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Global: Business Cycle Monitor

Tue, Nov 3 2009, 11:25 GMT
by Allan von Mehren

Danske Bank A/S


  • Leading indicators continued to improve in November. Some regions still show signs of softness in the indicators, while US and Asia continue to look strong.
  • Global PMI continued its expansion in October with a reading of 55.7, the highest level since June 2007
  • The Order-Inventory balance continued its reduction. The difference is still positive however, and with the normal lead of 3-4 months points to a peak in growth in Q1. The leading New Orders index fell slightly to 54.9 from 55.1. The Inventories index climbed to 44.9 from 43.9 in August, primarily driven by a fairly large increase in the US. It still points to inventory reductions, albeit at a slower pace.
  • In the US ISM rebounded with a reading of 55.7 from September’s reading of 52.6. The increase was driven by solid improvements in all subcomponents. However, Production and Employment posted the most positive surprises. Going forward we expect to see further improvements in ISM with a year-end target of 60. The decline in the Order- Inventory balance indicates that future improvement is likely to take place at a slower pace.
  • In Euroland PMI finally broke the important 50 level with a reading of 50.7. The Order- Inventory balance remains very favourable, pointing to further improvement in the PMI. In UK the New Orders index rose to 59.5, the highest level since January 2004. In Scandi leading indicators improved a bit further, but the pace of improvement slowed down a bit.
  • Asia continues to look strong, but shows signs of moderation in production growth. Chinese PMI reveals some underlying slowdown from the very high growth rates in H1 2009. In the EMEA countries the PMI data continue to look soft and Russia is still the weak link among the BRIC countries.
  • Outlook: We expect global PMI indices to rise further in coming months, although it will probably be a more uneven path from here. We expect that the speed of improvement in OECD’s leading indicators will start to moderate soon as we are also witnessing in the order-inventory balances in the PMI data. This confirms our expectation that global growth will be strong in the short term, but will level off from Q1 2010

Published on  Tue, Nov 3 2009, 11:25 GMT

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Global: Business Cycle Monitor

Wed, Oct 7 2009, 08:24 GMT
by Allan von Mehren

Danske Bank A/S


  • Global leading indicators continue to point to robust growth in coming quarters. The picture was slightly more mixed in September, though, with some indicators pointing towards a peak in growth in Q1 10. This is broadly in line with our expectations that growth will be strongest in coming quarters but level off somewhat during 2010.
  • Global PMI continued to improve in September, albeit at a slower pace than the previous months. PMI reached 54.3 this month and signals decent expansion in manufacturing.
  • The Order-Inventory balance fell back slightly, which, with the normal lead of three to four months, points to a peak in growth in Q1 10. The leading New Orders index fell slightly to 55.1 from 55.7, mainly driven by a decline in the US. The Inventories index climbed to 44.0 from 40.6 in August. It still points to inventory reductions but at a slowing pace.
  • In the US, ISM fell slightly to 52.6 from 52.9, led by a fall in New Orders. However, the New Orders index still points to around 4% GDP growth. Going forward, we expect to see further improvements in ISM. Our models suggest that the index will rise to 60 during the coming six months but it will probably follow a bumpier road from here.
  • In Euroland PMI rose further but is still below 50. The orders-inventories balance still suggests that the overall index soon will break 50. This is confirmed by German factory orders which point to strong German GDP growth in Q3. In Scandi leading indicators improved a bit further but the pace of improvement slowed down slightly.
  • Asia continues to look strong but shows signs of moderation in production growth. Chinese PMI reveals some underlying slowdown from the very high growth rates in H1 09. In the CEE countries the PMI order indices slowly climb towards 50.
  • Outlook: We expect Global PMI indices to rise further in coming months, although it will probably be a more uneven path from here. We expect that the speed of improvement in OECD’s leading indicators will start to moderate soon as we are also witnessing in the order-inventory balances in the PMI data. This confirms our expectation that global growth will be strong in the short term but level off from Q1 10.

Published on  Wed, Oct 7 2009, 08:24 GMT

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Global: Business Cycle Monitor

Thu, Sep 3 2009, 11:14 GMT
by Allan von Mehren

Danske Bank A/S


    • Global PMI continued to improve in August breaking through the important 50 level with a reading of 51.7 from July’s 49.4. Thus signalling an expansion in the global manufacturing sector. What is even more encouraging is that the order-inventories balance continues to improve, thereby indicating a further improvement in the PMI indices going forward.

