Calmer start to trading week following recent turbulence

Notes/Observations

- Week begins with markets appearing calmer following recent turbulence

- Japan Nikkei-225 surges 4% as fresh reports that pension fund GPIF to increase its domestic stock holdings to 25% from 12%

Key Economic Data in session

- (JP) Japan Sept Nationwide Dept Sales Y/Y: -0.7% v -0.3% prior; Tokyo Dept Store Sales Y/Y: 0.5% v 1.3% prior

- (DE) Germany Sept PPI M/M: 0.0% v 0.0%e; Y/Y: -1.0% v -1.0%e

- (JP) Japan Sept Convenience Store Sales Y/Y: -1.3 v -2.4% prior

- (NL) Netherlands Oct Consumer Confidence Index: -3 v -8e

- (TW) Taiwan Sept Export Orders Y/Y: 12.7% v 3.7%e

- (EU) Euro Zone Aug Current Account (Seasonally Adj): €18.9B v €21.6BB prior; Current Account NSA: €15.1B v €32.8B prior

- (IT) Italy Aug Industrial Sales M/M: +0.4 v -1.1% prior; Y/Y: -2.3% v -1.3% prior

- (IT) Italy Aug Industrial Orders M/M: 1.5% v 0.2%e; Y/Y: -3.2% v -0.7% prior

- (HK) Hong Kong Sept Unemployment Rate (Seasonally Adj): 3.3% v 3.3%e

Fixed Income:

- None seen

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

Equities

Indices [Stoxx50 -1%, FTSE 100 -0.5% at 6,276, DAX -1% at 8,752, CAC-40 -0.9% at 3,995, IBEX-35 -0.9% at 9,865, FTSE MIB -0.2% at 18,654, SMI flat at 8,255, S&P 500 Futures flat at 1,881]

- Market Focal Points/Key Themes: Equity markets open mixed following the sharp gains seen on Friday amid mixed earnings and gains in core bonds, IBEX-35 lags on Santander (ex-dividend)), SAP declines after cutting outlook, Philips Q3 sales below ests, Electrolux beats ests, German retailer Metro gains on better than expected Q4 sales, European companies report declining fx headwinds in Q3 (Philips, SAP, Electrolux) , M&A (Bid speculation related to Adidas Reebok unit, Nutreco , Havas, Spirit Pub), Resource firms trade mixed ahead of China Q3 GDP data (Oct 20th, after US close), US morning earnings (Hasbro, Halliburton, IBM), Apple reports after US equity close

By Sector

- Technology [SAP SAP.DE -3% (cut FY op profit outlook), Philips PHIA.NL -2% (Q3 sales below ests)]

- Telecom [Mobistar MOBB.BE +6% (raised outlook)]

- Consumer Discretionary [Nutreco NUO.NL +35% (takeover offer), Havas HAV.FR +7% (takeover offer), Spirit Pub SPRT.UK +7% (revised takeover offer), Adidas ADS.DE +5% (speculation related to Reebok), Metro MEO.DE +3% (Q4 sales above ests), Tesco TSCO.UK +2% (reports earnings on Oct 23rd)] Financials [Santander SAN.ES -2% (ex dividend), MunichRe MUV2.DE -1% (cautious outlook commentary)]

- Energy [OMV OMV.AT +2% (Q3 production rose)]

- Industrials [Electrolux ELUXB.SE +5% (Q3 results above ests)]

- Stoxx50 sectors [Technology -2.9%, Energy -1.5%, Utilities -1.1%, Financials -1%, Industrials -1%, Consumer Cyclical -0.8%, Basic Materials -0.8%, Consumer Non-Cyclical -0.8%, Telecom -0.5%]

Speakers

- France Econ Min Macron: Confident that EU Commission would not reject Paris's 2015 budget although it breaks EU deficit limits.

