Trading

TradeTheNews.com European Market Update: Russia’s Central Bank continues to narrow its interest rate corridor; Italian Dec consumer confidence slumps to 16-year low

***Economic Data***
- (RU) Russia Central Bank (CBR) cuts Refinancing Rate by 25bps to 8.00% (Not expected) but narrowed its rate corridor. The CBR raised Overnight Deposit by 25bps to 4.00% but left its Overnight Auction-Based Repo unchanged at 5.25%
- (EU) ECB: €6.3B borrowed in overnight loan facility vs. €7.5B prior; €347.0B parked in deposit facility va.. €265.0B prior
- (RU) Russia Narrow Money Supply Narrow w/e Dec 19th: 6.68T v 6.54T prior
- (FR) France Q3 Final Gross Domestic Product Q/Q: 0.3% v 0.4%e; Y/Y: 1.5% v 1.6%e
- (FR) France Nov Producer Prices M/M: 0.4% v 0.0%e; Y/Y: 5.6% v 5.2%e
- (HU) Hungary Oct Final Trade Balance: €490.3M v €497.4M prelim
- (ES) Spain Nov Producer Prices M/M: 0.2% v 0.0% prior; Y/Y: 6.3% v 6.5% prior
- (TT) Taiwan Nov Industrial Production Y/Y: -3.6% v -2.8%e; Commercial Sales Y/Y: -1.0% v +2.6%e
- (AS) Austria Oct Industrial Production M/M: -0.3% v -2.0% prior; Y/Y: 3.0% v 2.7% prior
- (IT) Italy Nov Hourly Wages M/M: 0.0% v 0.2%e; Y/Y: 1.5% v 1.7%e
- (UK) Nov BBA Loans for House Purchase: 34.7K v 35.4Ke
- (UK) Oct Index of Services M/M: -0.7% v -0.1%e; 3M/3M: 0.2% v 0.3%e
- (IT) Italy Dec Consumer Confidence: 91.1 v 95.3e v 96.5 prior; lowest reading since Jan 1995
- (BR) Brazil Dec FGV Consumer Confidence: 119.6 v 119.0 prior
- (BR) Brazil Dec FGV Construction Costs M/M: 0.4% v 0.5%e

Fixed income:
- (IN) India sold total INR120B vs. INR120B indicated in 2018, 2021 and 2030 bonds

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Outgoing ECB member Bini Smaghi commented that he could not see a reason why the ECB could not use quantitative easing if deemed necessary
- Bank deposits with ECB jump higher after 3-year tender operation
- Moody's maintains US Sovereign Credit Rating At Aaa, Outlook Negative

Equities:
FTSE 100 +0.60% at 5488, DAX +0.40% at 5873, CAC-40 +1% at 3103, IBEX-35 +0.90% at 8538, FTSE MIB +0.50% at 15,106, SMI +0.60% at 5871

- European shares traded in positive territory in a thin-volume holiday trading after encouraging US data, namely the lower than expected average jobs claims. Markets remain overshadowed by the Eur ozone crisis even though European news has been sparse.
In M&A news, Wavin [WAVIN.NV] jumped over 19% after Mexichem raised its offer to €10/shr from €9.0/shr.

Speakers:
- The Russian Central Bank surprised the markets and narrowed its rate corridor. The CBR cut the main Refi rate by 25bps to 8.00% while raising the Overnight Deposit Rate by 25bps to 4.00%. The central bank commented that it cut the Refinancing Rate due to lower inflation and risks to economy with the overa;ll decision aimed at controlling money market rates. It noted that inflation was at 6.4% as of Dec 19th with annual inflation seen falling in early 2012. It believed that the early dip in 2012 inflation to be temporary and saw steady consumption and moderate industrial growth. It next rate decision to take place in early February.
- ECB's Stark commented in the German press that his resignation from ECB was meant to 'shake up governments' as Euro zone was on the wrong path and did not understand the importance of budget discipline. Stark added that he believed his own credibility was endangered and his decision to leave the ECB was not tied to any single event. He noted that Europe was exposing itself too much by strengthening IMF. Deflation risks at this time were clearly smaller compared to the months afterward following Lehman Brothers collapsed back in Sept 2008
- Swiss Central Bank (SNB) published its Quarterly Report which reiterates its views on both interest rates and the EUR/CHF cross floor. The SNB would continue to enforce the EUR/CHF floor at 1.2000 and would to take additional measures at any time. It reiterated view to keep interest rates close to zero as possible.
- India Fin Min Mukherjee commented that the economic situation remained difficult but viewed it as a temporary setback. He did note that the prospects are "distant" for a solution to the euro-zone debt crisis. He stated that inflation might be between 6.0-7.0% by end of current fiscal year (March 2012) and reiterated FY12 GDP might be between 7.25-7.75% range. Lastly he believed the RBI's prolonged monetary tightening has hurt economic growth, while high crude oil prices through this year has pressured the government's finances
- Throughout the Asian and European session Moodys commented on numerous sovereign. It maintained current ratings and outlooks for In Europe it commented on Austria, Slovakia, Romania, Denmark and Iceland. In the Americas it commented on Mexico, Argentina, Chile and Canada. Lastly in the Asia/Pacific region it commented on New Zealand
- Moody's disclosures its stance of the credit ratings of Government of United States of America and maintained its AAA sovereign rating; Negative Outlook
- Moody's cuts Slovenia sovereign rating one notch to A1 from AA3; Outlook Negative
- Pakistan Army Chief: Any perception that military plans a takeover is misleading; army is committed to democracy
- China said to have invited new North Korean leader Kim Jong Un to visit the country
- Hungary Central Bank announced 1-week FX swap tender for banks to help year-end position squaring. It stated that this FX tender would a one-off event

Currencies:
- The price action in FX remained subdued ahead of the Christmas holiday break and locked within established ranges
- The GBP/USD was off its best levels following soft economic data and tested its session lows below 1.5680 ahead of the NY morning.
- The EUR/USD was steady at 1.3080 area while USD/JPY was holding just above the 78.00 level.
- The CHF currency was little changed after the SNB just reiterated its stance on both interest rates and the floor in the EUR/CHF cross. EUR/CHF was at 1.2230 ahead of the NY morning.