    • The leading new orders index rose from 51.8 to 55.7 – the highest level since April 2006, whereas the inventories index was unchanged at 40.2.

    • In the US, ISM broke the 50 level in August with a reading of 52.9 and the new orders index rose by 9.6 index points to 64.9. This points to around 4% GDP growth. Going forward we expect to see further improvements in ISM; our models suggest that the index will rise to 60 during the coming six months.

    • With a reading of 48.2, the Euroland PMI is still below 50, but a further increase in the index last month and a continued improvement in the orders-inventories balance suggests that the overall index will soon break 50. In Scandi the PMI indices fell this month; the largest decline was found in Norway’s PMI, falling to 42.1 from 50.1 in July.

    • Asia continues to look strong, in particular the new export orders have been very strong recently. In the CEE countries the PMI indices continue to be somewhat subdued, only showing marginal improvements in August.

    • Outlook: We expect the global PMI indices to continue to improve in the coming months, thereby followed by more hard data such as industrial production and GDP. However, we expect that the speed of improvement in OECD’s leading indicators and order-inventory balances will start to moderate soon, but stay at high levels.

    Published on  Thu, Sep 3 2009, 11:14 GMT

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    US: ISM preview, August

    Mon, Aug 31 2009, 16:10 GMT
    by Peter Possing Andersen, Signe Roed-Frederiksen

    Danske Bank A/S


      • Last month ISM surprised on the upside with a strong reading of 48.9 up from June’s reading of 44.8. The improvement in the overall index was driven by the solid increases in the sub components such as New Orders and Production, while the Inventory index remained low.

      • Most of the local indices have this month shown increases in the overall indices. Furthermore the sub components Production, New Orders and Employment rose in almost all local indices. The price indices have increased compared to last month.

      • Tomorrow we expect to see ISM break the important 50 level with a reading of 51, which is slightly above the consensus expectation.

      • Going forward we still expect to see improvements in production in order to stabilize inventories and meet the pent up demand. We expect that the speed and the magnitude of the manufacturing recovery will surprise during H2 of 2009

      Published on  Mon, Aug 31 2009, 16:10 GMT

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      Global: Business Cycle Monitor

      Tue, Aug 4 2009, 13:33 GMT
      by Allan von Mehren

      Danske Bank A/S


      • After a small break in June, Global PMI had another strong increase in July. The global new orders index rose from 49.1 to 53.3, which is above the long-term average of 52.6. OECD’s leading indicators also rose strongly to even higher levels, pointing to very strong growth and a further rise in PMI during Q3 and Q4.
      • The order-inventory balance from PMI data also rose a bit further, painting a similar picture of very strong global growth in H2 09.
      • In the US most leading indicators continued higher. The ISM new orders index made another move higher from 49.2 to 55.3 and the order-inventory balance rose further. The ISM model points to a further rise above 55 by year-end.
      • In Euroland OECD’s leading indicator, the PMI order-inventory balance, and ZEW all point to a significant rebound in H2 growth. In Scandi a sharp further rise in Swedish PMI stands out. Other countries and surveys also point to improvement, albeit at a slower pace.
      • Asia continues to look strong. In particular, the sharp rebound in industrial production in Japan, Taiwan and South Korea is striking. CEE shows further a rise in PMI. Russian PMI increased strongly again in July.
      • Outlook: We look for further improvement in PMI data in the coming months whereas some of the leading indicators that have risen the most are likely to level off soon from the very high levels. Global GDP growth looks set for a strong H2 recovery.

      Published on  Tue, Aug 4 2009, 13:33 GMT

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      Macro Monitor: Poland

      Fri, Jul 24 2009, 06:23 GMT
      by Lars Christensen

      Danske Bank A/S


        • On the following pages we present our new Macro Monitor on the Polish economy. It contains an updated outlook on the Polish economy taking into account the latest economic releases for May and June.
        • In general, economic activity should continue to decline in the coming quarters. GDP growth should move into negative territory in Q2 09 and most likely bottom out in Q3 and Q4 09. Although the Polish economy has not been as hard hit in terms of drop in economic activity, there are not clear signs of a swift recovery. We expect GDP growth of -0.3% y/y in 2009 and 0.2% y/y in 2010.
        • Private consumption should decline in the coming quarters on the back of a continuing deterioration in labour market conditions. This will play a key role in the recovery for the Polish economy. We are possibly looking at a year of contraction in private consumption and a slow recovery starting in H2 10. Investments, on the other hand, should bottom out in Q2 and Q3 09 and then gradually begin to move up.
        • The drop in economic growth and the expected slow recovery is likely to have a significant negative impact on the Polish labour market. Unemployment is expected to rise to 12.0% in 2009 and further to 14.4% in 2010. On the positive side, low capacity utilisation should reduce inflationary pressure for some time.

