TOP
Germany’s cherished European fiscal compact was unravelling as Hungary and the Czech Republic claimed it would be damaging and protesters in Warsaw demanded Poland stands firm against Angela Merkel – Telegraph.
Singapore’s exports unexpectedly rose in Nov as pharmaceutical sales countered weak demand for electronics amid a faltering global recovery. Non-oil domestic exports climbed 1.6% yoy (exp: – 1.2%), after a revised 16.3% slide in Oct, the island’s trade promotion agency said in a statement today – Bloomberg.
IMF chief Lagarde has warned that the global economy faces the prospect of “economic retraction, rising protectionism, isolation and . . . what happened in the 30s [Depression]”, as European tensions again flared over suggestions in Paris that the UK’s credit rating should be downgraded before France’s – FT.
Monti will face a confidence vote in Parliament to speed passage of a 30bn-euro ($39 billion) emergency budget plan aimed at spurring growth and convincing investors he can cut Europe’s second-biggest debt – Bloomberg.
EUROPE
ECB could alter rules again to ease dollar funding stress – WSJ.
Bank of France governor Christian Noyer: “A downgrade doesn’t seem justified to me when you look at the economic fundamentals. Or else a downgrade should come first for the U.K., which has a greater deficit, as much debt, more inflation, and less growth than us, and collapsing credit.” – WSJ.
EFSF considers euro warning clause – FT.
EZ govs are facing disappointment for their hopes that banks in the region would use new longer-term finance offered by the ECB to buy up beleaguered sovereign bonds – FT.
ECB chief plays down hopes for bigger bond purchases – WSJ.
ECB’s Mersch; should not pool powers among big nations; market is only partially convinced of EU Summit decisions; can’t expect nations to regain competitiveness in a year; Germany took many years to regain competitiveness; must restore confidence in the EZ; ECB will continue to maintain price stability; unlimited bond purchases are not an ECB task; the ECB can only restore confidence; doesn’t expect Eurobonds or bank license for EFSF.
The VP of Portugal’s socialist party reportedly said “We have an atomic bomb that we can use in the face of the Germans and the French: this atomic bomb is simply that we won’t pay” – Telegraph.
U.S. and Asian companies seeking acquisitions in Europe may accelerate deal making next year after a slowdown in the second half, beckoned by a slumping euro and share prices depressed by the sovereign debt crisis – Bloomberg.
Public faith in the Bank of England’s control over inflation has fallen to a record low after its policymakers repeatedly fumbled their forecasts – The Times.
Britain’s financial services industry contributed GBP 63 billion in taxes to the economy last year, up by 18%, the Corporation of London said on Thursday.
The co-chief executives of RIM, the company behind the BlackBerry Smartphone, have cut their salaries to $1 in an effort to fend off growing investor unrest.
US
The Senate’s top Democrat said his colleagues are considering a two-month extension of an expiring payroll tax cut and extended unemployment benefits if they are unable to strike a deal on a longer-term plan with Republicans – Bloomberg.
NY Fed Pres Dudley said the Fed isn’t planning to undertake additional steps to curtail the impact of Europe’s crisis, while standing by to boost liquidity if necessary – Bloomberg.
ASIA
China has decided to lower import tariffs on more than 730 items, effective early 2012, with the average tax ratio set at 4.4%, the MoF said. The move is aimed to boost imports to meet domestic demand, the ministry added.
Deposits in China’s “big four” state-owned banks declined by a net CNY400 billion in the first ten days of December, dragging down banks’ lending ability, the 21st Century Business Herald said on Friday.
Japan’s PM Noda said that aim to cap spending at JPY71tn and new bond issuance at JPY44tn while compiling the budget for next fiscal year.
Noda will hold a press conference this evening to declare that the crippled Fukushima nuclear site has achieved a stable condition known as cold shutdown, a key step toward decommissioning the plant. Critics disagree.
India’s rupee surged the most in 2 1/2 years, extending its rebound from an all-time low reached yesterday, after the CB announced measures to curb FX speculation – Bloomberg.
Indian stocks are ending 2011 with the biggest decline among the world’s largest equity markets, and analysts say the worst is yet to come – Bloomberg.
