ECONOMIC DATA

- (GE) German Sept Real Construction Orders NSA Y/Y: +2.2%

- (GE) German Q3 Final GDP Q/Q: -0.5% v -0.5%e; Y/Y: 0.8% v 0.8%e; Y/Y nsa: 1.3% v 1.3%e

- (GE) German Q3 Final Private Consumption: 0.3% v 0.1%; Final Government Spending: 0.8% v 0.5%e

- (GE) German Q3 Final Capital Investment: 0.1% v -1.3%e; Construction Investment: 0.3% 0.0%e; Final Domestic Demand: 1.3% v 0.5%e

- (GE) German Q3 Final Imports: % v 1.0%e; Final Exports: % v -0.7%

- (GE) German Dec GFK Consumer Confidence Survey: 2.2 v 1. 5e

- (FR) French Nov Business Confidence Indicator: 80 v 85e; Production Outlook Indicator: - 69 v -68e; Own- Company Production Outlook: -28 v -25e

- (SP) Spanish Oct Producer Prices M/M: -1.2% v -0.7%e; Y/Y: 5.9% v 6.4%

- (IT) Italian Nov Consumer Confidence: 100.4 v 100.3e

- (NE) Dutch Nov Producer Confidence M/M: -9.1 v -8.3e; Y/Y: -29 v -30e

- (SW) Swedish Oct PPI M/M: 0.0% v -0.3%e; Y/Y: 3.8% v 3.4%e

- (SW) Swedish Oct Trade Balance. SEK10.0B v SEK11.3B prior

- (IT) Italian Oct Trade Balance Non-EU: -€380M v -€3.28B prior

- (NO) Norwegian Q3 GDP Q/Q: -0.7% v 0.0%e; Mainland Norway Q3 Q/Q: 0.2% v 0.0%e

- (SZ) Swiss Oct UBS Consumption Indicator: 1.316 v 1.642 prior

- (UK) Q3 Preliminary Total Business Investment M/M: -0.2% v -1.9%e; Y/Y: -0.5% v -2. 2%e

- (UK) Oct BBA Loans for House Purchase: 21,584 v 23,422.

- (EU) OECD November Economic Outlook: Sees protracted recession in many member economies with contraction on avg by 0.4% in 2009; urges Fed and ECB to cut interest rates


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- In equities, BHP abandoned its $66B offer for Rio Tinto [RIO.UK], saying that the difficulties of divesting Rio assets negatively impacted the deal and that the merger was no longer in best interest of shareholders. BHP noted its growing concern over the deterioration of global markets and falling commodity prices. In addition, BHP saw the combined debt from the merged entity carrying unacceptable risks. Rio Tinto stated that would continue with its strategy of operating low-cost assets. || Axa [CS.FR] guided 2008 operating profit of €3.6-4.0B, well below consensus estimates of €6.71B. Axa's CEO insisted that its balance sheet remains solid, although forecasts now reflect reduced commissions on assets. He added that he expected 2012 assumptions are becoming more and more obsolete and pleged to continue avoiding "unjustified" shareholder dilutions. || Skanska [SKAB.SW] said it would cut 3.4K staff in Scandinavia (16.6% of regional staff), citing a 15% decline in bookings in 2009. The restructuring will cost approximately SEK600M in Q4. || BMW [BMW.GE] said it would cut 8.6K jobs (about 8.3% of its global workforce). || Volkswagen [VOW.GE] could consider halting production at Wolfsburg plant from Dec 18 to Jan 11. || Swiss's Roche signed definitive agreement to acquire Memory Pharma [MEMY] for $50M in cash. || Imperial Tobacco [IMT.UK] reported a full-year net of £428M, below estimates of £597. 8M, while revenues were £20.5B compared to levels of £12.3B y/y. The company said it was comfortable with its current financing position and expressed confidence that "opportunities lie ahead," noting that efficiencies were impacting workforce and it is on course to deliver targeted cost savings. || AstraZeneca [AZN.UK] update on its deal with Abraxis, in which it would receive $268M in fees if Abraxis takes exclusive marketing rights for certain products. || Topps Tiles [TPT.UK] reported FY08 revenues of £208.1M versus year-ago levels of £207.9M. Same-store sales declined 5.4% y/y. The company cancelled its final dividend. || Balfour Beatty [BBY.UK] awarded NZD230M contract to carry out overhead line works on the North Island Grid upgrade project. || Randstad [RAND.NV] acquired a 10% stake in Fujistaff for €12.3M, noting that the acquisition would not add to earnings. || Severn Trent [SVT.UK] reported a first half loss of £83.3M, compared to a year-ago profit of £150.9M. Revenues came in ahead of the year-ago figure of £814.3M. The company noted that it had a strong liquidity position and was funded for investments and cash flow until march 2010.

