EUROPEAN DESK TRADING COLOUR (Cash Only): Overall: +41% vs. 20D vol., 1.3:1 better to BUY.
Asset Manager Flow: 60%, 1.68:1 better to SELL. Hedge Fund Flow: 38.6%, 1.08:1 better to BUY.
Key Sector Flows: Financials: 19% (-0.7% vs. 20D average), 1.23:1 better to SELL. Consumer Discretionary: 10.7% (unch vs. 20D average), 1.22:1 better to BUY. Consumer Staples: 9.7% (+1% vs. 20D average), 1.2:1 better to BUY. Industrials: 9.4% (-0.6% vs. 20D average), paired off. Utilities: 9.34% (+4.2% vs. 20D average), paired off.
Key Stock Flows: GDF
How MS ranked: GDF
ASIA SO FAR: (J Grafton) HSI +70bps,
US RECAP: S&P 500: 1093.01, -.01% DJIA: 10246.97, +.20% NASDAQ: 2151.08, -.14% MARKET RECAP: Most
EURO RECAP: (J da Silva) Eurostoxx: -0.13% FTSE: -0.09% CAC: unch DAX: -0.12% Tuesday was choppy and we crossed the unchanged mark 8 times throughout the day, ending up just off the lows. We had plenty of numbers out first thing: Financials were mostly positive with HBSC +4%, Intesa +1.5%, Schroders +1.65%. The exceptions were Barclays, which traded down 5% on its low quality beat, and Julius Baer which traded down 6.8% after disappointing on inflows. Vodafone closed down just 1.45% despite a perceived "hidden profit warning" on emerging markets, as it recovered from its intraday lows and we saw big buying into the close. Imperial Tobacco reporting generally inline was taken well (+2.3%) and we saw very good 2-way flow in the name.
CREDIT RECAP: (
FX: (E Lawson) We remain positive on EUR. The data continue to show steady, if not spectacular, growth prospects in the euro area, and today's ZEW should continue in this vein. Last week showed the ECB's credibility, especially in comparison to the BoE and Fed. So while the USD comes under pressure due to policy concerns, EUR is the natural, liquid G3 currency to take up the slack. We are less concerned about EUR in the context of fiscal expansion as well. Furthermore, we expect there is ongoing reserve manager demand. In the present USD negative environment we believe there is upside in EUR while we believe there are fundamental mispricings in EUR/GBP. KEY RECOMMENDATION: Long EUR/USD, long EUR/GBP.
DOWNUNDER DAILY (G Minack)
MACRO CALENDAR: UK Labour market report, 09:30 Claimant Count (Oct) ~ MSe 21.0k / Cons20.0k / Last 20.8k: We do not expect a pickup in the pace of increase in claimant unemployment and forecast a 21K rise in the claimant count on the October data (after 20.8K in September). We expect the unemployment rate (3Q) to have ticked up to 8.1%. On average earnings growth for September, we expect the headline measure (including bonus, 3M/Y) to fall to +1.4% (from 1.6% in August). This series has been volatile lately.