Political/ In the Papers:
- Italian banks are said to be close to fulfilling approximately half of their 2012 funding requirements. The €116 billion borrowed by Italian banks from the ECB's 3-year loan operation helped move these institutions closer to their funding targets.
- The Times reported North Sea gas production declined by a record 29% due to the government windfall tax. This leaves Britain more exposed to expensive imports. Analysts have noted this is the biggest YoY quarterly decline since records began in 1996, and higher than official forecasts. The article also added third quarter oil production has been much lower. According to the Dept of Energy and Climate Change, including natural gas liquids, production declined by 22.7% y/y (the largest decline since records began in 1995).
- Amid the EU debt crisis, a rising number of citizens of peripheral EU countries are migrating to Germany. In the Telegraph report, during the first half of 2011, Spanish migration to Germany rose by nearly 50%. Also during the same time period, Greek migration to Germany rose by more than 80%.
- British household incomes are expected to hit a 34-year low. The ONS noted that real household disposable income declined by 1.9% YoY for the first nine months of the year. Households have not suffered more since 1977 when the annual decline was 2.1%.

***Looking Ahead***
- 8:30 (US) Nov Durable Goods Orders: 2.2%e v -0.5% prior (revised from-0.7%); Durables Ex Transportation: 0.4%e v 1.1% prior (revised from 0.7%)
- 8:30 (US) Nov Personal Income: 0.2%e v 0.4% prior; Personal Spending: 0.2%e v 0.1% prior
- 8:30 (US) Nov PCE Core M/M: 0.1%e v 0.1% prior; Y/Y: 1.7%e v 1.7% prior; PCE Deflator: 2.7%e v 2.7% prior
- 8:30 (CA) Canada Oct Gross Domestic Product M/M: 0.1%e v 0.2% prior
- 9:00 (MX) Mexico Nov Preliminary Trade Balance: -$475M v -$466M prior
- 9:30 (EU) ECB calls for bids in 7-day Main Refi Tender
- 9:30 (EU) ECB weekly settlements in gov't bond buying program
-10:00 (US) Nov New Home Sales: 313Ke v 307K prior

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TradeTheNews.com Asian Market Update: Moody’s Affirms US rating while the Congress reaches an agreement on payroll extension; Singapore data disappoints

***Economic Data***
- (SG) SINGAPORE NOV CPI M/M: 0.6% V 0.3%E; Y/Y: 5.7% V 5.3%E
- (SG) SINGAPORE NOV INDUSTRIAL PRODUCTION M/M: -25.2% V -9.0%E; Y/Y: -9.6% V +12.2%E
- (NZ) NEW ZEALAND NOV MONEY SUPPLY M3 Y/Y: 6.5% V 5.5% PRIOR
- (VN) VIETNAM DEC CPI M/M: 0.5% V 0.4% PRIOR; Y/Y: 18.1% V 19.8% PRIOR

***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 -0.8%
- S&P/ASX +1.4%
- Kospi +1.3%
- Taiwan Taiex +2.2%
- Singapore Straits Times +0.4%
- Shanghai Composite +1.5%
- Hang Seng +1.1%
- S&P Futures +0.5% at 1,255
- Feb Gold +0.2% at $1,613/oz
- March Crude +0.4% at $99.92

***Overview/Top Headlines***
- Asian markets gift to the globe was a rally heading into the weekend. Most markets were up over 1%. With a return of risk appetite the USD weakened against the majors but by no more than 30 pips. NZD/USD lost about 20 pips when a fresh 5.8 earthquake hit Christchurch, New Zealand (the same location as the previous devastating one). Corn and wheat futures both lost ground while silver and copper gained nearly 0.9%. After the close House Speaker Boehner (R-OH) said he had reached an agreement with Senate Majority Leader Reid (D-NV) on two month payroll tax cut extension; Congress will be asked to pass a revised version of the short term extension before Christmas. To begin talks on a one year payroll tax cut extension after the holiday break. Conference committee will also work on a two year "Doc fix." Moody's affirmed the US's sovereign AAA rating but assigned a negative outlook. Without further deficit reduction measures, the rating could be placed on review for downgrade sometime in the coming year or two.

- China Securities Regulatory Commission (CSRC) has granted the first group of QFII licenses to 19 firms under trial program. Chinese press reported that China DEC new yuan loans may come in at CNY550-600B v CNY562B in Nov. The property market in Asia continues to show signs of slowing. According to Centaline sales of land in Beijing, Shanghai and Guangshou have fallen. In Taiwan new housing projects in have fallen to a 10-year low.

- Gloucester Coal and Yanzhou Coal reached an A$6.0B merger agreement. Deal is conditional on getting an ASX listing for Yanzhou Australian assets. Gloucester's major shareholder, Noble Group, expects a gain of $200M from Gloucester divestment and fully supports the deal. Yanzhou said it was planning to raise output to 25M tons per year by 2016; Will take steps to cut operating costs and build on margins. The combined companies will create the 9th largest in the world.

