21.11.14 Friday Morning

Japan
The big news of the week was Japan’s shock announcement that it had slipped into recession. This saw a volatile week for the Nikkei, with the index never settling into a consistent trend of loss or gain as it became very sensitive to global data. This recession slide was followed by the long-rumoured announcement by Japanese President Abe to delay a sales tax hike until April 2016, and call a snap election for December 2014.

Next Tuesday will see another conference by Bank of Japan Governor Kuroda, whose announcements have recently caused waves on the global markets. Next week also sees Japan announce year on year retail sales, as well as preliminary month on month industrial production. The strength of these figures could bear on President Abe’s re-election chances, as his ‘Abenomics’ is a hot button issue in Japan.

USA
The yen continued to weaken against the dollar, which was supported by a continually-record breaking Dow and S&P500. The former especially eschewed the normal effects of good or bad US data to retain its momentum, each day seeing it surge to closing highs. The US will be focused on the potentially huge retail performance next week, as Black Friday this year begins on Thanksgiving for many stores. This will lead into Cyber Monday the following week, which is traditionally the USA’s biggest single retail day. A positive consumer period may see the Dow continued to bounce to record highs.

The US also sees the announcement of consumer confidence figures on Tuesday, which investors will hope is healthy preceding the heavy retail period mentioned above. Also on Tuesday is the reveal of the USA’s preliminary quarter on quarter GDP; if the Dow’s trend continues, this figure may matter less than it has in recent times.

Europe
Europe was on the receiving end of multiple ECB conferences this week, as President Draghi continued to assuage Europe that measures would be taken to aid the Eurozone, after a week of disappointing manufacturing PMI figures. Despite his calming words, Draghi had failed to provide the European economies with a firm course of action beyond his reassurances until Friday afternoon, when it was announced that the ECB had begun buying asset-backed securities.

Its role as the heart of the Eurozone has been both a blessing and a curse for Germany, and Merkel et al. will be hoping for a strong performance from the Ifo business climate, alongside their detailed year on year GDP report. Germany has been a sore spot for Europe recently, only narrowly avoiding a recession, and providing a blockade to President Draghi actually announcing any quantitative easing measures. They will need strong figures next week if they are to successfully prevent Draghi from taking the latter measure in the near future.

UK
The FTSE hit a seven week high mid-week, after a strong set of figures that included year on year CPI and month on month retail sales growth. The tail end of the week saw the Tory government shaken by UKIP winning their second seat with a defected member of the Conservative Party. Next week sees the UK announce its second estimate month on month GDP, as well as the month on month housing price index. The UK is susceptible to the Eurozone’s weaknesses, so the UK, as much as the Eurozone themselves, will be hoping for some firmer news from Draghi.

Brent Crude Oil
Oil continued to hover below $80 per barrel, as no movement was made to stall its downward trajectory. However, next week could see this change, as OPEC meet on the 27th November to predominantly discuss oil’s dismal few weeks. The promise of this marginally pushed Brent crude oil back above the $80 level.  Whilst the cartel, especially Saudi Arabia, is reluctant to cut production, with oil showing no real sign of rallying, they may be forced down that avenue of action. Regardless, the OPEC summit should see movement on oil, dependent on what decision the cartel makes. Volatility may be increased due to the OPEC summit taking place on Thanksgiving, where the US markets will be performing on a reduced rate. 
 
Stock of the week:
Target - After the earnings were revealed yesterday, shares jumped 7.4% to hit 7251 by Wednesday close. This was the first time Target Corp had broken through the 7000 mark since August 2013, and only slightly less than its 10 year high of 7341.5 in July 2013. Target will remain hopeful for the fourth quarter, as next week sees Thanksgiving, which of course now comes twinned with Black Friday. Target will face fierce competition over this period from Walmart and Amazon, as the former desperately attempts to lure shoppers away from the online retail behemoth. Following Black Friday is the Christmas rush; Target will be hoping it gets get a better gift from Santa this year than the data-breach-disaster of 2013.

Economic Diary:

Monday:

7.00am – GBP Nationwide house price m/m, y/y
9.00am – EUR German Ifo Business Climate
1.30am – USD National activity index
11.50pm – JPY Monetary Policy Meeting Minutes
                    JPY SPPI y/y

Tuesday:

1.00am – JPY BoJ Gov Kuroda speaks
7.00am – EUR German GDP detailed y/y
1.30pm – USD Prelim GDP q/q
15.00pm – USD Consumer confidence

Wednesday:

9.30am – GBP GDP second release, y/y, q/q
13.30pm – USD Durable goods orders
                 USD Unemployment claims
15.00pm – USD New home sales-units m/m
               USD New home sales change m/m

Thursday:

8.00am – EUR Spain estimated GDP y/y
8.55am – EUR German Unemployment change
               EUR German Prelim CPI m/m
13.00pm – EUR CPI preliminary y/y
23.30pm – JPY CPI national
                JPY unemployment rate
                JPY retail sales y/y

Friday:

10.00am – EUR Unemployment rate
     EUR CPI flash estimate y/y

Earnings releases:

Monday:

• Cranswick PLC - Half Year 2014 Cranswick PLC Earnings Release
• Palo Alto Networks Inc – Q1 2015 Earnings Release
• Nuance Communications Inc – Q4 2014 Earnings Release

Tuesday:

• Caledonia Investments PLC - Half Year 2014 Earnings Release
• KCOM Group PLC – Half Year 2013/2014 Earnings Release
• Pall Corp – Q1 2015 Earnings Release
• Campbell Soup Co – Q1 2015 Earnings Release
• TiVo Inc – Q3 2015 Earnings Release

Wednesday:

• Thomas Cook Group PLC – Full Year 2013/2014 Earnings Release
• IGas Energy PLC - Half Year 2014-2015 Earnings Release
• Britvic PLC – Full Year 2014 Earnings Release

Thursday:

• PayPoint PLC – Half Year Earnings Release
• Electra Private Equity PLC – Full Year 2014 Earnings Release

Friday:

• Pennon Group PL C – Half Year 2014/2015 Earnings Release
• Arrow Global Group PLC – Q3 2014 Earnings R