns – making it hard to determine overall consumer sentiment. Indeed it used to be just black Friday that was the focal for discounts. Now its spread across a longer period prior to this and after.

Turning to the fixed income markets the continued strength in Treasuries was one of the key highlights for US fixed income markets on what was otherwise another weak day for Oil & Gas credits. Starting with rates, the 5yr and 10yr benchmark Treasury reopened following Thanksgiving some 8bps lower in yield before closing at 1.48% and 2.16%, respectively. The 10yr in particular is just whiskers away from the October 15th closing lows of 2.136%. In the world of Credit, US IG spreads were broadly unchanged at the index level as opposed to a +7bp widening in US HY. The oil & gas sector extended their move wider with IG and HY energy spreads closing +4bp and +37bp wider at 157bp and 624bp on the day, respectively. As the stresses in US HY energy credits continue to build there seems to be increasing chatter of whether this current move in Oil will drive the next default cycle. Our US credit strategists have recently said that WTI at around $75 is already low enough to see first signs of stress materializing among the weakest names. At these levels our US strategists estimated pure energy sector contribution to US HY default rate at less than 1%, and pushing the headline rate to 3.5%, up from 1.7% currently. Given we’ve past the $75 mark at WTI, our colleagues noted that at $60 WTI, if sustained for a considerable time, could be sufficient to push the overall energy sector into distress. Clearly still a developing story that should keep everyone on their toes for now.

Closer to home, CPI and unemployment data for the Euro-area on Friday did little to excite the market after coming in line with consensus. However there were some interesting comments out of the ECB’s Lautenschlaeger ahead of the central bank meeting this week, commenting on the already depressed rates, specifically in Spain and Italy, and whether public QE would necessarily see a positive outcome. As mentioned part of the interest this Thursday may well be on whether we see a consensus for further action – it’ll be interesting to see if we hear any conflicting statements in the lead up this week. Just wrapping up the weekend news, the results from the Swiss referendum were released and showed the Swiss – as expected – comprehensively reject the proposal to force the Swiss National Bank to hold 20% of its balance sheet in Gold. The commodity is some 1.4% weaker this morning on the back of the result.

Turning to the Asian session overnight we are seeing further pressure in Oil with both WTI (-2.65%) and Brent (-2.67%) extending their declines to trade at $64.44 and $68.15 as we go to print. Bourses are trading mixed on the back of the moves with the Nikkei +0.64%, Hang Seng -1.97%, Kospi -0.79% and Shanghai Composite -0.05%. China appears to be the major source of headlines this morning, starting with the early data print for the week which shows a relatively subdued HSBC manufacturing PMI. The 50.0 reading in line with expectations but down from 50.4 in October. Looking at the breakdown, large companies (mainly SOEs) are still above 50. However, SMEs are trending below the 50 level which suggest that financial conditions for them remain poor. More on China, local news reported that the PBOC plans to officially launch the long-awaited deposit insurance scheme in January 2015. Whilst the timing of the implementation is in line with our DB Chinese banks analyst Tracy Yu’s expectation, the details of the scheme are still unknown. Overall whilst the implementation of the scheme may weigh slightly on banks’ earnings, Tracy believes it should help lower the system’s funding costs and reduce the systematic risks as interest rates become increasingly deregulated.

Quickly coming back to the aforementioned ECB meeting this week, our European economists are not expecting the central bank to announce any new material policies on Thursday. DB’s Mark Wall notes that although Draghi’s last speech was dovish, this was rather more of a justification for actions already taken rather than a prelude to imminent action. Looking ahead to Thursday, Mark notes two contingencies need to be met in order for the ECB to act again. The first being if the ECB concludes that current measures are insignificant to meet the €1tn goal. We note however that in his 21st November speech, Draghi expressed confidence in the capacity of TLTRO and ABS/covered bond purchases and this, combined with a ‘wait and see mode’ that council members typically adopt, makes us believe that it would be particularly hasty for Draghi to deem the current programme ineffective at this stage. The second contingency centers on the medium term outlook for inflation deteriorating, however our colleagues note that it’s unlikely that the expected upcoming downward revisions will be enough to force the ECB to act at this stage. The interest however this Thursday will be how Draghi’s rhetoric keeps the market confident moving into 2015 and provides some evidence of consensus for further action building in the camp.

In terms of the rest of the week ahead, we’ve got another busy calendar to look forward to, highlighted by the payrolls report in the US at the end of the week. Kicking off this morning in Europe, we’ve got November flash manufacturing PMI’s in Spain, Italy and Greece to look forward to as well as the final read on France, Germany, and Euro-area numbers today. In terms of the former, the market is expecting a slight improvement in both Spain and Italy, but generally unchanged prints through the latter regions. Looking ahead to this afternoon in the US, the market is expecting a slight drop in the November ISM to 58 (vs. 59 previously) – although noting that it will remain at the higher end of its post-recession range. There’s no shortage of central bank speak today, with ECB’s Costa and Mogherini speaking as well as the Fed’s Dudley and Fischer. Tuesday is a relatively quiet day data-wise in Europe, with just Euro-area PPI to look forward to, along with Spanish unemployment and the UK construction PMI. Across the pond, we are expecting vehicle sales data, construction spending as well as the NY ISM where the market is looking for a modest improvement. Perhaps of more interest, the Fed’s Yellen will be speaking in the evening so we will keep an eye out for anything of interest there. We start Wednesday off in Asia, with both non-manufacturing and services PMI prints due out of China as well as the services and composite PMI readings for Japan. Closer to home, we’ve got a host of further services and composite PMI prints to keep an eye out for in Europe – covering Italy, France, Germany, Spain, UK and the Euro-area, as well as October retail sales for the latter where the market expects the yoy print to jump to +1.6% from +0.6% previously. In the US in the afternoon, we will get the ADP employment print which as always will provide some hints into Friday’s payrolls. DB’s Joe Lavorgna is forecasting a slightly more bullish 240k reading (vs. 224k market consensus), up from 230k previously. As well as the ADP print, we also get revisions to Q3 productivity/unit labour costs and the November non-manufacturing ISM survey. Also of note for Wednesday will be the release of the Beige Book in the US. Thursday’s focus will be in Europe with just claims data in the US to look forward to. Away from the ECB meeting, we’ve got German and Euro-area retail PMI’s, as well as employment data in France. The end of the week brings the aforementioned payrolls report in the US. Before we get there however, we’ve got the leading index print in Japan expected first thing, followed by factory orders in Germany and industrial output in Spain. In terms of the payroll print, the market is looking for a +225k non-farm print whilst our US team has a +250k forecast. Our US colleagues noted that the employment component of the Richmond survey rose to a record high in November, boding well for both the non-manufacturing ISM and nonfarm payrolls print. In terms of unemployment, our colleagues expect the 5.8% unemployment rate to remain unchanged. Rounding out the week, the Fed’s Fischer and Mester will be speaking on Friday. So a very busy week.

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