***Reminder: Coverage will be limited on Monday the 26th due to the Christmas holiday.***

***Speakers/Geopolitical/In the press***
- (NZ) According to economists from ANZ and other banks, RBNZ is not likely to start tightening policy rates from the current 2.5% until H2 of 2012 - Dominion Post
- (CN) China sovereign wealth fund (CIC) expected to receive $50B capital injection - financial press
- (CN) HSBC estimates China 2012 GDP to slow to 8.6% before rising to 8.8% in 2013; Down from 8.9% GDP expected for 2011 - China Daily
- (KR) Fitch: Could upgrade South Korea's sovereign rating within 1-2 years
- (RU) Russian ambassador to China: Expects 2011 trade with China to be $78B - China Daily
- USD/KRW: (KR) South Korea Govt and Bank of Korea (BoK) agree to take steps to reduce currency volatility

***Equities***
- TM: Exec: Expects Thailand operations to resume normal operations by mid-Jan (slightly behind schedule) - Financial press
- China Airlines, 2610.TT: Issues 568M shares at NT$11.73/shr (approx 12% of shares outstanding)
- Quanta Computer, 2382.TT: May see a 20% m/m decline in shipments of notebooks in Dec - DigiTimes
- UGL.AU: Railcorp renews maintenance contract worth A$1.4B over 7-year term

- QCOM: Sale of airwaves to AT&T for $1.9B has been approved by US regulators - financial press; +0.2% after hours

***FX/Fixed Income/Commodities***
- (CN) China Commerce Ministry will look to improve logistical infrastructure between farms and supermarkets to stabilize food prices - China Daily
- (CN) China's Shandong province plans to build 6-8 reserve facilities for coal by 2015 - Chinese press
- (CN) China and Thailand have signed a currency swap agreement
- GLD: SPDR Gold Trust ETF daily holdings fall by 9.1 tons to 1,258.8 tons (lowest since 1,255.7 on Nov 7th); 2nd session of decline
- (US) NY Fed reports new swap facility at $9.89B with foreign central banks

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TradeTheNews.com Market Internals update

- NYSE volume 470M shares, about 28% below its three-month average; advancers lead decliners by 3.5:1.
- NASDAQ volume 1.20B shares, about 19% below its three-month average; advancers lead decliners by 1.9:1.
- VIX index -0.5% at just over 21.00

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TradeTheNews.com Market Internals update

- NYSE volume 360M shares, about 25% below its three-month average; advancers lead decliners by 3.6:1.
- NASDAQ volume 930M shares, about 17% below its three-month average; advancers lead decliners by 2.1:1.
- VIX index -2% at just over 20.00

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TradeTheNews.com Market Internals update

- NYSE volume 240M shares, about 28% below its three-month average; advancers lead decliners by 2.2:1.
- NASDAQ volume 635M shares, about 15% below its three-month average; advancers lead decliners by 1.8:1.
- VIX index -1.0% at just over 21.00

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TradeTheNews.com US Market Update

Dow +25 S&P +5 NASDAQ +13
***Economic data***
- (TU) Turkey Central Bank leaves Benchmark Repo Rate unchanged at 5.75%; as expected
- (US) Nov Chicago Fed National Activity Index: -0.37 v -0.17e
- (US) Q3 Final GDP Q/Q Annualized: 1.8% v 2.0%e; Personal Consumption: 1.7% v 2.3%e
- (US) Q3 Final GDP Price Index: 2.6% v 2.5%e; Core PCE Q/Q: 2.1% v 2.0%e
- (US) Initial Jobless Claims w/e Dec 16th: 364K v 380Ke; Continuing Claims: 3.546M v 3.60Me
- (MX) Mexico Nov Unemployment Rate: 5.0% V 4.8%E
- (US) Dec Final University of Michigan Confidence: 69.9 v 68.0e (highest since June 2011)
- (US) Nov Leading Indicators: 0.5% v 0.3%e
- (US) Oct House Price Index M/M: -0.2% v +0.2%e
- (US) Weekly EIA Natural Gas Inventories: -100 bcf vs. -100 bcf to -110 bcf expected range

- US equity indices are in the black this morning despite the slight downward revision in the final reading of Q3 GDP. Positive sentiment is being buttressed by a second substantial consecutive decline in initial weekly jobless claims, which pushed out to their lowest level since April 2008 with today's data. Note that European indices appear to be still benefiting from the afterglow of the ECB's three-year LTRO auction. Analysts noted that the US GDP surprise was largely due to a downward revision in consumer spending, particularly in healthcare services. After the data dropped, PIMCO's Bill Gross reiterated that he expects the Fed to prolong its 'extended period' language out to four or five years in early 2012 to counter rising fears about global growth. Treasury markets are little changed but to the upside.

- Quarterly losses at DRAM manufacturer Micron were considerably greater than expected, thanks to further declines in the firm's profit margins. Executives commented that the DRAM market is under a lot of pressure in general, although they also claimed that Micron is faring better than competitors. Shares of MU are up a whopping 15%. Retailer Bed, Bath and Beyond had a decent third quarter, with earnings that came in ahead of consensus estimates. The firm also increased its FY11 earnings outlook. BBBY is down more than 5%. Auto giant Toyota forecasted a 20% jump in 2012 sales, to 8.48M vehicles, as it recovers from output losses caused by natural disasters in Japan and Thailand this year. Cancer specialist Alliance Healthcare offered a soft initial view of its FY12 outlook and failed to bring up FY11 guidance to meet expectations. AIQ is up 20% on the day. On the deal front, Vulcan Materials rejected Martin Marietta's unsolicited all-stock exchange offer.

- The mixed US economic data has had little impact on the greenback and it continues to maintain its recent trading ranges. Note that the euro was slammed by more downgrade rumors, pulling EUR/USD back below 1.3100 after a spike upwards on strong demand among Middle Eastern names. The USD/JPY pair was edging higher to probe 78.20.

