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DAILY US OPENING NEWS - 17/04/12

· German ZEW Survey (Economic Sentiment) (Apr) M/M 23.4 vs. Exp. 19.0 (Prev. 22.3).

· Spain sell to the top of the indicative range with strong bid/covers in their earlier T-Bill auction.

· Goldman Sachs (NYSE:GS) Q1 EPS USD 3.92 (adj. USD 4.38) vs. Exp. USD 3.55; boosts quarterly dividend to USD 0.46 per common share from USD 0.35 vs. Exp. USD 0.40.

· RANsquawk European Morning Briefing Video: http://youtu.be/ONxK591ESEk

Market Re-Cap

European markets are seen trading higher as North America comes to market, with some momentum seen following the release of the forecast-beating German ZEW Survey. An economist from the institution commented that downside risks have decreased significantly over the past month, prompting some risk-appetite in Europe during the morning.

Participants were also looking towards the Spanish T-Bill auction with particular focus, but it did not confirm the nation's worst fears as the auction passed with strong bid/covers, selling to the top of the indicative range. Yields, however, did increase over both lines. As such, the Spanish 10-yr yield has fallen below the key 6% mark and remained below that level for most of the session. Peripheral 10-yr spreads against the German Bund are seen tighter throughout the day, amid some market talk early in the session of domestic accounts buying the paper, however this remains unconfirmed.

Looking ahead in the session, markets await the latest Housing Starts data from the US.

Global Headlines

IMF's Lagarde hopes to boost the IMF crisis fund by more than USD 400bln, according to a report. Lagarde will leave the issue open for a few weeks as some countries need more time to get approval through parliamentary procedures. (Il Sole 24 Ore)

The Japanese finance minister Azumi has said Japan is to provide USD 60bln to the IMF. The minister does not think Europe's efforts to create a firewall have been sufficient and expects Europe to make more efforts. (Sources)

Sweden's finance minister has said Sweden may eventually contribute USD 15bln to the IMF. (Sources)

Asian Headlines

Japanese Industrial Production (Feb F) M/M -1.6% (Prev. -1.2%) (Sources)

Japanese Industrial Production (Feb F) Y/Y 1.5% (Prev. 1.5%)

Japanese Capacity Utilization (Feb F) M/M -1.7% (Prev. 3.4%)

Japanese Consumer Confidence (Mar) M/M 40.3 vs. Exp. 40.0 (Prev. 39.5, Rev. 39.9)

Chinese Actual FDI (Mar) M/M -6.1% vs. Exp. -13.6% (Prev. -0.9%) (Sources)

US Headlines

Fed's Bullard said that policy can stay on hold for now and does not see a lot of change in the Fed's forecast. (RTRS)

EU and UK Headlines

The German ZEW survey rose unexpectedly to 23.4, showing its fifth consecutive increase, hitting its highest reading since June 2010. The forecast-beating investor sentiment was followed by a move higher in equity space and bund futures hit session lows.

-German ZEW Survey (Economic Sentiment) (Apr) M/M 23.4 vs. Exp. 19.0 (Prev. 22.3)

-German ZEW Survey (Current Situation) 40.7 vs. Exp. 35.0 (Prev. 37.6) (Sources)

Spain sold to the top of the range at an earlier T-Bill auction, with strong bid/covers. The smooth auction lifted sentiment somewhat and the Spanish spread against the German bund has closed by around 20BPS on the day. The Spanish 10-yr yield has also been below the 6% mark for most of the session.

-Spain sells EUR 2.09bln 12-month T-Bills, bid/cover 2.90, Prev. 2.14 (yield 2.623%, Prev. 1.418%)

-Spain sells EUR 1.09bln 18-month T-Bills, bid/cover 3.77, Prev. 2.93 (yield 3.110%, Prev. 1.711%) (Sources)

The UK's yearly CPI rate rose for the first time since September 2011, with the ONS commenting that upwards pressure was seen from food, clothing, recreation and culture. Downside effects were seen from fuel, utilities and transport. BoE's Posen, a known dove, has said he will rethink his opinion if core inflation does not slow; but one month's data is not sufficient to change his view. (Sources)

UK CPI (Mar) Y/Y 3.5% vs Exp. 3.4% (Prev. 3.4%)

