Trading with point and figure

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- Digesting slightly better than expected Korea Q3 GDP, awaiting Ifo
Business Climate, US Consumer Confidence, House Price measures, Richmond
Fed surveys; Carney & Draghi speak, deluge of corporate earnings, London
airport decision, UK 2065 Gilt syndication and US 2-yr sale also on tap

- Ifo Business Climate: seen consolidating September surge

- US Consumer Confidence: modest setback from 9-yr high seen on gasoline
prices, mortgage rates and election uncertainty

- Charts: US 2yr yield, 2yr Bund/Treasury spread, Europe equity performance
by sector

..........................................................................

********************
** EVENTS PREVIEW **
********************

Outside of digesting the overnight South Korea preliminary Q3 GDP data, the German Ifo adn US Consumer Confidence surveys, the day's statistical agenda is distinctly second division iin terms of market impact, featuring Italian Orders, Brazil's Current Account, US House Prices (both FHFA & the S&P Case Shiller measure) and Richmond Fed surveys, and Polish Unemployment, which is expected to a post Communist era low at 8.4%). The policy side of the agenda is busier with a speech from Draghi, which will likely echo last week's press conference as far as clues on the policy outlook go, while Mr Carney testifies to the House of Lords Economic Affairs Committee, where he will doubtless resolutely defend the BoE's independence, though he may face some awkward questions about whether he will extend his term to the full eight years, and indeed whether he will complete his initial five year term. Corporate earnings will continue to flood in, while the UK will likely launch its syndicated re-opening of the 2065 Gilt, and the US kicks off this week's four part sale with USD 26.0 Bln of 2-yr Treasury Notes, which with the 2 yr Bund/Treasury spread close to its highs should see good demand (see charts). On the political front, the UK government is due to announce which London airport will be selected for expansion, though a final, final decision (says it all - Ed.) will not be taken until this time next year. As Monte Paschi di Siena announces the next steps in its recovery plan, and markets await news on what Deutsche Bank plans to do next, it is also worth noting that are Financials are no longer the worst performing sector year to date, with that dubious honour now going to Telecoms - see attached chart. Tonight's API oil sector inventories are expected to see Crude stocks rise 800K, while Gasoline stocks are projected to fall by 1.3 Mln, according to a Reuters poll.

** Germany - October Ifo Business Climate **
- After yesterdays' sharp rebound in the German Services PMI (54.1 vs. Sept 50.9) and better than expected Manufacturing PMI (55.1 vs. Sep 54.3), the whisper on the Street will doubtless be skewed to the upside of forecasts for little change to the headline Ifo Business Climate (109.6 vs. Sept 109.5). However, it will be recalled a) that the Ifo has, outside of an anomalous looking dip in August, painted a rather more robust profile of activity than the PMIs, and b) already saw a sharp jump in September to a 29-month high of 109.5 from August's 20-month low of 106.3. Per se the consensus forecast would appear to be 'in the ballpark'.

** U.S.A. - October Consumer Confidence **
- Having posted solid gains in preceding months and hitting a 9-yr high at 104.1 in September, Consumer Confidence is seen slipping to a still very respectable 101.5, with a combination of higher gasoline prices, higher mortgage rates and some concerns about the outcome of the election seen weighing on sentiment. The labour differential will as ever be closely watched, having surged to a cyclical high of 6.3 in September.

from Marc Ostwald
 
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