***Looking Ahead***
- 11:00 (CO) Colombia Q3 GDP Y/Y: 6.0%e v 5.2% prior
- 11:00 (EU) ECB Draghi and BOE King at European Systemic Risk Board briefing
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 12:15 (US) US President Obama to speak on payroll tax
- 13:00 (BR) Brazil Nov Central Govt Budget Balance (BRL): No est v 11.3B prior
- 14:00 (AR) Argentina Oct Economic Activity Index M/M: No est v 0.3% prior; Y/Y: 7.5%e v 7.7% prior
- 20:35 (CH) China Dec MNI December Flash Business Sentiment Survey

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TradeTheNews.com Market Internals update

- NYSE volume 130M shares, about 32% below its three-month average; advancers lead decliners by 3.3:1.
- NASDAQ volume 330M shares, about 17% below its three-month average; advancers lead decliners by 2.3:1.
- VIX index -3.5% at just over 20.00

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TradeTheNews.com European Market Update: UK Current Account Deficit is widest on record

***Economic Data***
- (IN) India Primary Articles WPI w/e Dec 10th Y/Y: 3.8% v 5.5% prior; Food Articles Y/Y: 1.8% v 4.4% prior
- (HU) Hungary Oct Retail Trade Y/Y: +0.6% v -0.2%e
- (ES) Spain Oct Total Housing Permits M/M: -22.0% v 72.9% prior; Y/Y: -2.9% v 0.0% prior
- (TT) Taiwan Nov Unemployment Rate: 4.3% v 4.3%e
- (DK) Denmark Q3 Final GDP Q/Q: -0.5% v -0.8%e; Y/Y: +0.1% v -0.2%e
- (NL) Netherlands Q3 Final GDP Q/Q: -0.2% v -0.3%e; Y/Y: 1.1% v 1.1%e
- (NL) Netherlands Oct Consumer Spending Y/Y: -1.4% v -1.8%e
- (SE) Sweden Nov PPI M/M: 0.8% v 0.5%e; Y/Y: 0.3% v 0.1%e
- (HK) Hong Kong Q3 Current Balance of Payment: $33.7B v $4.6B prior; Overall Balance of Payments: $23.6B v $19.6B prior
- (IT) Italy Oct Retail Sales M/M: +0.1% v -0.2%e; Y/Y: -1.5% v -1.5%e
- (NO) Norway Dec Unemployment Rate: 2.4% v 2.4%e
- (PO) Poland Nov Retail Sales M/M: -5.5% v -7.1%e; Y/Y: 12.6% v 10.5%e
- (PO) Poland Nov Unemployment Rate: 12.1% v 12.1%e
- (UK) Q3 Final GDP Q/Q: 0.6% v 0.5%e; Y/Y: 0.5% v 0.5%e
- (UK) Q3 Current Account: -£15.2 v -£6.1Be (widest on record)
- (UK) Q3 Final Total Business Investment Q/Q: +0.3% v -1.4%e; Y/Y: 4.3% v 0.3%e
- (RU) Russia Gold & Forex Reserve w/e Dec 16th: $501.3B v $513.0B prior
- (IT) Italy Nov Non-EU Trade Balance -€1.2B v -€808M prior
- (BE) Belgium Dec CPI M/M: 0.0% v 0.4% prior; Y/Y: 3.5% v 3.9% prior
- (IE) Ireland Nov Retail Sales Volume M/M: 1.6 v 0.4% prior; Y/Y: -0.8% v -3.4% prior
- (BR) Brazil Nov Unemployment Rate: 5.2 v 5.7%e

Fixed income:
- (HU) Hungary Debt Agency (AKK) sold HUF30B vs. HUF40B targeted in 12-Month Bills; Avg Yield 7.91% v 7.07% prior

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

Equities:
FTSE 100 +1% at 5446, DAX +1.2% at 5858. CAC 40 +1.3% at 3068, IBEX-35 +0.90% at 8451, FTSE MIB +1.3% at 15,006, SMI +0.50% at 5835

- European shares continued their Santa rally for the third straight session following the nearly half a trillion euros in three year funds that banks borrowed from the ECB will soothe current funding strains. The three-year tender saw the ECB lending €489B above expectations of €310B.
- In M&A news, Lufthansa [LHA.GE] announced it signed an agreement to acquire British Midland for £172.5M in cash. The competing company, Virgin Atlantic requested authorities to halt the BMI deal.

Speakers:
- Bank of Italy (BOI) was said to have pressed local banks to tap ECB funds for more than they needed
- Hungary Econ Min Matolcsy commented that the country remained vulnerable and government continued to prepare for IMF/EU talks to begin in January
- Iran was said to hold naval exercises for 10 days from Dec 24th and to be held east of the Strait of the Hormuz
- Japan govt formally cut its 2011/12 and 2012/13 GDP growth outlooks (in line with recent press speculation). The Govt now saw FY2011/12 GDP at -0.1% compared to prior+0.5% view. It also cut its FY2012/13 GDP forecast to +2.2% from +2.7% prior
- German wiseman Bofinger stated that the future of the Euro would be decided in the next six months and the joint currency had no future unless Germany changed its stand
- India Central Bank (RBI) Gov Subbarao reiterated his concerns about external macroeconomic factors and high inflation. RBI inflation projection of 7.0% by end of FY12 (March) faced uncertainty due to weaker INR currency, oil prices and Euro Zone crisis. He cautioned that current central bank's FY12 GDP growth forecast to be lower than 7.6% projection and would be revise lower in January. Current account deficit to come under pressure due to INR currency depreciation. RBI to contain sharp volatility in foreign exchange markets and closely watch FX developments
- German Finance Ministry releases monthly report which noted that Nov tax revenues rose by 7.6% y/y and was upbeat consumers to provide basis for economic growth. It also commented that Government's new 2011 debt was likely around €20B
- Brazil Central Bank published its Q4 inflation Report which noted that global growth outlook had deteriorated substantially since Q3 and it cut its 2011 GDP growth to 3.0% from 3.5% prior. More restrictive global environment was likely to be more prolonged than anticipated and it reiterated to make 'moderate adjustments' in interest rates
- World Bank Economist Piontkivskyi commented that the Ukrainian economic situation was worsening due to the European crisis and forecasted its 2012 GDP growth to slow to 2.5%. It was unlikely to maintain deficit to GDP ratio of 3.5% in 2011
- Moodys comments on South Korea: Ratings Outlook not currently affected by the geo-political risks
- Aide to Russia President Medvedev: Europe has not asked Russia for help through the IMF

Currencies:
- The FX markets were subdued during the European morning but the USD was softer on some sovereign names dealings. The EUR/USD climbed above the 1.31 handle led by buying by Middle Eastern names but remains well contained within the highs established following the ECB 3-year LTRO operation on Wednesday. Market conditions were thinning and the continued concerns that France might face a sovereign downgrade helped the green back off its worst levels. EUR/USD was little changed from its Far East opening levels as the NY morning approached and was at 1.3050 area.

