European market Update: OECD says it sees "very negative" growth outlook in OECD area during 2009; Euro-Zone Industrial Data declines by its largest amount on record


ECONOMIC DATA

- (GE) German Producer Prices M/M: -0.5% v -0.2%e; Y/Y: 0.9% v 1.3%e

- (TH) Thailand Foreign Reserves: $114.2B v $112.9B prior

- (FR) French Q4 Final Wages: 0.3% v 0.3%e

- (EU) Euro-Zone Industrial Production M/M: -3.5% v -4.0%e; Y/Y: -17.5% v -15.5%e; Lowest reading on record


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- Equities: Sony Ericcson [ERICB.SW] provided a Q1 updated, Net is now seen at €340-309m and the JV expects a gross margin decline y/y and q/q in Q1 2009. Phone maker plans to ship 14M units with average selling price of €120. Firm notes that weak sales trends continuing into Q1 2009 with sales being hit by declines in consumer demand and de-stocking of products. || || Xstrata [XTA.UK] Chairman stated that Global stimulus packages would support the mining industry, and that 2009 would be a challenging environment. Added that cuts made in current downturn were larger than those made in previous economic turn-around and that cuts in production are laying the seeds for a future commodities recovery. He added that limited acquisition opportunities are becoming available.
|| Property management firm Regus Group [RGU.UK] reported its FY08 Op Profit at £147.4M v £146.3Me, Rev £1.08B v £1.07Be. Regus put its total capacity, including workstations in non-consolidated businesses at 171.3K v 155.3K y/y and average occupancy at 82.9% v 82.7% y/y.
The firm noted for its outlook that the global economic background has undoubtedly become more difficult and that in the last two months of 2008 which has continued into 2009. || GlaxoSmithKline [GSK.UK], the drug maker announced its intentions to sell 5.75M shares of Quest Diagnostic Inc. common stock. It stated that on 19th March 2009, 4.5M Quest shares were sold back to Quest for $44.33 per share, for an aggregate price of approximately $200M. || Reportedly for the drink maker/distributer Diageo [DGE.UK], it is considering the sale of its Central London Global HQ - Times. Article see sale as part of £100M cost savings program and that offices would potentially be moved to West London Park Royal site. || Vodafone [VOD.UK] announced a partnership with Belgacom unit Tango in Luxembourg, the Co. will be able to use Tango's 3G network and Tango to have access to supply chain management. || Property management firm DTZ holdings [DTZ.UK] provided n interim management statement. Firm stated that it was achieving lower than expected revenues; maintains cautious outlook for FY09/10. DTZ stated that the global economic environment has continued to deteriorate, with a correspondingly negative impact on confidence and levels of activity in the commercial property market. || French food and clothing retailer Rallye [RAL.FR] reported its FY08 Net at a loss of €86M v profit €10.4Me, EBITDA €1.98B v €2.04Be, Rev €29.4B v €29.72Be. || Technip [TEC.FR] has been awarded an installation contract by ConocoPhillips Skandinavia AS in Norway. Contract a lump sum contract for the Ekofisk VA subsea water injection project located in block 2/4 on the Norwegian Continental Shelf, financial terms not disclosed. || Siemens [SIE.GE] has been awarded consortium order for 100 high speed trains in China; co's share of contract is worth €750M. Siemens said it signed a contract Friday with its Chinese partners Tangshan Railway Vehicles Co. Ltd., Changchun Railway Vehicles Co. Ltd. and the research institution Academy of Railways to build the trains. The total value of the order wasn't disclosed || Philips [PHIA.NV] has launched home health-care operations in India, is targeting 40% share of Indian market by 2013. Will offer sleep and respiratory products in India. || Tomtom [TOM2.NV] Counter sues Microsoft [MSFT] on patent infringement claims.

