Next Week Tape $SPX $SPY #market $$

Major Catalysts to watch for the week of Mon Dec 12 (courtesy of Hedge Analyst)


Major Catalysts to Watch

Fed meeting – the last FOMC meeting of 2011 takes place Tues 12/13.  There will not be a press conf following this meeting (so normal time – 2:15pmET press release).  Overall there isn’t expected to be any major policy or language changes.  There has been a lot of speculation (see 12/5 WSJ article about how the Fed is considering material adjustments to its communications strategies although this prob. won’t come until early ’12.

Europe details – Merkel intimated there would be no more Eurozone summits in 2011 but the coming days/weeks could wind up bringing more news.  We are waiting for specifics on how the ECB will help get the EFSF up and running.  Also, within the next ten days officials will detail how Europe’s central banks will make bilateral loans to the IMF.

Germany – there are a couple catalysts to watch in Germany in the coming week.  On Wed (12/14), the government may decide to re-launch its SoFFin bank bailout fund (and could impose forced equity injections into those institutions found to have a gap).  On Friday, results of the German FDP referendum on the ESM are due.

Europe + S&P – S&P, which put a bunch of AAAs on watch neg. Mon (12/5), says it will make a decision on whether to downgrade in “the coming days” (i.e. sometime next week).

ECB speakers – given how important ECB policy has become for global markets, investors will listen closely to whenever major principles speak.  In the coming week, German’s Weidmann speaks twice (Tues 12:30pmET and Wed 8:30amET) and on Thurs president M Draghi will deliver comments (6:25amET).  Weidmann will most likely stick to his traditional hawkish tone while Draghi will prob. repeat most of what he said during the last press conf (12/8).

Corporate earnings – big week of results from Nov-end Q companies.  Some of the highlights for the coming week include BBY (Tues) and DFS/FDX (Thurs).  Other companies come later in Dec (ORCL/NKE on 12/20 and TIBX on 12/21).

Analyst meetings + ’12 outlooks – we are in the heart of the year-end analyst meeting season where companies start to provide guidance for 2012.  Some of the highlights for the coming week include DD/GE (Tues), BRCM/DAL/DHR/FSLR (Wed), AET/HON/UTX (Thurs), and AGCO/DRI (Fri).

Dec eco data – we will get the first look at Dec’s economic activity in the coming week.  Flash PMIs from China (Wed night) and Europe (Thurs morning) will both be released.  In the US, we get the Philadelphia and Empire Survey results on Thurs.

Inflation – the CPI for Europe comes Thurs and for the US on Fri.  Obviously the Eurozone number will be the more important one to watch.

China economic policy – the country’s top government leaders will hold annual economic work meetings 12/12-14.  There has been a lot of speculation that the PBOC could tweak its language although state media reported recently that the government will continue to pursue a “stable” macroeconomic policy.  Also, at some point during the week of 12/12 China will publish its money supply/new loan numbers for Nov and Thurs night the flash PMI for Dec gets reported.


European Headlines

El-Erian oped – the ECB and EU Leaders Summit events were both neither decisive enough.  “Yet another golden opportunity was insufficiently exploited by European policymakers”.  Important progress was achieved but more needs to happen.  CNBC

“Eurozone leaders deluded if they think this‘sticking plaster‘ treaty can solve the debt crisis” – London Telegraph.

Eurozone leaders duck all the big issues – London Telegraph.

Europe’s Fri Summit “lacked the bold strokesinvestors have been urging and could be insufficient to halt the crisis” – WSJ

IMF says the Leaders Summit outcome was a step in the right direction but not a complete solution – the IMF’s chief economist said he was more optimistic than he was a month ago but urged Leaders to push forward w/further steps.  Reuters

France, trying to lead the way in Europe and write a provision into the constitution mandating a balancing of the state’s budget, may wind up having to delay such an action by three months until after the country’s upcoming presidential elections.  Such a delay could damage confidence – Reuters

Europe’s banks have slashed their exposure to peripheral sovereign debt by ~EU65B in the first 9 months of 2011.  BNP had the biggest decline on an absolute basis (EU7B) while D Bank had the largest percent contraction (66%).  The selling appeared to have accelerated as the EBA stress tests were undertaken as banks were forced to mark their holdings to market.  FT

European bank sovereign debt selling could reverse now that the EBA tests are done and w/the new ECB liquidity options; in addition, the decision to eliminate “PSIs” in the case of future bailouts is important also (and will help buyers return to sovereign markets) – while banks have purged their balance sheets of EU65B in the first three qtrs of ’11, they may start buying again.  French president Sarkozy outlined the attractive arbitrage that exists presently: “Italian banks will be able to borrow [from the ECB] at 1 percent, while the Italian state is borrowing at 6-7 percent. It doesn’t take a finance specialist to see that the Italian state will be able to ask Italian banks to finance part of the government debt at a much lower rate.”  FT

ECB update in the WSJ – Draghi stands ready to do more if tensions intensify and will prevent a complete meltdown in sov bond prices but he is content for markets to keep pressure on governments until new fiscal rules get implemented.  So the “tail risk” has been removed but the ECB won’t make life easy for governments.  WSJ

German finance minister Schaeuble says he is “certain” the EU Leaders Summit will solve Europe’s debt crisis.  Reuters

Italian PM Monti said he is convinced he can talk German
y into signing off on euro bonds.  Monti says it’s better for Europe to issue debt deliberately and intentionally rather than being forced to do so by markets – Reuters

Italy – the country’s bank organization threatened to sue the EBA over the recent stress test results and capital decisions – Reuters

IMF funding concerns rising – some major shareholders in the IMF, inc. the US, are growing increasingly concerned about the prospect of the fund expanding its exposure to Europe even further.  Some members of Congress are trying to pass legislation limiting the ability of the US to send money to Europe via the IMF.  Reuters

IMF fundraising – as the IMF seeks further funding to match the EU200B in bilateral commitments from Europe’s central banks, the US will be a bystander and not contribute – Bloomberg

New poll reveals most French and German citizens don’t want to stay in the euro longer-term.  Daily Mail

UK – Nick Clegg (the deputy PM) said he was “bitterly disappointed” w/the outcome of the EU Leaders Summit last week (he is very pro-Europe).  However, Clegg said breaking up the present coalition government would spell “economic disaster” – FT

Russia – protests gather steam in Russia against Putin – the country is seeing its largest instances of unrest in at least 20 years.  Sky News



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