Political/ In the Papers:
- At yesterday's ECB 3-year loan operation, it is believed that Spanish banks were allotted up to €100 billion in funds. According to one source, nearly all Spanish banks participated in the operation. Ahead of yesterday's operation, there was speculation that banks in Spain and Italy were buying government bonds issued by their home countries to be used as collateral at the ECB operation.
- The Irish leading state economic development agency, Enterprise Ireland, reported record exports, and employment from export companies stabilizing. The Irish Independent article added that Irish firms have had record exports, returning to pre-recession levels. The group's 2011 statement showed new export sales are expected to reach beyond €1B within weeks.
- UBS economic adviser George Magnus, in an FT article, stated that he believes the EU's fundamental problems have still not been solved. The article is critical of the EU's use of austerity measures to deal with the crisis. The EU is trapped in a circle of weak growth, retreating fiscal targets and austerity measures which hurt growth. He expects EU GDP to contract at about a 2% rate over the coming quarters.

***Looking Ahead***
- (ES) Spain's PP Ministers Sworn in
- 7:00 (TU) Turkey Central Bank Interest Rate Decision: Expected to leave the Benchmark Repo Rate unchanged at 5.75%
- 8:00 (RO) Romania to sell 2021 Bonds
- 8:15 (IT) Italy Senate holds confidence vote on austerity measures
- 8:30 (US) Nov Chicago Fed National Activity Index: -0.17e v -0.13 prior
- 8:30 (US) Q3 Final GDP Q/Q Annualized: 2.0%e v 2.0% prelim; Personal Consumption: 2.3%e v 2.3% prelim
- 8:30 (US) Q3 Final GDP Price Index: 2.5%e v 2.5% prelim; Core PCE Q/Q: 2.0%e v 2.0% prelim
- 8:30 (US) Initial Jobless Claims w/e Dec 16th: 380Ke v 366K prior; Continuing Claims: 3.60Me v 3.603M prior
- 9:00 (MX) Mexico Nov Unemployment Rate: No est v 5.0% prior
- 9:55 (US) Dec Final University of Michigan Confidence: 68.0e v 67.7 prelim
- 10:00 (US) Nov Leading Indicators: 0.3%e v 0.9% prior
- 10:00 (US) Oct House Price Index M/M: 0.2%e v 0.9% prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (CO) Colombia Q3 GDP Y/Y: 6.0%e v 5.2% prior
- 11:00 (EU) ECB Draghi and BOE King at European Systemic Risk Board briefing
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 14:00 (AR) Argentina Oct Economic Activity Index M/M: No est v 0.3% prior; Y/Y: 7.5%e v 7.7% prior
- 20:35 (CH) China Dec MNI December Flash Business Sentiment Survey
- 23:00 (IN) India Fin Min Mukherjee to address PHD Chamber of Commerce

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TradeTheNews.com Asian Market Update: Markets slip after EU bank liquidity measures are taken; Toyota guides global production

***Economic Data***
- (NZ) NEW ZEALAND Q3 GDP Q/Q: 0.8% V 0.6%E (4th quarter of expansion); Y/Y: 1.9% V 2.2%E
- (JP) Japan investors bought ¥26.2B in foreign bonds last week v ¥403B bought in prior week
- (JP) BANK OF JAPAN (BOJ) DEC MONTHLY ECONOMIC REPORT: PUBLIC WORKS SPENDING EXPECTED TO SHOW MILD INCREASE AS RECONSTRUCTION DEMAND MATERIALIZES

***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 -0.6%
- S&P/ASX -1.2%
- Kospi -0.2%
- Taiwan Taiex -0.1%
- Singapore Straits Times -0.3%
- Shanghai Composite -0.4%
- Hang Seng -0.5%
- S&P Futures -0.2% at 1,234
- Feb Gold -0.2% at $1,610/oz
- March Crude +0.1% at $98.81

***Overview/Top Headlines***
- Asian markets were skeptical on the ECB's plan to provide cheap loans to EU banks in an effort to ease the debt crisis and fell as a result. The fact that so many banks took the ECB up on the offer so quickly just highlights the state of the EU crisis. EUR/USD eased a bit in the session to $1.3040. USD/JPY stayed in a tight range with little direction. A$ and NZD both lost about 20 pips in the session to $1.0080 and $0.7678.

- New Zealand Q3 GDP q/q showed its 4th expansion reading and beat expectations at 0.8% while y/y fell short of expectations at 1.9%. Residential building component fell for the 5th consecutive quarterly decline to -1.8% though up from the -7.2% prior. Private spending was up 1.5% and imports q/q rose 3.1% and exports +0.4% v -0.5% prior.

- PBoC released its Q4 Survey saying property controls have shown effect, not as many expect prices to increase more; CPI expectations look to fall in Q1. Noted there is less overall dissatisfaction with inflation. Entrepreneurs Confidence Index 68.4, felt need for loans is being met. 14.4% of bankers expect looser monetary policy in Q1. Shanghai municipal govt has joined those of Beijing, Guangzhou, Haikou, Shenzhen, Qingdao, Fuzhou, Changchun and Xiamen in announcing continued property investment restrictions in 2012.