UK CPI (Mar) M/M 0.3% vs Exp. 0.3% (Prev. 0.6%)

Spain's industry minister has said Spain rules out seeking a bailout and added that expansive ECB policy is desirable. (Sources)

IMF's Lagarde has said Spanish labour market reform is 'significant'. Lagarde says monitoring of Italy's finances is not needed and investors are more confident in the Italian government. (Il Sole 24 Ore)

Hollande, the front-running socialist candidate for the French presidency has said that the ECB should have intervened "massively" by lending directly to Eurozone countries to save Greece and counter the sovereign debt crisis. (FT-More)

John Paulson has said he is shorting European sovereign bonds, according to sources. (Sources) The source has said Paulson expressed concern over the Spanish banking sector in an investor conference call and is buying credit default swaps on European debt.

EQUITIES

European equity markets are seen trading higher as North America comes to market, with some momentum being picked up after the release of the strong German ZEW survey, reinforcing investor sentiment. The financials sector has seen some relief this morning with concerns over the Eurozone periphery receding somewhat, with the Spanish T-Bill auction passing by smoothly. As such, this morning has seen the financials sector outperform all others, and peripheral banks are seen as some of the strongest performers of the day.

Against the trend of the Eurostoxx 50, Repsol is seen as one of the worst performers in Europe today following last night's news that Argentina intends to renationalize their YPF unit. This is a key unit for Repsol, providing them with 21% of their net profits. The company chairman has been vocal this morning, denouncing the plans and has warned that Repsol could take the Argentine government to a World Bank arbitration tribunal and could demand up to USD 18bln in compensation. Despite the comments, Repsol shares trade lower by around 6.3% ahead of the US open.

Goldman Sachs (GS) Q1 EPS USD 3.92 (adj. USD 4.38) vs. Exp. USD 3.55; boosts quarterly dividend to USD 0.46 per common share from USD 0.35 vs. Exp. USD 0.40. (Sources)

- Q1 revenue USD 9.95bln vs. Exp. USD 9.41bln

- Q1 investment banking revenue USD 1.15bln, up 35% from Q4

- Co. says client activity was relatively low in some areas

- Co. says remaining share authorization under the firms existing repurchase programme is 60.3mln shares

- Q1 end Tier 1 capital ratio under Basel 1 14.7%

Top performing sectors in the BE500: Financials (+2.19%), Industrials (+1.30%), Utilities (+1.20%)

Worst performing sectors in the BE500: Health Care (+0.08%), Technology (+0.10%), Oil & Gas (+0.70%)

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6708.1

3254.67

5715.62

2339.29

6158.67

Change (ticks)

82.91

49.39

49.34

38.10

33.76

**Note: For US equity news in detail, refer to the RANsquawk Daily US Equity Opening News report.

FX

EUR/USD is seen roughly flat on the session so far, with some upwards trade noted following the forecast-beating German ZEW survey and the smooth Spanish auction. The pair now trades in close proximity to the 1.3125 option expiry level due for the 10am NY cut.

JPY weakness is observed across the board as stock futures in Europe trade higher. As such, USD/JPY now trades higher, however gains may be capped with unconfirmed market talk of offers in the pair as 80.80. USD/JPY is now close to a touted option expiry of 80.75 due for the 10am NY cut.

GBP/USD has also seen strength in the session, trading near session highs of 1.5971, following the higher than expected UK CPI reading dampening future expectations of further QE from the BoE. However, BoE dove Posen said that one month's inflation data is not sufficient to change his views. The pair may see some fluctuations when the US comes to market, with the slew of US data and US earnings reports.

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3138

1.5957

80.67

Change (pips)

-0.0004

0.0057

0.2600

COMMODITIES

WTI and Brent crude futures are seen trading higher ahead of the US open following forecasting-beating macro data from Germany. Energy complex participants now look ahead to API inventories due at 2130BST/1530CDT.

Oil & Gas News:

· The Iranian oil minister has said Saudi Arabia will not be able to replace Iranian oil supplies in the long run, in the case of shortfalls due to sanctions against Iran, according to state television.

· Cheniere Energy has won federal approval to build the largest US natural gas export terminal in Cameron Parish, Louisiana.

· The UK government have backed the exploration of shale gas nearly one year after it temporarily banned the fracking drilling method which triggered two earthquakes.

