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Daily US Opening News And Market Re-Cap: May 15

Zero Hedge
Tuesday, 15 May 2012

From RanSquawk
· German GDP SA (Q1 A) Q/Q 0.5% vs. Exp. 0.1% (Prev. -0.2%)· Eurozone GDP (Q1 A) Q/Q 0.0% vs. Exp. -0.2% (Prev. -0.3%)· Greece are to pay the EUR 435mln bond redemption today, according to government sources; no official confirmation.

*Market Re-Cap*

European bourses are trading in modest positive territory ahead of the US open with early trade seeing moves higher across equities as Germany printed an expectation-beating 0.5% growth in their flash Q1 GDP. Elsewhere, Eurozone growth surprised to the upside somewhat, coming in flat against the expected contraction of 0.2%.

However, as time passed, Greece garnered the focus of markets once more as they face a EUR 435mln foreign-law bond redemption today. Government source comments have somewhat reassured markets that the payment will be made, but participants await official confirmation. Further assisting the moves off the highs was a lower-than expected ZEW survey from Germany, with economists noting that the French and German elections have knocked confidence in the country over the past month.

Looking ahead, the Greek leaders are set for yet another meeting in Athens. Expectations of a coalition government remain at rockbottom, so markets may not be hopeful of any revelations, but official commentary regarding the redemption payment will receive focus. Elsewhere, the EU finance ministers are to hold a press conference at 1245BST/0645CDT, wherein they are speculated to come to a decision on the Basel III capital requirements. CPI data is also due from the US as well as advanced retail figures, both scheduled for 1330BST/0730CDT.

*Asian Headlines*

Japanese Consumer Confidence (Apr) M/M 40.0 vs. Exp. 40.8 (Prev. 40.3) (Sources)
Chinese Actual FDI (Apr) Y/Y -0.7% vs. Exp. 2.8% (Prev. -6.1%) (Sources)

*US Headlines*

The US Senate have reached a deal that is likely to see the Export-Import Bank bill approved by Tuesday. The bill would extend the Export-Import Bank’s mandate for three years and raise the financing cap to USD 140bln. (Sources)

*EU and UK Headlines*

GDP figures have been released across the Eurozone, with some notable upside surprises, including from Germany and the Eurozone as a collective. The release of the German GDP figures provided support across the European equity markets, but as Greece regained the limelight, the markets made moves lower; awaiting official confirmation of a bond redemption payment.
German GDP SA (Q1 P) Q/Q 0.5% vs. Exp. 0.1% (Prev. -0.2%)
German GDP NSA (Q1 P) Y/Y 1.7% vs. Exp. 0.9% (Prev. 1.5%)
German GDP WDA (Q1 P) Y/Y 1.2% vs. Exp. 0.8% (Prev. 2.0%)
Eurozone GDP SA (Q1 A) Q/Q 0.0% vs. Exp. -0.2% (Prev. -0.3%)
Eurozone GDP SA (Q1 A) Y/Y 0.0% vs. Exp. -0.2% (Prev. 0.7%)
Italian GDP SA & WDA (Q1 P) Q/Q -0.8% vs Exp. -0.7% (Prev. -0.7%)
Italian GDP SA & WDA (Q1 P) Y/Y -1.3% vs Exp. -1.2% (Prev. -0.4%)
French GDP (Q1 P) Q/Q 0.0% vs. Exp. 0.0% (Prev. 0.2%, Rev. to 0.1%)
French GDP (Q1 P) Y/Y 0.3% vs. Exp. 0.5% (Prev. 1.3%, Rev. to 1.2%) (Sources)

Not all data was positive however, as the German ZEW survey disappointed to the downside, with ZEW economists noting that the uncertainty surrounding French and Greek elections have knocked confidence in the country over the past few weeks. ZEW estimated that the sentiment index foresees German GDP at 1.5% across 2012.

German ZEW Survey (Economic Sentiment (May) M/M 10.8 vs. Exp. 19.0 (Prev. 23.4)

German ZEW Survey (Current Situation) (May) M/M 44.1 vs. Exp. 39.0 (Prev. 40.7) (Sources)

Government sources have claimed that Greece are to repay their EUR 435mln bond redemption today, providing some optimism evident in a move lower in the Bund and some tentative support in EUR/USD, however there has not yet been any official confirmation, so participants await further commentary. (Sources)

Moody’s downgraded 26 Italian banks, outlook remaining negative which is in line with the Europe wide banking review by Moody’s. The ratings agency cut ten banks by one notch, eight by two notches, six by three notches and two by four notches. Italian Banks are now among the lowest in advanced European countries, reflecting a combination of adverse conditions, asset quality deterioration and restricted access to market funding. (FT-More)

