EFTA00422126.pdf

From: Henry Higdon <1 To: Undisclosed recipients:; Subject: Early Tour 1.2.12 Date: Mon, 02 Jan 2012 10:45:09 +0000 Inline-Images: image002.png Good Morning ... European Markets up 20-140 bps (DAX +1.37%, Italy +1.17%, Greece -1.15%) ... KOSPI +0.03%, Taiwan -1.69% EUR 1.2955 (-0.04%) JPY 76.93 (-0.02%) CHF .9400 (-0.20%) GBP 1.5504 (-0.25%) DXY 80.24 (+0.08%) Italy 10yr yield 6.93% (-18bps) China's official PMI for Dec comes in at 50.3 vs 49.0 in Nov and better than expectations of 49.1. This is above the all-important 50 mark (signaling expansion) and implies that the economic slowdown may be stabilizing. Officials said that Western and Chinese New Year celebrations spurred domestic and overseas consumption which drove the rebound. All developed markets in Asia were closed today except Korea and Taiwan (KOSPI +0.03%, Taiwan -1.69%). European markets bid up in light trading (U.K., Ireland, Switzerland all closed today but the rest of Europe is open for a full day). Spain's new centre-right government raised the forecast for its 2011 budget deficit to 8.0% of GDP on Friday (up from the prior government's estimate of 6.0%). Today, Spanish economy minister Luis de Guindos says it could actually exceed 8.0% ("but not by much"). In New Year's speeches, most European leaders were out over the weekend warning of a difficult 2012 ahead (FT). January is shaping up to be a busy month in terms of news flow and will likely bring back some volume to the markets as well as volatility. We have highlighted the key events in January to keep on the radar below. ***U.S. markets closed today*** • ECB says banks deposited €413.9 billion overnight (down from €445.7 billion the previous day) • German FinMin says rescue funds can only buy time before indebted nations take necessary measures • Germany & France send 2 key officials to fill positions at ECB today (struggle for job of chief economist) • Eurozone PMI Manufacturing comes in © 46.9 = inline (see bullet below for individual country PMI's) • Europe Dec PMI's: Italy 44.3 (est 43.8), Spain 43.7 (43.8 prior), France 48.9 (48.7 est), Germany 48.4 (48.1 est) • EU commission will assess "sizeable fiscal slippage" of Spain's 2011 budgetary target says Olli Rehn • Obama signs $662 billion defense bill into law (includes sanctions against Iran's central bank) • Group of 5 investors sued Porsche last Friday in Stuttgart over misleading market re: VW in 2008 • Barron's says Cummins may hire 5,000 to 2015 & Paccar may rise 50% on truck replacement demand EFTA00422126 • Solar: LDK bidding for Sunways (23% premium), Solarwortd CEO says Q4 sales -pleasantly good" • Daimler is on track to boost O4 operating profit y/y and meet annual sales forecast says CFO in interview • ProSiebenSat.1 (PSM GY) says its market share in 2011 rose slightly from 28.5% to 28.9% • Teva Pharma names Jeremy Levin of BMY to replace ShIomo Yanai as CEO (trading +3.0% in Israel) • Archer Ltd trading lower in Oslo as CEO Jorgen Rasmussen leaves to pursue other interests (trading -3.7%) • Vestas Wind Systems (VWS DC) trading +6.6% after announcing 310 MW turbine orders on Friday • Iran plans to test fire 2 long range missiles today in Gulf drill according to military officials (Reuters) • Iran has produced its first nuclear fuel rod says IRNA citing Iran's Atomic Energy Agency • South Korea Dec HSBC Manufacturing PMI 46.4 vs 47.1 prior (5th consecutive reading below 50) • Taiwan December HSBC Manufacturing PMI 47.1 vs 43.9 (7th consecutive reading below 50) • India's December HSBC manufacturing rose to 54.2 from 51.0 in November (fastest pace in 6 months) • PBoC says CNY is nearing equilibrium level (reits prudent monetary bias with some fine tuning) • China Commerce Ministry considering offering consumer spending incentives (may come