Indonesia’s plan for guidelines on acquiring land for infrastructure projects and a boost to the nation’s credit rating augur improved prospects for investment in the world’s fourth-most populous country – Bloomberg.
Australia’s banking regulator refused to comment on a newspaper report that it has asked banks to conduct stress tests to model the impact of a worst-case scenario. The report said such a scenario includes contraction in GDP, unemployment rate of 12% and 30% fall in house prices.
CORPORATE
BoA, Goldman and Citigroup had their credit grades cut by Fitch Ratings as the impact of financial regulation and market turmoil weighed on the industry – Bloomberg. Barclays, Credit Suisse, Deutsche Bank and BNP Paribas were also downgraded.
Citigroup will be ordered by regulators to suspend some operations in Japan after a probe revealed compliance violations, according to two people familiar with the matter – Bloomberg.
Morgan Stanley is to eliminate 1,600 jobs as the bank readjusts its workforce in response to new capital requirements, restrictions on trading and a sluggish global economy – FT.
OTHER MARKETS
Asian stocks rose for the first time in 4 days after better-than-expected US data signalled the world’s biggest economy is strengthening – Bloomberg.
Nikkei – up 0.29%. Shanghai Composite – up 0.01%. Hang Seng – up 0.61%.
Dow Jones – up 0.39%. Nasdaq – up 0.07%.
Treasuries: USTs ended NY trade mildly lower Thursday.
Commodities: WTI crude oil futures now trading slightly down, with the Jan contract falling $0.19 to $93.68 a barrel, after trading in a $93.39 to $93.70 range, and coming in below the 200-day moving average of $97.10. The Dec contract settled at $93.87 per barrel last night.
Spot gold is now up $7.43 at $1577.95 per ounce, after a $1569.20 to $1578.15 range, rebounding from lows in the previous session. The gold spot rate remains below the 55-day moving average, which serves as near-term resistance at $1699.79.
CALENDAR
0700/0200 ACEA Nov-11 new car registrations
0745/0245 France Dec-11 manufacturing sentiment
0745/0245 France Dec-11 services sentiment
0745/0245 France Dec-11 construction sentiment
0800/0300 ECB Governing Council member Ignazio Visco opening remarks at conference in memory of Tommaso Padoa-Schioppa, in Rome
0830/0330 ECB President Mario Draghi chair panel on monetary policy and payment systems, with BOE Gov. Mervyn King and former Fed vice chair Donald Kohn, in Rome
0830/0330 Germany’s Bundesrat, to vote on 2012 federal budget bill; German Finance Minister Wolfgang Schaeuble likely to speak, in Berlin
0900/0400 ECB Governing Council member Ewald Nowotny press
conference on financial stability, in Vienna
1000/0500 EMU Oct-11 construction output
1000/0500 EMU Oct-11 trade balance
1000/0500 EMU 3Q-11 labour costs
1030/0530 BIS General Manager Jaime Caruana and EBA Chairman Andrea Enria in panel discussion on financial system regulation and supervision, in Rome
1330/0830 US Nov-11 Consumer Price Index
1330/0830 Canada Oct-11 International sec transaction
1330/0830 ECB Governing Council member Iganzio Visco chairs panel discussion European integration, with EFSF CEO Klaus Regling, in Rome
1500/1000 Mexico 02-Dec Bank of Mexico policy minutes
1530/1030 ECB Executive Board member Lorenzo Bini Smaghi and IMF Deputy Managing Director John Lipsky on panel discussing reform of international monetary system, in Rome
1615/1115 Chicago Federal Reserve Bank President Charles Evans
on panel at EC2 Conference on econometric tools for
policy making after the crisis, in Florence, Italy.
1700/1200 Dallas Federal Reserve Bank President speech on the
economic outlook at the Austin Chamber of Commerce
2012 Economic Forecast Luncheon in Austin
Eastern Europe
BUDAPEST – Final day of IMF/EU informal visit to Budapest
BUDAPEST – PM Orban to speak on public radio (0630)
BUDAPEST – Wages, Oct <HUWAGE=ECI> (0800)
BUDAPEST – Construction sector output, Oct (0800)
POLAND – EU’s Barroso, Lybia’s Jalil, Tunisia’s Essebsi visit (0800)
POLAND – Employment/unemployment (1400)
HSBC Global Research