***Speakers/Geopolitical/In the press***
- (CN) China top 4 banks issued loans worth CNY75B in early DEC - Chinese press
- (CN) Former PBoC member Fan Gang: Global double dip recession not likely; China should be able to achieve a soft landing - Chinese press
- (KS) According to Korea Chamber of Commerce and Industry (KCCI) poll, growth in South Korea retail market is expected to fall to 6.3% in 2012 from 7.3% in 2011 - Korean press

***Equities***
- TM: Sees 2012 global production at record 8.48M vehicles and global sales of 8.65M; Sees 2013 global production at 8.98M vehicles and global sales of 8.95M vehicles
- HMC: To shift large part of its manufacturing to N America in the next 2 years, increasing regional capacity by up to 40% - US financial press
- IIN.AU: To acquire Internode for A$105M; Deal to be accretive pre-synergies in FY13
- Inner Mongolia Baotou Steel Rare Earth, 600111.CH: Reports 11-month coal output 908M tons - Chinese press
- Tepco, 9501.JP: Will seek permission from the Govt to raise electricity prices for households; Will raise prices for businesses starting in April
- Komatsu, 6301.JP: Exec: Expects mining equipment sales to increase 10% in 2012; Expects sale to be especially strong in China

***FX/Fixed Income/Commodities***
- (CN) China 11-month rare earth exports -7.3% y/y to 49.1K tons - Chinese press
- (JP) Japan MoF sells ¥2.50T in 0.1% (0.2% prior) 2-yr JGBs, bid to cover 4.22X (5-month high) v 3.60X prior
- (CN) PBoC sells 3-Month bills at 3.1618% (unchanged for 16th consecutive week)
- FCG.NZ: Exec: Expects record levels of dairy exports in DEC close to 240K metric tons
- GLD: SPDR Gold Trust ETF daily holdings fall by 12.1 tons to 1,267.9 tons (lowest since 1,267.2 on Nov 16th)

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TradeTheNews.com Market Internals update

- NYSE volume 545M shares, about 17% below its three-month average; advancers lead decliners by 1.6:1.
- NASDAQ volume 1.5B shares, about 1% above its three-month average; decliners lead advancers by 1.1:1.
- VIX index -6.75% at 21.00

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TradeTheNews.com Market Internals update

- NYSE volume 405M shares, about 17% below its three-month average; decliners lead advancers by 1.2:1.
- NASDAQ volume 1.12B shares, about even to its three-month average; decliners lead advancers by 1.8:1.
- VIX index -3.5% at 22.00

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TradeTheNews.com Market Internals update

- NYSE volume 275M shares, about 18% below its three-month average; decliners lead advancers by 1.8:1.
- NASDAQ volume 750M shares, about even to its three-month average; decliners lead advancers by 2.4:1.
- VIX index -3% at 22.00

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TradeTheNews.com US Market Update

Dow -70 S&P -8.5 NASDAQ -49
***Economic data***
- (BR) Brazil Dec IBGE CPI IPCA-15 M/M: 0.6% v 0.6%e
- (CZ) Czech Central Bank left the Repo Rate unchanged at 0.75%; As expected
- (US) MBA Mortgage Applications w/e Dec 16th: -2.6% v +4.1% prior
- (BR) Brazil Nov Total Outstanding Loans (BRL): 1.984T v 1.946T prior; Private Banks Lending: 1.131T v 1.118T prior; Outstanding Loans M/M: 1.9% v 0.8% prior
- (CA) Canada Oct Retail Sales M/M: 1.0% v 0.5%e; Retail Sales Less Autos M/M: 0.7% v 0.2%e
- (BE) Belgium Dec Business Confidence Level: -10.6 v -12.5e
- (MX) Mexico Q3 Aggregate Supply & Demand: 4.9% v 5.8%e
- (CA) Canada Oct Teranet/National Bank HPI M/M: 0.0% v 0.0% prior; Y/Y: 7.9% v 6.5% prior; House Price Index: 148.50 v 149.52 prior
- (EU) Euro Zone Dec Advanced Consumer Confidence: -21.2 v -21.0e
- (US) Nov Existing Home Sales: 4.42M v 5.05Me
(BE) Belgium Dec CPI M/M: 0.4% v 0.4% prior; Y/Y: 3.5% v 3.9% prior
- (US) Weekly DOE Energy Inventories: CRUDE: ## vs. -3Me; Gasoline: ## vs. +500Ke; Distillate: ## V -500Ke; Utilization: % V 85.0%e

- The initial market response to this morning's inaugural ECB three-year LTRO was heartening, with the approx €490B allotted in the auction matching the high end of most expectations. European equity indices surged to their highs, US futures traded up, the dollar softened and the euro gained. But the buzz wore off quickly and global markets tumbled as analysts sank their teeth into analyzing what it actually meant. SocGen wrote that when you net out the declines in the ECB's Main Refinancing Operation (MRO) yesterday, the three-month LTRO today and recent moves out of the 12-month LTRO, the net new liquidity generated by the new three-year LTRO is a mere €210B or so. There are also questions about where all the new liquidity will go, and comments by the Italian Bank Association (ABI) that it expected banks to reduce exposure to government debt under new EBA rules suggest one of the new destinations may not be European sovereign bonds. And finally, everybody is still waiting for S&P to pull the trigger on its promised euro zone sovereign downgrades. EUR/USD fell over 170 pips from Euro session highs to test below 1.3030. In US trading, the S&P500 is at or near its lows in mid-morning trading. Note that after a few refreshingly positive housing market data reports, the Nov existing home sales data missed expectations and the Oct number was revised lower. Spot gold closed below $1,600 yesterday afternoon, and was up above $1,640 after the LTRO auction, before trading off again. Front-month WTI crude tried and failed to breach $100, and is around $98 in mid-morning trade. Treasury markets are little changed with the benchmark 10-year yield holding near 1.9%.

- Oracle is a major focus this morning, following its substantial shortfall, which has shocked investors given that its results are typically quite predictable. Oracle missed earnings and revenue expectations in its Q2 report; executives blamed the elongation of sales cycles just as the quarter ended, particularly in the Americas and Europe, in addition to headwinds from the euro. Multiple analysts cut the name overnight and shares of ORCL are down 14% in the early going. Walgreen also missed on its bottom line, although margins and sales comps held up pretty well. Walgreen executives telegraphed that negotiations with Express Scripts were moribund, and the CEO said that a "serious" attempt was made last week to reach a final deal with Express Scripts, and the response was disappointing. Carmax also more or less met expectations, although sales comps were negative on a y/y basis. WAG is down 6% and KMX is down 6.5%. On the bright side, Nike is up more than 2% after topping earnings expectations in its Q2 and reporting a whopping 35% y/y gain in China revenue. Shares of Shaw are up nearly 15% after the engineering name crushed expectations in its Q1 reports and hiked its FY12 outlook.