        Published on  Fri, Jul 24 2009, 06:23 GMT

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        Global: Business Cycle Monitor

        Mon, Jul 6 2009, 10:09 GMT
        by Allan von Mehren

        Danske Bank A/S


        • Global PMI rose further in June, but the increase was smaller than in previous months. OECD’s leading indicators, however, continue to rise strongly and reached levels signalling above-trend growth in Q4 09.
        • The order-inventories balance from PMI data also continues to point to a marked increase in global growth in H2 09.
        • In the US most leading indicators continued higher. The ISM new orders index slipped slightly in June, though, after rising strongly for several months.
        • In Euroland OECD’s leading indicator, the PMI order-inventory balance, and ZEW point to a significant rebound in H2 growth. Other surveys point to a more muted recovery. In Scandi a sharp rise in Swedish PMI stands out rising above 50 for the first time since June 2008. Other countries and surveys also point to improvement, albeit at a slower pace.
        • Asia continues to perform strongly. Especially the sharp rebound in industrial production in Japan, Taiwan and South Korea is worth highlighting. CEE shows further rise in PMI. Russian PMI increased strongly again in June.
        • Outlook: We look for further improvement in leading indicators in coming quarters and for some catch up in the US and Europe in H2 09 following the production rise in Asia.

        Published on  Mon, Jul 6 2009, 10:09 GMT

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        Global: Business cycle monitor

        Mon, Jun 8 2009, 09:09 GMT
        by Allan von Mehren

        Danske Bank A/S


        • Leading indicators continued to improve in May. The development points to a rather synchronous recovery with improvement in leading indicators in all regions. The picture of improvement is supported by significant rises in metal prices and freight rates recently.
        • Global PMI rose to 45.3 in May from 41.8 in April and thus continues the increasing trend from the previous months reaching for the crucial level of 50. The most leading sub index new orders rose significantly to 48.6 from 43.8. The balance between inventories and orders continued to improve, which points to a further recovery in global PMIs in the months ahead.
        • Again Asia has shown strong recovery signs and most PMIs are now above 50. Importantly hard data for exports and production has also risen – perhaps most impressively in Japan where companies plan to increase production further in the coming months.
        • In the US, ISM manufacturing has continued its march higher, driven by further increases in new orders. Euroland PMI also surprised positively. As domestic demand has stayed very subdued, the improvement is probably related to improvement on export markets.
        • The slowest recovery in the PMI indices can be found in the CEE countries, which is in line with expectations.
        • Latin America is also looking stronger, with both PMI and industrial production turning higher in Brazil.
        • Outlook: We continue to look for further improvements in leading indicators in the coming months. Lean inventories in combination with demand being lifted by substantial stimulus should pave the way for increases in production. We see increasing upside risk to Q3 growth. See also Global Scenarios, June 2009.

        Published on  Mon, Jun 8 2009, 09:09 GMT

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        US: ISM preview, May month

        Fri, May 29 2009, 16:33 GMT
        by Signe Roed-Frederiksen

        Danske Bank A/S


        • April’s ISM figure increased significantly to 40.1 from 36.3. The important subindices Production, New Orders and Employment all contributed to the increase. Especially the new orders – inventories balance rose markedly. The price index was merely unchanged.
        • ISM 42.6 42.0 40.1 The readings from the local indices have again been slightly mixed this month, but overall the reading from the local surveys is positive. The local indices suggest an ISM reading of 41.3.
        • Taking other variables into account as well, we expect Monday's ISM index to post a small increase to 42.6, which is slightly higher than the consensus forecast of 42.0.
        • Going forward, we still expect to see a continued recovery in the ISM over the coming quarter. However, problems in the auto sector posts a risk to the short term outlook for the manufacturing sector, which is likely also behind the weakness in some of the regional indices this month. The underlying trend nevertheless remains up as production needs to pick up to close the huge gap between demand and supply growth.