- In speakers, the ECB's Bini Smaghi noted that deflation talk has been imprecise, suggesting that no country is currently experiencing deflation. He sees inflation falling sharply but remaining within positive territory, adding that he still expects long-term inflation around 2%. Anchoring inflation would keep deflationary risks remote and if and when deflation risks emerge the central banks must act fast. He also warned that central banks must not exhaust their ammunition too early. || The BoE's King said that inflation has fallen sharply and that the economy is contracting. King believes that the UK entered recession in the second half of 2009, noting that the BoE would take steps to keep CPI within target. The VAT cut would lower inflation in short run. According to King, bank lending is the most pressing policy challenge of the moment, stating that the UK may not have reached the end of the bank recapitalization process and not ruling out further government intervention. Lastly King stated that the BOE might need to cut rates further as banks are slow to pass though rate cuts. || The ECB's Nowotny stated that the ECB cannot rule out cutting interest rates to 2% (currently at 3.255%). He noted that the central bank would maintain a "steady hand policy" regarding interest rate decisions, reminding listeners that measures need time to work. ECB must maintain future rate cutting capabilities and that the economic slowdown warrant calls for 'some rate cuts. He stated that the economy may have passed worst elements by H2 2009. || BoE's Gieve noted that the fiscal stimulus would raise economic growth as well as CPI. The BoE would make assessments to see if more needs to be done but the case for UK fiscal stimulus was strong || BoE's Sentence stated that he saw clear signs that UK economy was in recession and expected alower CPI and weak FX to boost growth. Noted that interest rate cuts during the CPI increase could have posed risk to BoE credibility and that the BoE policy must counter deflation pressures || BoE's Bean stated that bank rate may need to move more aggressively to achieve the same result during normal economic times. The supply of credit is key, policy transmission mechanism currently uncertain || BoE's Barker: housing market remains extremely difficult and suffers from lack of mortgage access and lack of confidence. || Chancellor Darling said the UK will continue to do all that is necessary adding that inaction would be irresponsible. Noted that UK has given substantial assistance to help business and that the UK Stimulus package would make a difference. Banks must be motivated by Gov't to begin lending . Lastly he added that his forecasts are close to BOE's. || A deputy Indonesian Central Bank governor noted that recent declines in Indonesia's FX reserves were not a cause for concern. The official said that annual 2009 GDP growth would be 5.0-5-5%. || The OECD's November Economic Outlook report stated that there could be a protracted recession in many member economies, with the contractong on average by 0.4% in 2009, urging the Fed and ECB to cut rates. The report noted that the UK's GDP would fall by 1.1% in 2009, which would be the biggest contraction since 1991, giving the BoE the scope for rate cuts. It lowered China's 2009 GDP forecast to 8.0% from 9.5%, noting that domestic demand is slowing. It cut Russia's 2009 GDP forecast to 2.3% from 6.5%.

- In currencies, the USD saw a moderate recovery after weakening on Monday. The recent inverse relationship of USD and JPY in regards to equity price movements remained intact. The ECB's Nowotny noted overnight that the ECB could not rule out cutting interest rates to as low as 2%, and while European equity markets are softer, the overall impact on the FX majors has been somewhat muted. The EUR/CHF pair extended its recent gains to trade near 1.5493, while USD/CHF consolidated after it moved back above the 1.2000 handle. A dealer noting that the Norwegian data released ealier today leaves plenty of room for further aggressive Norges Bank rate cuts. In fixed income, Italy sold €2B 2YR zero coupon bonds at an average yield of 3.265% and a bid-to-cover ratio of 1.95 times.

- In energyRussia Energy Minister Shmatko stated that Russia would cooperate with OPEC on oil output in order to protect its interests. The minister noted that low oil prices are hurting investments and that 2009 would be a difficult year for oil. The minister also said Russia would finalize an energy deal with China by the end of 2008. || A Norwegian Deputy Oil Minister stated that Norway had no plans to cut oil supplies. || The Kuwaiti government handed in its resignation, although it remains uncertain whether this was accepted or not, but recall that earlier today Kuwaiti ministers walked out of parliament in protest over PM questioning.


NOTES

- BHP walked away from its Rio Tinto offer citing the turmoil in global markets. The U.S. Treasury and Federal Reserve will unveil as soon as today a lending program to shore up the consumer-finance market, using money from the government's $700B rescue. Dealers noting the Equity price action that has seen it recover from its worst two-day performance and turn it into it s best two-day performance. The newfound risk appetite should be tested today with second look at US Q3 GDP data later this morning. The forces of financial-system deleveraging remain enormous and would likely continue as long as VIX remains elevated. Dealer chatter about a recent Bernstein research report on deleveraging factors with hedge funds.

Looking Ahead:

- 8:30 (CA) Canadian Sept Retail Sales: M/M consensus expectations are 0.4%; The prior number was -0.3%. Retail Sales Less Autos : M/M consensus expectations are 0.2% ; The prior number was -0.3%.

- 8:30 (US) Q3 Preliminary GDP Q/Q (annualized): Consensus expectations are - 0.5%; The prior number was -0.3%

- 8:30 (US) Q3 Preliminary Personal Consumption: Consensus expectations are -3.2%; The prior number was -3.1%

- 8:30 (US) Q3 Preliminary GDP Price Index: Consensus expectations are 4.2%; The prior number was 4.2%.

- 8:30 (US) Q3 Preliminary Core PCE: Q/Q consensus expectations are 2.9%; the prior number was 2. 9%

- 9:00 (US) Sept S&P/CaseShiller Home Price Index: Consensus expectations are 163.0; The prior number was 164.4

- 9:00 (US) Sept S&P /CS Composite -20 Y/Y : Consensus expectations are -16.9%; the prior number was -16.6%

- 9:00 (US) Q3 S&P / Case-Shiller US HPI. There are no consensus expectations ; The prior number was 155.3

- 9:00 (US) Q3 S&P / Case-Shiller US HPI Y/Y 5: Consensus expectations are -17.1%; The prior number was -15.4%

- 10:00 (US) Nov Consumer Confidence: Consensus expectations are 38.0; The prior number was 38.0

- 10:00 (US) Nov Richmond Fed Manufacturing Index. Consensus expectations are -26; The prior number was -26

- 10 :00 (US) Sep House Price Index : M/M consensus expectations are -0.7%; The prior number was -0.6%

- 10 :00 (US) Q3 House Price Purchase Index: There are no consensus expectations ; The prior number was -1.4%.