· Sweet crude and condensate exports from Australia, Papua New Guinea and East Timor will rise in June as producers resume output after disruptions caused by cyclones, according to traders.

Geopolitical News:

· Iran's Ahmadinejad has said Iran will respond with force to any threats to its territorial integrity, adding that it would prefer to cooperate with its Arab neighbours to maintain security in the Gulf.

· Russia has proposed that Western governments abandon plans to impose new sanctions on Iran in exchange for the cancelling of the expansion in Iran's centrifuge program to enrich uranium.

· The UAE have warned that the Iranian dispute cannot go on forever, and has urged Tehran to agree to talks or international arbitration.

· North Korea will not allow IAEA inspectors into the country to examine its nuclear program, according to Japanese Press, citing unnamed diplomatic sources.

Commodity

WTI Nymex

OTC Spot Gold

 

Level

103.7

1654.8

 

Change (NYSEARCA:USD)

0.77

2.92

 

**Note:

For commodities news in detail, refer to the RANsquawk Daily Energy Commentary report.

** Note:

WTI Crude May options expiry (1930BST/1330CDT)

LOOKING AHEAD

Economic Releases

CDT

BST

 

DATA

EXP

PREV

0730

1330

US

Housing Starts (Mar) M/M

705K

698K

0730

1330

US

Housing Starts (Mar) M/M

1.0%

-1.1%

0730

1330

US

Building Permits (Mar) M/M

710K

715K

0730

1330

US

Building Permits (Mar) M/M

-0.7%

4.8%

0730

1330

CA

Manufacturing Sales (Feb) M/M

-0.2%

-0.9%

0755

1355

US

Redbook (Apr 13) W/W

 

0.8%

0755

1355

US

Redbook (Apr 13) Y/Y

 

4.1%

0800

1400

CA

Bank of Canada Rate Announcement (Apr) M/M

1.00%

1.00%

0800

1400

CA

Bank of Canada's Monthly Statement

   

0800

1400

IT

Bank of Italy's Quarterly Economic Bulletin

   

0815

1415

US

Industrial Production (Mar) M/M

0.3%

0.0%

0815

1415

US

Capacity Utilization (Mar) M/M

78.5%

78.4%

1530

2130

US

API Crude Oil Inventories (Apr 13) W/W

 

6584K

1530

2130

US

API Gasoline Inventories (Apr 13) W/W

 

1184K

1530

2130

US

API Distillate Inventory (Apr 13) W/W

 

-476K

1530

2130

US

API Cushing OK Crude Inventory (Apr 13) W/W

 

303K

N/A

N/A

US

Internal Revenue Service Deadline for Taxes

   
 

Speakers

0730

1330

EU

ECB's Draghi speaks in Frankfurt

0800

1400

WLD

IMF releases World Economic Outlook and Fiscal Monitor

0800

1400

WLD

The IMF and World Bank hold their 2012 Spring Meeting

0800

1400

WLD

IMF's Blanchard holds press briefing on WEO report

0925

1525

SW

Swedish PM & Finnish President hold press conference

1000

1600

WLD

IMF's Cottarelli holds press briefing on Fiscal Monitor Report

1000

1600

EU

OECD Webinar on "A Path Forward for the EU and Euroarea"

1200

1800

GE

Bundesbank's Dombret

N/A

N/A

EU

ECB Statistics Conference

 

Auctions

0845

1445

UK

BoE Asset Purchase Facility GBP 1.5bln 2027-2060 Gilt Purchases

1000

1600

US

Fed's Outright Trea. Coup. Purch. Feb'36 - Feb'42 (USD 1.50-2.00bln)

1030

1630

US

USD 25bln 4-Week T-Bill Auction

 

Earnings

UK

N/A

EU

N/A

SZ

N/A

US

Coca-Cola, CSX Corp, Forest Labs, IBM, Intel, Intuitive Surgical, Linear Technology, Seagate Technology, Stryker, Yahoo

Prices taken at 1209BST

'Market talk' - Signifies information that has not been formally tested through traditional journalistic channels and therefore is to be treated as unsubstantiated. Any interpretation of the talk is taken at the readers own risk and is a representation of the rumours within the market place and never generated by ourselves.