SMF Notes Morning Call for Thursday, November 10, 2011

Morning Call for Thursday, November 10, 2011

Overnight Developments

• Global stocks this morning are mixed with the Euro Stoxx 50 up +0.17% and Dec S&Ps up +13.40 points. The dollar index retreated from a 1-month high and commodities were mixed, with copper falling to a 2-week low, as the Italian government sold all the bills planned at auction and as the ECB bought Italian bonds. The euro recovered from a 1-month low against the dollar after Italy sold all 5 billion euros of 1-year bills today, with investors bidding for nearly double the amount of securities on offer. The euro had fallen earlier after ECB Council member Knot said the central bank can't do "much more" to stem the Euro-Zone debt crisis. The European Commission cut its growth forecasts for this year and next for the Euro-Zone with EU economic and monetary affairs commissioner Rehn saying "the recovery has now come to a standstill and there's the risk of a new recession unless determined action is taken." The commission said Euro-Zone GDP may grow 1.5% this year and 0.5% in 2012, weaker than earlier projections of 1.6% this year and 1.8% next. Gains in stocks remain limited after Sep French industrial production fell -1.7% m/m, weaker than expectations of -0.7% m/m and the biggest decline in 15 months, while Oct German CPI (EU harmonized) was revised up from +2.8% y/y to +2.9% y/y, and remained at a 3-year high. As expected, the BOE kept its benchmark rate at 0.50% and held its asset purchase target at 275 billion pounds following the conclusion of its monetary policy meeting.

   

   

• Asian stocks today closed lower with Japan down -0.69%, China -0.51%, Australia -1.27%, South Korea -1.03%, India -0.56%. Asian stocks slumped after a surge in Italian bond yields fueled concern Europe's currency union will unravel and cause a recession in China's largest export market. Asian stocks were also pressured after Oct Chinese exports rose +15.9% y/y, weaker than expectations of +16.2% y/y and the smallest pace of gain in 8 months. Japanese stocks were undercut after Sep Japan machine orders, an indicator of future capital spending, declined -8.2% m/m, weaker than expectations of -7.1% m/m.