04.12.15 Friday Morning

Arguably the biggest week for data this year (or, at the very least, since September), a much-anticipated ECB meeting and a beyond-important non-farm payroll figure provided the catalysts for some dramatic trading as November turned into December.

Eurozone
Strong manufacturing and services PMIs, disappointing inflation (well, not for the stimulus-seeking Eurozone indices) and weak German retail sales were all just foreplay to Thursday’s main event, what was meant to be a QE-filled conference from Mario Draghi.

Yet instead of a blockbuster injection of quantitative easing, the Eurozone got a 10 basis points cut to the deposit rate (less than the 20 basis point cut hoped for) alongside a 6 month (and beyond, if needs be) extension to the current €60 billion a month asset purchase programme, taking the loose end point from September 2016 to March 2017. The main news, however, was what wasn’t in Draghi’s speech; with the markets already disappointed by the smaller than anticipated deposit rate cut the DAX and co. dove headfirst into the red when it transpired that the bulking up of the central bank’s purchasing power (with reports suggesting an increase to €75 million a month) wasn’t going to happen.

To make matter worse the ECB cut its inflation forecasts for 2016 and 2017 (even if it did raise its growth forecasts for 2015 and 2017), leaving the DAX and CAC to plunge by nearly 4% by the end of Thursday, and casting a pallor over what was meant to be ‘Santa rally’ territory. Next week doesn’t look like it will provide much to remove the bitter after-taste left by Draghi’s failure to deliver, with French trade balance, non-farm payroll and industrial production figures, German inflation data and the region-wide targeted LTRO number all that is on offer.

US
The US still has, perhaps, the single most important number of its year to come, the final non-farm payroll figure before the Fed’s next (potentially interest rate-hiking) meeting on December 16th. Leading up to Friday’s figure the US saw weak a weak Chicago PMI, underperforming Markit and ISM manufacturing and services PMIs, a 5 month high for the ADP non-farm number and, most importantly, a couple of hawkish speeches from Janet Yellen. All of this played havoc with the Dow Jones, which lurched between 100 point losses and 100 point gains, Draghi’s fumble on Thursday causing the biggest tumble.

Beyond that potentially lift-off signalling non-farm figure later this Friday, next week sees slightly less exciting fare, labour market conditions on Monday, JOLTS job openings on Tuesday, jobless claims and import prices on Thursday and retail sales on Friday all unlikely to dissuade (or indeed persuade) the Fed to change whatever position it holds.

UK
As it has done for almost the entirety of the second half of the year, the FTSE was in thrall to other masters this week, be it the Eurozone, the US or the usual leash its commodity stocks has it on. Weak manufacturing and construction PMIs were countered by a 4 month high services figure, whilst Tuesday’s successful bank stress tests had helped the UK index re-cross 6400, only for commodity and Eurozone pressure to send it back to nearer the 6200 mark.

Next week is a bit busier for the FTSE, with manufacturing and industrial production figures, the NIESR GDP estimate, the trade balance number and the consumer inflation expectations all surrounding Thursday’s Bank of England rate vote.

Stock of the week: The Berkeley Group Holdings PLC
The Berkeley Group had been struggling since September, with a bearish Liberum note at the start of November criticising the value of the housing sector compounding matters. However, a recovery in the past fortnight received its biggest boost this Friday, with Berkeley’s announcement of a 10.2% rise in adjusted half year pre-tax profit to £242.3 million alongside, more importantly, the news that it was upping its dividend from £13 to £16.34 per share, appears to have gotten Berkeley back on track. Surging over 6.5% the stock soon hit a fresh 2015, and all-time, high of £35.96, suggesting there is still life left in what was starting to look like a tired sector.

(Source: IT-Finance.com 04/12/2015)

Economic Diary, 7^th to 11^th December 2015

 

Monday 7^th December

All Day – EUR Eurogroup Meetings

7.00am – EUR German Industrial Production m/m

9.30am – EUR Sentix Investor Confidence

3.00pm – USD Labor Market Conditions Index m/m

11.50pm – JPY Final GDP q/q

 

Tuesday 8^th December

All Day – EUR Italian Bank Holiday

All Day – EUR ECOFIN Meetings

7.45am – EUR French Gov Budget Balance

7.45am – EUR French Trade Balance

9.30am – GBP Manufacturing Production m/m

9.30am – GBP Industrial Production m/m

10.00am – EUR Revised GDP q/q

3.00pm – GBP NIESR GDP Estimate

3.00pm – USD JOLTS Job Openings

 

Wednesday 9^th December

1.30am – CNY CPI y/y

1.30am – CNY PPI y/y

7.00am – EUR German Trade Balance

3.30pm – USD Crude Oil Inventories

 

Thursday 10^th December

6.30am – EUR French Final Non-Farm payrolls q/q

7.45am – EUR French CPI m/m

7.45am – EUR French Industrial Production m/m

8.30am – CHF Libor Rate

8.30am – CHF SNB Monetary Policy Assessment

8.30am – CHF CNB Press Conference

9.30am – GBP Trade Balance

12.00pm – GBP MPC Official Bank Rate Votes

12.00pm – GBP Monetary Policy Summary

12.00pm – GBP Official Bank Rate

1.30pm – USD Unemployment Claims

1.30pm – USD Import Prices m/m

6.00pm – EUR German Buba President Weidmann Speaks

 

Friday 11^th December

7.00am – EUR German Final CPI m/m

9.00am – EUR Italian Industrial Production m/m

9.30am – GBP Consumer Inflation Expectations

10.15am – EUR Targeted LTRO

11.00am – EUR Italian Quarterly Unemployment Rate

1.30pm – USD Core Retail Sales m/m

1.30pm – USD Retail Sales m/m

1.30pm – USD PPI m/m

1.30pm – USD Core PPI m/m

3.00pm – USD Prelim UoM Consumer Sentiment

 

Saturday 12^th December

5.30am – CNY Industrial Production y/y

5.30am – CNY Fixed Asset Investment ytd/y

5.30am – CNY Retail Sales y/y

 

Earnings releases, 7^th to 11^th December 2015

 

Monday 7^th December

GW Pharmaceuticals PLC – Full Year 2015 Earnings Release

 

Tuesday 8^th December

Costco Wholesale Corp – Q1 2016 Earnings Release

Krispy Kreme Doughnuts Inc – Q3 2016 Earnings Release

 

Wednesday 9^th December

Stagecoach Group PLC – Half Year 2015 Earnings Release

Ashtead Group PLC – Q2 2016 Earnings Release

 

Thursday 10^th December

Mulberry Group PLC – Half Year 2015 Earnings Release

Sports Direct International PLC – Half Year 2015 Earnings Release

 

Friday 11^th December

N/A