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Daily UK and Europe Highlights – 13 August 2009

Courtesy of Raymond Shaw

Good morning early birds.  Quarterly GDP data is out today from the Euro zone.  There is no economic data out of the UK today or tomorrow, Monday we shall see the Rightmove House Price Index report its month-on-month figures.  German GDP q/q data showed an unexpected seasonally adjusted increase of 0.3% as opposed to a decline of -0.2%.  The GDP increase was pegged to government consumption and positive developments in its Net trade position.  Same increase reported for the French economy according to finance minister Christine Lagarde.  [Updated] Expect an upturn in the Eurozone Flash GDP as well because of the French and German GDP data, expectations for -0.5% might end up being too negative.

Continuing the negative theme, Raiffeisen International of Austria which fully receives its income from Eastern European countries reports a -93% decline in Q2 profit as it had to increase bad loan provisions; the number of non-performing consumer loans rose by 6.8%, up 3.7% from 2008 according to a Bloomberg report:

Western banks with units in eastern Europe are facing increased loan losses as the global economic crisis threatens to destabilize economies where growth based on debt funding and exports has stalled. Raiffeisen International, which last month raised 1.25 billion euros from its majority shareholder, increased provisions for bad loans almost fivefold to 523 million euros.

Quick Asia update – most indices are higher by at least a percentage point as of this writing except for the KOSPI.  The Feds report last night that they are not going to take the Federal punch bowl away from the market has given a serious jolt to the Asian markets this morning.  The Melbourne Institute released its Inflation Expectations today which had edged up again by 3.5% versus the previous months 3.2% increase.  Remember, the Aussie Inflation Expectations have shown clear uptrend since May 2009.  The Aussie dollar is dancing in the sun right now, especially against the Yen.  No data coming out of China or Japan today so quiet on that front.  Indian Budget report is expected to cause a flurry in the stock markets this morning as they’re expected to report tax cuts including abolishing a levy (UK stamp duty type) on equities trading, hooray !  On top of that, Foreign Investment Inflows (FII) increased 5-times by $15 bln in April-June Q2 period in India as opposed to Q1 period.  In better news I suppose, the Australian Senate has rejected PM Kevin Rudd’s Cap-and-Trade plan to reduce emissions and asked him to call an early election!

Edmund Conway of Telegraph has a nice article which discusses how the weak Sterling is (sort of) helping British exports.  It discusses the different ways in which a (relatively speaking) weaker Sterling can be beneficial to Britain during this slowdown.  Some history lessons also provided !

Twitter update – Finally you can now follow the highlights on Twitter at http://twitter.com/raymondshawzh.  Sometimes the briefings are written early and they don’t end up on the frontpage because Tyler or Marla are busy.  So I suggest you subscribe if you want to keep up in the morning.  Marla recommended Twitter to me ! 🙂

  • Must read: Recession will be the worst in modern history, Bank of England confirms (Telegraph, Guardian)
  • Must read: East Europe Budgets Strained as Recessions Worsen, Surveys Show (Bloomberg)
  • Must read: UK unemployment set to top three million, or a 50-year high (Telegraph)
  • Lord Mandelson contracted by the UK Treasury over Labour’s economic policies (Telegraph)
  • Lithuania’s `Attractive’ Bonds Help Government Avoid International Bailout (Bloomberg)
  • Hungarian Economy Shrank 7.6% in Second Quarter From Year Ago (Bloomberg)
  • Confidence in Global Economy Jumps on Signs Recession Is Approaching End (Bloomberg)
  • German, French Economies Unexpectedly Expand as Countries Exit Recessions (Bloomberg)
  • Ukraine Plans to Boost Grain Sales to Europe, Asia, Africa, Minister Says (Bloomberg)
  • Youth unemployment figures raise spectre of Thatcher’s Britain (Guardian)
  • Markets wrongfooted as Bank signals low rates (Telegraph)
  • Workers over 60 are surprise key to McDonald’s sales (Telegraph)
  • Deflation, not inflation, is the economy’s swine flu; QE is its Tamiflu (Telegraph)
  • Mervyn King tells a puzzled City: ‘It’s the levels stupid’ (Telegraph, The Independent)
  • Must read: RBS uber-bear issues fresh alert on global stock markets (Telegraph)
  • Citi hires external help to probe management (Financial Times)
  • Signs of investor fatigue with rights issues (Financial Times)
  • Paying too little for bad property loans may erode market trust (The Independent IE)
  • Irish Insurance Market shrinks by 26pc as recession takes toll on insurers (The Independent IE)
  • Struggling CIT Group lost €125m in the Irish Market by end of 2007 (The Independent IE)
  • Hoteliers check out options as 12,000 rooms lie vacant in Irish hotels (The Independent IE)
  • Bupa loses customers for its private medical insurance (The Independent)
  • Director of Aldi’s UK division steps down as growth falters (The Independent)
  • Enea Attracts Interest in Poland’s Largest State-Asset Sale in Nine Years (Bloomberg)
  • Hungary’s Worst Recession in 18 Years Deepened as Last Quarter Output Fell (Bloomberg)
  • Ukraine’s Economy May Expand 5% on Average Next Five Years, Minister Says (Bloomberg)
  • Ukraine Plans to Boost Grain Sales to Europe, Asia, Africa, Minister Says (Bloomberg)
  • China to Force Higher Rates on Corporate Bonds to Spur Demand (Bloomberg)
  • ECB says EUR 244mln borrowed using overnight loan facility, EUR 124.174bln deposited
  • ECB says Eurosystem covered bond purchase program totals EUR 6.299bln
  • Italian BTP Tap auction for EUR 3.351bln 3.5% 01-Jun-14, Bid/Cover 1.46 vs. Prev. 1.36
  • BP (BP/ LN) patially shut 137,000bpd Australian refinery after pump failure
  • ECB Q3 survey – Professional Forecasters see Eurozone GDP 2009 -4.5% (from -3.4% in Q2 survey)