***Looking Ahead***
- 11:00 (FR) France President Sarkozy
- 11:00 (US) Fed to sell $8.00-8.75B in Notes
- 12:00 (EU) EU Barroso
- 13:00 (US) Treasury to sell 7-Year Notes
- 13:30 (SP) Spain PM Rajoy to announce cabinet members
- 14:00 (US) Fed to sell $8.00-8.75B in Notes
- 14:00 (AR) Argentina Nov Trade Balance: $0.7B v $1.2B prior
- 14:00 (AR) Argentina Q3 Current Account Balance: $0.4B v $1.2B prior
- 18:00 (EU) European Systemic Risk Board meets in Frankfurt

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TradeTheNews.com Market Internals update

- NYSE volume 155M shares, about 18% below its three-month average; decliners lead advancers by 1.5:1.
- NASDAQ volume 395M shares, about 2% below its three-month average; decliners lead advancers by 2.1:1.
- VIX index -5.25% at 22.00

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TradeTheNews.com European Market Update: ECB inaugural 3-year LTRO operation high take initially viewed in a positive tone but not an end-all to crisis

***Economic Data***
- ECB: €7.8B borrowed in overnight loan facility vs. €7.1B prior; €251.4B parked in deposit facility vs. €225.6B prior
- (DE) Germany Nov Import Price Index M/M: +0.4% v -0.3% prior; Y/Y: 6.0% v 5.3%e
- (DK) Denmark Dec Consumer Confidence Indicator: -9.8 v -9.9e
- (CH) Swiss Nov Money Supply M3 Y/Y: 7.2% v 8.1% prior
- (SE) Sweden Dec Consumer Confidence: -7.4 v -8.0e; Manufacturing Confidence: -11 v -14e; Economic Tendency Survey: 92.8 v 93.0e
- (IC) Iceland Dec CPI M/M: 0.3% v 0.0% prior; Y/Y: 5.3% v 5.2% prior
- (IC) Iceland Nov Wage Index M/M: 0.3% v 0.7% prior; Y/Y: 9.0% v 8.9% prior
- (IT) Italy Q3 Final GDP Q/Q: -0.2% v -0.2%e; Y/Y: 0.2% v 0.4%e
- (MA) Malaysia Nov CPI Y/Y: 3.3% v 3.3%e
- (NO) Norway Oct AKU Unemployment Rate: 3.3% v 3.3%e
- (UK) Nov Public Finances (PSNCR): £10.6B v £10.3Be; Public Sector Net Borrowing: £15.2B v £16.6Be; PSNB ex Interventions: £18.1B v £19.7Be
- (AS) Austria 2011 WIFO Institute GDP Estimate: 3.2% v 2.9% prior Sept view

Fixed income:
-(EU) ECB allotted $33.0B in 14-day USD liquidity operation at fixed 0.57% vs. $5.1B prior
- (SZ) SNB allotted $320M in 14-day USD liquidity operation at fixed 0.57%
- (SW) Sweden sold SEK7.9B vs. SEK10.0B indicated in 3-month and 6-month Bills
- (EU) ECB allotted €29.7B in 3-Month Tender vs. €50Be (prior €38.6B0
- (EU) ECB allotted €489.2B in 3-Year Refinancing Tender vs. €310Be

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Moody's warned on Britain's AAA sovereign
- BOJ leaves interest rates unchanged (as expected) but cuts economic assessment
- Japan registers an adj trade deficit.
- ECB allotment higher than expected in its inaugural 3-year Refinancing Operations

Equities:
FTSE 100 +0.90% at 5467, DAX +1.5% at 5936, CAC 40 +1.6% at 3103, IBEX 35 +1.3% at 8565, FTSE MIB +1.6% at 15,209, SMI +0.50% at 5835

- European bourses continued their rally in today's session after US and EU economic data came in stronger than expected. Financial stocks led the rally. A strong Spanish auction, stronger German economic prospects and better housing data from the US has sustained optimism in the markets. Furthermore, ECB allotted €489.2B in its inaugural 3-year refinancing tender, above the €310B expected by the traders. The 3-year refinancing operations was a key event in today's markets. However, tech sector was pressured following Oracle's disappointing results.

Speakers:
- Bank of England (BOE) released its Monetary Policy Committee minutes which registered its third straight month of unanimous votes. The BOE reiterated that it saw little merit in fine tuning policy and that some MPC members stated that more QE might be warranted in due course. Some MPC think economic conditions were worse since November and that a contraction in Euro Area activity was likely underway. Some MPC members noted that Inflation risks more balanced in medium term but overall reiterated its view that inflation to fall sharply in first part of 2012 and more uncertain in H2 of year
- France regulator AMF's Jouyet commented in the French press that a cut in France's sovereign rating may cost the country up to €10B per year in interest
- Japan's R&I Downgrades Japan's Sovereign Rating to AA+ from AAA; Outlook Stable. The rating agency cited that Japan Govt ability to adjust fiscal conditions was no longer supportive of highest rating and prospects for Japan economic revitalization were "uncertain" and critical measures for Japan social security reform had yet to be decided
- Japanese Rating Agency JCR maintained Japan's sovereign rating at 'AAA'; Outlook Stable
- Japan Cabinet Office Monthly Economic Report maintained its economic assessment that Japan's economy was picking up slowly, but remained severe after March earthquake. It lowered its view on corporate sentiment (first time in 2-months) and noted that large manufacturers sentiment was weakening and needed to be cautious about the future.. The Gov't was wary of risks from overseas slowdown due to EU crisis and market volatility.
- Bank of Japan (BoJ) Gov Shirakawa post rate decision press conference started off noted that he could not say with certainty when Japan's economy would recover but mechanisms remained intact. He reiterated that delays to the solution for the European crisis would harm global growth and was the biggest threat to Japan. Needed to monitor European banks' deleveraging USD assets and noted that China's economy was unlikely to slump sharply
- China PBoC reiterated its views following after Party meeting chaired by Gov Zhou . China would continue implementing its "prudent' monetary policy approach and further advance its exchange rate regime reform
- China could announce 1st batch of rare earth export quotas for 2012 later in Dec
- India Finance Ministry official: Looking at all options to attract foreign capital into country and was looking to reduce lock-in period and residual maturity for foreign institutional investment in infrastructure bonds
- Fitch commented on Austrian banking sector and noted that viability ratings were under pressure but had a stable outlook for IDRs
- Germany's Bundesbank reiterated its demand to have parliamentary approval of new IMF funds
- Germany Finance Ministry announces 2012 issuance program and planned to issue €250B in debt in 2012 compared to. €283B in 2011.
- Netherlands Fin Min de Jager said the country's central bank could report a record loss in 2011
- Poland Central Bank Gov Belka: Contribution to the IMF might be €6.3B but no decision had been made
- Poland Central Bank Zielinska-Glebocka commented that: 2012 GDP growth view of 2.5% was very conservative and sustained by strong exports. She noted that the PLN currency to be less volatile in 2012 with Euro-Area calm discouraging currency speculation on PLN. The
Central bank remained in 'wait-and-see' mode and wanted to see if economic slowdown curbed inflation
- Poland Central Bank's Winiecki stated that 2012 GDP growth might be slightly above 3.0%