- EU not likely to reject Italy's budget plan but look for clarification

- Germany Econ Min Gabriel: To spend more on infrastructure investments without raising debt

- ESM's Regling: Greece is in a different position than Ireland and Portugal in terms of exit measures. Greece potential early exit causes some uncertainty in markets and reforms in the country are unfinished

- Russia Foreign Min Lavrov: Sees chance for political solution in Ukraine

- PBOC Dep Gov Hu Xiaodong: CNY currency (yuan) internationalization to occur gradually; currently the 7th largest reserve currency. To widened corridors for cross-border yuan convertibility

Currencies/Fixed Income:

- FX markets were relatively quiet given last week's volatility. The USD saw some slight gains evaporate as the session progressed. The focus will be on some key Chinese data due out on Tuesday including Q3 GDP data

Political/In the Papers:

- (FR) Germany and France said to be "secret" negotiations over a deal that would see Berlin sign off Paris's new budget even though it violated EU fiscal rules

- (UR) Ukraine's and Russia's leaders said to have reached a preliminary agreement on a price for gas supplies this winter

- (JP) Japan's Government Pension Investment Fund (GPIF) working out plans to increase its portfolio allocation for domestic stocks to 25% - Nikkei; Report noting GPIF will update its portfolio allocation standards later this month

- (HK) Hong Kong crisis deepens after weekend clashes; Tens of thousands of protesters returned to the streets of Hong Kong and violent clashes with police broke out over the weekend

- (CN) important week for Chinese markets as Communist Party gathers in Beijing for a planning meeting (4th Plenum)

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (EU) EU Foreign Ministers meet in Luxembourg

- (DE) Franco-German meeting in Berlin

- (EU) EU Energy Min Oettinger mediates gas dispute between Russia and Ukraine in Berlin

- (FR) ECB's Coeure speaks at OMFIF Policy Group Roundtable in London

- (PT) Portugal Aug Current Account Balance: No est v €380.2M prior

- (BE) Belgium Debt Agency to sell combined €1.5-2.0B in 2024, 2041 and 2045 OLO Bonds

- (SK) Slovakia Debt Agency (ARDAL) to sell 2024 and 2029 Bonds

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell combined €2.0-4.0B in 3-Month and 6-Month Bills

- 06:00 (RO) Romania sells 2019 bonds

- 06:00 (IL) Israel Q2 Final GDP Annualized: No est v 1.5% prelim

- 06:00 (BR) Brazil Oct IGP-M Inflation (2nd Preview): 0.0%e v 0.3% prelim

- 06:30 (BR) Brazil Central Bank Weekly Economists Survey

- 06:45 (US) Daily Libor Fixing

- 07:10 (UK) BOE's Cunliffe

- 07:45 ((FI) Finland and Sweden finance ministers joint press conference in Helsinki

- 07:50 (PT) ECB's Constancio (Portugal) in London

- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions

Bonds on Thurs

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (CA) Canada Aug Wholesale Trade Sales M/M: -0.3%e v -0.3% prior

- 08:50 (FR) France Debt Agency (AFT) to sell combined €6.5-7.7B in 1-month, 3-month, 6-month and 12-month Bills

- 09:00 (BE) Belgium Oct Consumer Confidence Index: No est v -11 prior

- 09:15 (DE) German Fin Min Schaeuble and Econ Min Gabriel press conference with French counterparts

- 09:25 (SI) German Chancellor Merkel in Slovenia

- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

- 10:00 (US) Fed's Powell on community banking

- 11:00 (US) Fed to purchase $1.00-1.25B in notes

- 11:30 (US) Treasury to sell combined $54B in 3-Month and 6-Month Bills

- 17:00 (CO) Colombia Aug Trade Balance: -$0.5Be v -$0.8B prior; Total Imports: $5.6Be v $6.1B prior

- 20:30 (AU) RBA Minutes of Oct Meeting

- 22:00 (CN) China Sept YTD Fixed Urban Assets: 16.3%e v 16.5% prior

- 22:00 (CN) China Sept Retail Sales Y/Y: 11.7%e v 11.9% prior; Retail Sales YTD Y/Y: 12.1%e v 12.1% prior

- 22:00 (CN) China Sept Industrial Production Y/Y: 7.5%e v 6.9% prior; Industrial Production YTD Y/Y: 8.4%e v 8.5% prior

- 22:00 (CN) China Q3 GDP Q/Q: 1.8%e v 2.0% prior; Y/Y: 7.2%e v 7.5% prior; GDP YTD Y/Y: 7.4%e v 7.4% prior