next week) Leading European Sectors: Autos/Parts +1.27%, Insurance +1.04%, Tech +1.02% Lagging European Sectors: Real Estate -0.15%, Healthcare -0.01%, Travel/Leisure +0.05% Key Events in January MI verdict on 15 Eurozone countries due sometime in January (likely sooner rather than later) It will be a busy Jan/Q1 for European sovereign debt issuance & refinancing (€740 billion for 2012 of which — €82 billion in January & €234 billion in O1 ) (Italy needs to refinance €53 billion in O1) House & Senate continue negotiations on extending payroll tax cuts for 1 year after agreeing to temporary 2-month extension last month Jan 3 — Iowa Caucuses (Romney & Paul leading prelim polls for Iowa — Gingrich has faded — Romney or Paul victory likely means Romney becomes the nominee) Jan 5 — December Retail Comps = shed light on holiday sales & guidance for O1 Jan 6 — U.S. labor report (NFP estimate +150k, 8.7% unemployment) EFTA00422127 Jan 6 — next round of formal negotiations for new EU fiscal treaty (presented to all 27 EU members and institution) (Sarkozy meets with Monti in Paris) Jan 9 — UniCredit begins taking orders for €7.5 billion rights offering Jan 9 — Sarkozy/Merkel meet to continue fiscal integration talks Jan 9 —Alcoa officially kicks off earnings season after the close Jan 10 — New Hampshire primary (Romney expected to win) Jan10/11/12 — ICR XChange in Miami (big retail conference) (Schedule) Jan10/11112/13 — Consumer Electronics Show (CES) in Las Vegas (Link) Jan 12 — ECB & BOE announcements (no changes expected but some looking for another 25bps cut from ECB to 0.75%) (note next ECB 3yr LTRO is Feb 29) Jan 13 — JPM reports earnings (rest of the banks report week of 1/16 after the MLK holiday on Monday) Jan 21 — South Carolina primary Jan 23 — China Lunar New Year begins — SHCOMP closed all week ... chatter of RRR cut sometime before this date Jan 24/25 — FOMC announcement with Bemanke press conference after (expected to sharpen policy communications to include more detailed rate forecast — and potentially tied to specific levels of unemployment, inflation, etc). WSJ's Hilsenrath recently suggested they may give more guidance on path of interest rates and effectively extend low rate pledge from mid-2103 into 2014 & beyond). There has also been a lot of attention to the dovish changes to the complexion of the 4 rotating voting members of the Fed that take effect this month: they are losing 3 hawks and picking up 1 in Lacker = this has fueled further speculation of potential QE3 in March focused on MBS purchases. Jan 30 —Another EU summit (this one focusing on jobs and economic growth) Jan 31 — Florida primary EFTA00422128 Other Newspaper Articles 8 Stories EU officials begin New Year with calls to save the Euro CNBC Why was wife of SNB head trading Francs days before devaluation? Business Insider Retailers face being "squeezed to extinction" Telegraph Collapse of the Eurozone "will start this year Daily Mail Austerity reigns over Eurozone as crisis deepens NYT Romney gains narrow lead in Iowa poll FT How MF Global was undone WSJ Natural gas ends 2011 at 27-month low WSJ Henry G. Higdon Tourmaline Europe LLP 57/59 Haymarket - St Albans House London SW1Y 4QX S from U.K. Y<1 Description: Description: _ EFTA00422129 This e-mail and any files transmitted with it are confidential and intended only for the person or entity to which it is addressed. If you are not the intended recipient, you are hereby notified that any dissemination, distribution or copying of this e-mail and any attachment(s) is strictly prohibited. If you have received this e-mail in error please immediately notify the sender at 203-302-7300 or by replying to this e-mail and delete the e-mail and any attachment(s) from your system. 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