Currencies:
- The USD remained soft against during the European morning as risk appetite continued to find footing. The sentiment found some additional momentum following the ECB inaugural 3-year Refinancing Operations with a take of €489.2B. The EUR/USD probed the 1.32 handle ahead of the NY morning. The market viewed that a high take up was a good thing assuming it would shore up their medium-term financing, balance sheets and perhaps to buy sovereign debt
- The BoE minutes showed unanimous votes for unchanged policy for the third straight month. The GBP continued to find ways to strengthen against the major pairs and tested 1.5775 against the USD.
- The JPY was weaker against the European pairs but steady versus the greenback.

Political/ In the Papers:
- The Home Builders Federation warned that the British housing crises will worsen next year due to mismanagement of the planning system. The delivery of new homes is expected to be half the pace required to meet demand, placing homebuilding at lowest level since the 1920s. So far planning approvals are down 17% on 2010, and average approximately 33.3k per quarter against the 38.5k in 2009 according to the federation.
- The FT noted that insolvencies in the British consumer sector are expected to rise next year. According to RSM Tenons analysis of Companies House data, one in five businesses in food manufacturing, hospitality and tourism industries, and one in eight retailers is on insolvency alert. E&Y head of restructuring for UK and Ireland Alan Hudson believes the number of insolvencies in 2012 will exceed 2008, the peak year to date.
- Irish ministers plan to speed up the revision process for property taxes. The current household charges of €100/year is likely to be replaced in slightly over a year's time by a new comprehensive graduated scale based taxing system. Under the terms of the EU/IMF program, a graduated system of property tax was not expected until 2014. The Commission on Taxation recommends an increase of €1.2 billion/year (or approximately 8X greater than the €160 million from the €100/year charge).
- Ambrose Evans-Pritchard commented on the "ECB carry trade". Spanish and Italian bond markets have rallied this week ahead of the ECB's 3-year loan operation on Wednesday. There have been hopes that the funds borrowed at the ECB operation could be used to buy higher yielding peripheral debt, thus potentially allowing the ECB to support countries without violating its treaty. It is not clear if banks will buy sovereign bonds with funds borrowed from the ECB, as EU banks have been recently cutting their peripheral exposures in order to meet capital rules.

***Looking Ahead***
- 6:00 (SW) Sweden Central Bank Nyberg
- 6:00 (BR) Brazil Dec IBGE CPI IPCA-15 M/M: 0.6%e v 0.5% prior
- 7:00 (CZ) Czech Central Bank Interest Rate Decision: Expected to leave the Repo Rate unchanged at 0.75%
- 7:00 (US) MBA Mortgage Applications w/e Dec 16th: No est v 4.1% prior
- 7:30 (BR) Brazil Nov Total Outstanding Loans (BRL): no est v $1.946T prior; Private Banks Lending: No est v $1.118T prior; Outstanding Loans M/M: No est v 0.8% prior
- 8:30 (CA) Canada Oct Retail Sales M/M: 0.5%e v 1.0% prior; Retail Sales Less Autos M/M: 0.2%e v 0.5% prior
- 9:00 (BE) Belgium Dec Business Confidence Level: -12.5e v -12.2 prior
- 9:00 (MX) Mexico Q3 Aggregate Supply & Demand: 5.8%e v 4.2% prior
- 9:00 (CA) Canada Oct Teranet/National Bank HPI M/M: No est v 0.0% prior; Y/Y: No est v 6.5% prior; House Price Index: No est v 149.52 prior
- 9:30 (BR) Brazil Central Bank Posts Currency Flows' Data for Prev. Week
- 10:00 (FR) France debate on 2012 revised budget law
- 10:00 (EU) Euro Zone Dec Advanced Consumer Confidence: -21.0e v -20.4 prior
- 10:00 (US) Nov Existing Home Sales: 5.05Me v 4.97M prior
- 10:30 (US) Weekly DOE Energy Inventories
- 11:00 (FR) France President Sarkozy
- 11:00 (US) Fed to sell $8.00-8.75B in Notes
- 12:00 (EU) EU Barroso
- 13:00 (US) Treasury to sell 7-Year Notes
- 14:00 (US) Fed to sell $8.00-8.75B in Notes
- 14:00 (AR) Argentina Nov Trade Balance: $0.7B v $1.2B prior
- 14:00 (AR) Argentina Q3 Current Account Balance: $0.4B v $1.2B prior
- 18:00 (EU) European Systemic Risk Board meets in Frankfurt

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