- Speakers: OECD Chief Gurria commented that he saw a very negative growth outlook in OECD area during 2009. He noted positive growth of India and China were not going to be enough to offset the negative global growth outlook. He stated that China's GDP to grow 6% to 7% in 2009. Gurria commented that he expected global growth to strengthen in 2010 on the back of stimulus packages || German MoF commented that the German economic contraction had gained momentum in Q1 and that the economic indicators pointed towards further economic weakness. The Finance minister commented that there was no end in sight of the countries export slump and the outlook for industrial production remained bleak. It saw construction sector slowing further in next few months coupled with rising

- Unemployment in Q2 to further dampen demand and consumption. Lastly, the MOF forecasted moderate inflation to persist over the few months || German CDU party lawmaker commented that the ECB has a rescue fund that can be deployed in 24 hrs to any member at risk of going bankrupt.
Noted that Ireland was in the worst financial situation in Euro Zone, followed by Greece. The ECB can make unlimited amount of funds available to help troubled EU states via loans. The lawmaker commented that Germany would attach conditions to any bailout and would not accept low tax states like Ireland. || Irish Foreign Minister commented that the EU s did not discuss a rescue plan at its pre-G20 summit meeting. He did note that Ireland has taken steps to adjust its budget deficit ||

- In Currencies: USD was again under moderate pressure in early European trading but recovered from its worst levels. The EUR/USD consolidating below the 1.37 level . The weaker USD continued to keep commodities firm. Gold was at $962/oz and its cause was aided by chatter that China sought to increase its underground gold reserves by 800 tons from its current level of around600 tons.

- Dealers noting that the market seems distracted that the EUR/USD is poised to see its biggest weekly percentage gain since its inception. However, there is some caution out there that perhaps its magnitude might a bit too anticipatory. The FT noted that perhaps the ECB was under mounting pressure to alter its strategy regarding quantitative easing.

- The USD/JPY holding below the historical pivot point of 95.00 but some taking noted that some key moving averages are about to cross over, which could add to the pair's upside momentum. Dealers do note that there is lingering risk of JPY repatriation ahead of its March 31st fiscal year-end in Japan.

- In Energy: US President Obama stated that he was ready to address a full range of issues with Iran and pursue constructive ties but cautioned the process of US-Iran reconciliation "would not be advanced by threats" || Iran welcomed President Obama message, and called for concrete action. An Iranian official commented that the US should lift its economic sanctions on Iran || Kuwait has told builders in South Korea that a $6.3B refinery project has been canceled due to economic conditions.
|| Spanish oil producer Repsol [REP.SP], it has reportedly obtained 20 additional exploration blocks in Gulf of Mexico - Spanish press. Economista reported that co. would increase its presence in the region, including under partnership agreements, by an additional 50% after the latest auctioning of blocks. || WSJ Options Report: Bullish sentiment focusing on commodity sector after spike in oil and gold prices

- Credit Crisis: FT article discussing that the ECB is under pressure to adopt 'quantitative easing' after Fed move this week. Article noted that many economists believe that the ECB will be forced to follow the Fed and BoE in making outright asset purchases.


NOTES

- The week appears to be ending with some risk aversion setting in. Dealers noting that the US House passage of the 90% tax on bonuses for firms that took TARP money probably implies faster return of money, which probably implies lower lending, levels.

- Dealers' pointing out that markets tend to dislike government policy characterized by “trial and error approaches”. This seems to have TALF investors backing away with fear that government can change the rules as it sees fit.

- OECD Chief Gurria stated that he saw very negative growth in OECD area during 2009 and that positive growth from India and China were not going to be enough to offset the negative global growth outlook

- President Obama said that he is ready to address a full range of issues with Iran and pursue constructive ties but any reconciliation "would not be advanced by threats"

- SNB no plan to amend its gold holdings.

- Looking Ahead: Equity opts exp today

- 8:30 (CA) Canadian Jan New Motor Vehicle Sales M/M: 6.0% expected v -14.8% prior

- 8:30 (CA) Canadian Jan Retail Sales M/M: 1.0% expected v -5.4% prior; Y/Y: 0.5% expected v -3.2% prior; Less Autos M/M: 0.5% expected v -3.2% prior

- 9:00 (EU) ECB's Weber speaks in Germany

- 10:00 (US) Fed's Duke speaks in Washington

-11:00 (MX) Mexican Interest Rate Decision: 25pbs cut to 7.25% expected, current Overnight Rate is 7.50%

- 12:00 (US) Fed's Bernanke speaks in Phoenix