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Livesquawk - US Briefing - Tuesday 12.10
US Briefing - Tuesday 12.10
Headlines
  • Deutsche Survey: Major Central Banks Are Likely To Make Policy Mistakes
  • EU Receives Record EUR120Bln Bids For 15Y Green Bond: Spread: MS-8
  • German Oct. ZEW Current Situation, Economic Sentiment See Big Misses
  • French Pres Macron Launches EUR30Bln "France 2030" Investment Plan
  • Norway PM Solberg Set To Resign To Clear Way For A New Government
  • UK Sep. Payrolls Rise Above Pre-Covid Levels With Record Hiring Levels
  • China Commences Inspection Of Financial Regulators And State Banks
  • Reports China To Expand Anti-Monopoly Bureau As Crackdowns Widens
  • China Property Developers See Rating Cuts At Fastest Pace In 5 Years
  • China’s Evergrande Misses Two Further Dollar Bond Interest Payments
  • Chinese Developer Sinic Warns Of Default As Sees Hidden Risks Mount
  • Japan’s PM Kishida Pledges To Boost Wages Without Raising Sales Tax
  • Lira Slumps To Record Low As Erdogan Signals A New Syria Offensive
  • Russia: Gazprom Has Begun Using Gas Stockpiles To Stabilise Market
  • Morgan Stanley Sees Stocks Suffering On A Souring Consumer Outlook
  • Merck Aims To Double Covid-19 Antiviral Pill Supply On Rising Demand
  • Private Equity Firms Circle GlaxoSmithKline's USD54Bln Consumer Unit
  • RTRS: EU Set To Open Probe Into Nvidia's USD54Bln Takeover Of Arm
  • Airbus Drops On Weak Sep Deliveries; SocGen Falls: To Cut 3700 Jobs
  • EasyJet Boosts Capacity Plan To 70% Of Its 2019 Levels This Quarter
  • Industry Body CAAM: China's Vehicle Sales Tumble 20% In September
Commentary
UK Jobs Data Returns To Pre-Pandemic Levels

LONDON – The UK released strong employment and wage data Tuesday, with unfilled positions soaring to a record and the unemployment rate declining prior to the end of the country’s programme for protecting workers during the pandemic. British employers took on a record 207,000 staffers in September, the government said.   The Office of National Statistics said that in the three months through August, the number of workers rose 235,000 – the biggest quarterly rise in six years – but this fell short of the market forecast of 250,000 even though it exceeded the 183,000 level in the prior three months. The unemployment rate eased to 4.5% to match the market estimate following the 4.6% mark set in the previous period.  

 

Job vacancies in the July-September period hit a record, pre-pandemic high of 1,102,000, a rise of 318,000 from January to March 2020. The ONS said the positive vacancy data was broad-based and brings the labour market back to levels last seen ahead of the global spread of the coronavirus. “All industry sectors were above or equal to their January to March 2020 pre-pandemic levels in July to September 2021, with accommodation and food service activities increasing the most, by nearly 50,000 (59%).”  Average weekly earnings rose 7.2% in the three months through August versus the 8.3% mark seen in the previous period. Also slowing was the ex-bonus data, although it still showed a 6.0% increase in the same three-month period. 

(LiveSquawk – Continue Reading)

German ZEW Investor Morale Drops For 5th Straight Month

FRANKFURT – Investor sentiment in Europe’s largest economy showed sharper-than-expected declines in October as growth, inflation and supply concerns soured the mood among financial market experts. The results of the ZEW economic institute’s monthly survey produced the fifth consecutive drop in the forward-looking economic sentiment gauge, which fell to 22.3 versus the market estimate of 24.0 and last month’s 26.5 reading. The current conditions indicator was also well off expectations with a sharp decline to 21.6 compared to a market forecast of 29.5 and 31.9 last month.

 

“The economic outlook for the German economy has dimmed noticeably,” ZEW President Achim Wambach said. He noted that the drop “is mainly due to the persisting supply bottlenecks for raw materials and intermediate products. The financial market experts expect profits to go down, especially in export-oriented sectors such as vehicle manufacturing and chemicals/pharmaceuticals.” The outlook for the Eurozone also worsened for the fifth consecutive time with a fall to 21.0 versus 31.1 in September. The economic sentiment reading, the index’s measure for expectations over the next six months in Germany, has been losing ground since June, and ING’s Carsten Brzeski suggested it still hasn’t reached its nadir. “No turning point in sight,” he tweeted.

(LiveSquawk – Continue Reading)

Big US Banks Have Been Stars, But The Encores Are Over

America’s biggest banks have had star turns this year for investors betting on the global economic rebound from the Covid-19 pandemic, but the encores might well be done. Lenders from the U.S. and Europe have comfortably beaten earnings expectations while the world grappled with economic shutdowns and reopenings. But with third-quarter earnings coming up — starting with JPMorgan Chase & Co. on Wednesday — there’s now a chance of some disappointment.  The key is going to be old-fashioned lending and whether it has started to pick up. A big part of the bull case for banks is that people and businesses will start to borrow more again after months of paying down loans and credit cards. With rising interest rates, the argument goes, this will finally bring an upturn in interest income and margins.

 

But both sides of this line look flawed. U.S. interest rates aren’t going up very much anytime soon and in three years could still be barely more than 1%, according to market indicators and analysts. Meanwhile, bank executives presenting at financial conferences in recent weeks gave cautious guidance on loan growth. Banking bulls may have gotten ahead of themselves. Big bank stocks have rallied dramatically this year — even Citigroup Inc., the worst performer among the largest lenders, has kept pace with the S&P 500. This has driven valuations to around the highest in three years when looking at prices as a multiple of forecast book values.

(Bloomberg – Continue Reading)

Evergrande Misses 3rd Round Of Bond Coupon Payments

China Evergrande Group on Tuesday missed its third round of bond payments in three weeks, intensifying market fears over contagion involving other property developers as a wall of debt payment obligations come due in the near-term. Some bondholders said they did not receive coupon payments totalling $148 million on Evergrande’s April 2022, April 2023 and April 2024 notes due by 0400 GMT on Tuesday, following two other payments it missed in September. That puts investors at risk of large losses at the end of 30-day grace periods as the developer wrestles with more than $300 billion in liabilities.

 

Evergrande did not immediately respond to a request for comment. A total of $101.2 billion bonds issued by Chinese developers will be due in the next year, Refinitiv data show. “We see more defaults ahead if the liquidity problem does not improve markedly,” said brokerage CGS-CIMB in a note, adding developers with weaker credit rating are having difficulty in refinancing at the moment. Trading of high-yield bonds remained soft on Tuesday following a rout in the previous session on fears about fast-spreading contagion in the $5 trillion sector, which accounts for a quarter of the Chinese economy and often is a major factor in policymaking.

(Reuters - Continue Reading)

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