Economic Calendar:

  • German GDP SA (Q2 P) Q/Q +0.3% vs. Exp. -0.2% (Prev. -3.8%, Rev. to -3.5%)
  • German Q1 GDP Down Rev. 3.5% On Quarter Vs. 3.8% Decline Estimated Earlier
  • French GDP (Q2 P) Q/Q +0.3% vs. Exp. -0.3% (Prev. -1.2%, Rev. to -1.3%)
  • Swedish Industrial Production (Jun) M/M -0.8% vs. Exp. -2.5% (Prev. -2.7%)
  • Swiss Producer & Import Prices (Jul) M/M 0.0% vs. Exp. 0.1% (Prev. 0.0%)
  • Dutch GDP SA Q/Q (2Q P) -0.9% vs. Exp. -0.7% (Prev. -2.6%)
  • Austria’s Recession Continues, -0.4% in Q2, -4.3% Y/Y
  • Eurozone GDP SA (Q2 A) Q/Q -0.1% vs. Exp. -0.5% (Prev. -2.5%) [Update 2]
  • Spain CPI (Jul) M/M -0.9% vs. Exp. -0.9% (Prev. 0.4%); Y/Y -1.4% vs. Exp. -1.4% (Prev. -1.0%)
  • Finland April-June Wages And Salaries Sum Down 0.3% On Year
  • Ireland Retail Sales (Volume) (Jun) M/M 2.2% vs. Prev. -1.2% (Rev. to 1.2%) [Update 3]
  • Czech June Retail Sales -4.9% Y/Y, larger than expected
  • Czech Q2 Czech National Bank – Czech inflation report – III released expected today
  • Hungarian GDP falls 7.6% y/y in Q2, worse than expected, fell -6.7% in Q1
  • Hungarian June Agricultural prices -13% y/y
  • Slovakia Q2 Flash estimate GDP -5.3% y/y (constant prices), -6.5% at current prices
  • Romania Q2 GDP -8.8% y/y, Q1 fall was -7.6% y/y
  • Slovakia Q2 Flash estimate Total employment
  • Polish July CPI Y/Y
  • Polish July Broad Money M3 Y/Y
  • Iceland’s Sedlabanki (Central Bank) keeps interest rate unchanged at 12.00%
  • Russian Weekly International Reserves – $403.4 bln W/E 7-Aug-2009

Interesting articles from other Blogs, this morning:

  • Unemployment where you live – good post which compares ONS Claimant Counts vs. LFS data (Guardian Data Blog)
  • How does the NHS compare to the US in terms of per-capita spending? (Guardian Data Blog)
  • Edmund Conway: How to understand the Bank’s Inflation Report (Telegraph)
  • Citi’s dirty pool of assets – NOT the Jim Cramer “buy, buy, buy” version of analysis (Reuters Commentaries)
  • Eastern Europe ETFs: Time to Take a Look? – slightly older, some chart analysis here (ETF Trends)
  • Loan loss provisions drag on ING – looking into the issues at this insurer, we covered this yesterday (FT Alphaville)
  • RBS pays £10m for two top bankers – top punters still churning cheddar despite legal jawboning (FT Alphaville)
  • Subdued recovery in global oil demand – IEA plays down link between speculators and oil prices (FT Energy Source)
  • No law beyond the twelve mile limit – interesting take on the Arctic sea ships (Fistful of Euros, Reuters)

Make sure you to watch the RAN Squawk ‘EU Morning Briefing’ video and visit the RAN Squawk News page.

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