Following the EuroGroup meeting yesterday, EU's Juncker said growth and consolidation policies should be pursued in parallel and that the Euro-zone consolidation strategy is in-line with the EU budget rules. Juncker confirmed that a Greek EMU exit was not discussed, dubbing the proposal as nonsense and propaganda. (Sources)

*EQUITIES*

European equities got off to a strong start following an expectation-beating GDP from Germany, however the upwards trend did not prove long-lived as Greece regained the focus with its looming debt repayments. The German data is still seen as providing some support ahead of the US open as European stocks trade in modest positive territory.

Following the Moody’s downgrade late last night, it is not surprising to see Italian as well as peripheral banks making up a large proportion of the top losers in Europe today, with Banca Monte dei Paschi and Bankia both suffering particular losses. Elsewhere, FTSE stock IAG are seen sharply lower following a downgrade from JP Morgan and ThyssenKrupp shares have fallen by around 4.5% following a larger than expected loss per share in their earnings report.

The Italian bank Intesa Sanpaolo have released their Q1 earnings report. Despite showing a higher-than-expected Q1 net of EUR 804mln, their Q1 loan loss provisions is seen far higher than in Q4, pushing to session lows, but remaining in positive territory.

Outperforming stocks in Europe today include Vivendi who released their earnings report after-market yesterday, announcing that they are to distribute 45-55% of their adjusted net as dividends throughout 2012. At the midpoint of the European session today, Vivendi shares are seen higher by around 4%.

*FX*

EUR/USD was seen lower in the Asian session as the Moody’s downgrade of Italian banks took effect, however ahead of the US open, the pair is seen higher, against the trend of the last week or so, with GDP readings from the Eurozone and Germany providing support. The pair has struggled to maintain an upward trend, printing a high of 1.2871, not looking to threaten 1.2900 to the upside. EUR/USD now trades in close proximity to a touted option expiry at the 1.2850 level.

AUD/USD remains to be seen around the parity level, which happens to be a large option expiry for the 10am NY cut. The pair did see some strength following the German GDP, moving to a session high of 1.0017; however this was not long-lasting, moving back below parity ahead of the US open. Later in the session, there is a raft of US data, including CPI and Retail Sales, so all USD-pairs may see some volatility at 1330BST/0730CDT.

COMMODITIES

*WTI and Brent crude futures trade in minor negative territory after selling off following some strong bids after better-than-expected German GDP data. The price levels have since come off and moved below the unchanged mark ahead of the NYMEX pit open.*

*Oil & Gas News: *
· Enterprise and Enbridge may boost the capacity on their 150,000BPD Seaway pipeline earlier than anticipated, according to aerial observation conducted by Genscape.· Citigroup have said oil prices could fall in Q3 as economies across Europe and Asia remain weak and Saudi Arabia overcompensates with supply. Religare Capital Markets have estimated that Brent crude will drop to USD 100/BBL and WTI crude to USD 90/BBL as concerns over Iran fade from the market and supply increases from Saudi Arabia, Libya and Iraq.· The Obama administration is not opposed to exporting LNG but will rely on official analysis on whether to allow further export projects, according to a White House official.· China is to consume 160bln m3 of natural gas by 2015, according to a soon-to-be-released five year plan for the sector.· Oil production from North Dakota hit a record high during March, as output increased by as much as 19,000BPD.· Total oil output for the month averaged 575,500BPD. The Australian LNG industry faces competition from Qatari and East African projects, according to the CEO of Santos.

*Geopolitical News: *
· A US diplomat has said his country is not impressed with India’s efforts to cut oil imports from Iran, casting doubt on whether India could be given a waiver from US financial sanctions before the June deadline.· A close ally of Iran’s Ahmadinejad has criticised Iran’s nuclear talks with world powers in a sign of the president’s frustration at being sidelined in the negotiations. Although Mr Ahmadinejad has never been a decision maker in the nuclear controversy, he has sought to give himself a direct role in past negotiations.· Gulf Arab leaders have agreed to study plans for a closer political union as the six oil-rich monarchies close ranks to protect themselves from the turmoil in the region and confront Iran’s influence. The leaders of the Gulf Cooperation Council have approved the call for a commission to continue studying in order to present final results in a coming summit, according to Saudi Arabia’s foreign minister.· An Iranian envoy has said talks with the IAEA are good, and the environment is constructive.
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