        Published on  Fri, May 29 2009, 16:33 GMT

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        Global: Business Cycle Monitor

        Wed, May 6 2009, 09:42 GMT
        by Allan von Mehren

        Danske Bank A/S


        • Global leading indicators continued to improve in April. The development points to a rather synchronous recovery with improvement in leading indicators in all regions.
        • Global PMI (new orders) rose from 37 to 43 and although it is still below 50 – and thus points to contraction – it has risen rapidly after bottoming at 27.4 in December last year. The balance between inventories and orders continued to improve and points to a significant further rise in PMI in the coming months.
        • Asia in particular has shown strong recovery signs. PMIs are rising above 50 and hard data for exports and production has risen. This is not least the case in China, South Korea and Japan.
        • In the US, ISM manufacturing has continued its march higher, driven by further increases in new orders.
        • Euroland PMI and German ifo also surprised positively. As domestic demand has stayed very subdued, the improvement is probably related to improvement on export markets.
        • In Russia and Central and Eastern Europe, PMIs have also continued higher. Russian PMI new orders has risen for four months now to 43.9 after bottoming at 28.6 in December.
        • Outlook: We continue to look for further improvements in leading indicators in the coming months. Lean inventories in combination with demand being lifted by substantial stimulus will pave the way for increases in production. We start to see upside risk to Q3 growth.

        Published on  Wed, May 6 2009, 09:42 GMT

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        US: ISM preview for April

        Fri, May 1 2009, 07:33 GMT
        by Peter Possing Andersen, Signe Roed-Frederiksen

        Danske Bank A/S


        • March’s ISM figure rose slightly to 36.3 from 35.8 in February. Although the composite rose only marginally, the report included stronger details, as new orders rose from 33.1 to 41.2, while inventories dropped from 37.0 to 32.2. The improved orders-inventory balance bodes well for April’s release. The prices index rose slightly from 29.0 to 31.0.
        • The readings from the local indices have been very positive this month, with improvements in all regions. Overall the local indices have improved by 4.6 index points from 35.6 to 40.1, suggesting a significant improvement in the April ISM. The local price indices suggest only a minor pick-up in the ISM price index to 32.6 in April from 31.0 in March.
        • For April, we expect a significant increase in the ISM index to 40, which would be a positive surprise compared to the consensus median forecast of 38.4. There could even be some slight upward risk to our estimate.
        • Going forward, we still expect to see a continued recovery in the ISM as production is ramped up to match the pace of demand. This should take place over the coming three to six months as inventory destocking is completed.

        Published on  Fri, May 1 2009, 07:33 GMT

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        Global: Business Cycle Monitor

        Fri, Apr 3 2009, 12:51 GMT
        by Allan von Mehren

        Danske Bank A/S


        • Global leading indicators continued to improve over the past month with further rises in PMI and improvement in the balance between orders and inventories. A rapid decline in inventories means production will soon have to rise in order to meet demand. In fact production plans in Japan already point to rising production in March and April. Metal prices have increased further. However, the Baltic Freight Index has declined slightly.

        • In the US the ISM index surprised on the upside and details of the report showed a strong increase in the new orders index. Euroland PMI also surprised positively but as expected the improvement is happening more slowly here.

        • Emerging markets continue to do better. China PMI from CLSA fell slightly but the PMI from NSA continued to rise. Export and production data in several Asian countries have continued the improvement seen in previous months. PMI in Central and Eastern Europe and Russia also managed to rise further - despite the region's financial problems.

        • We continue to expect further improvement in leading indicators going forward as stimulus should improve demand and inventories have become very lean globally.

        • The next issue of our Business Cycle Monitor will be published on May 6, 2009.

        Published on  Fri, Apr 3 2009, 12:51 GMT

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        USA: Preview on March's ISM

        Tue, Mar 31 2009, 16:15 GMT
        by Peter Possing Andersen, Signe Roed-Frederiksen

        Danske Bank A/S


        • February's ISM figure rose slightly to 35.8 from 35.6 in January. The increase was mainly driven by the "production" sub-index. We also saw a slight increase in the new orders - inventories ratio, as inventories declined to 37.0 and new orders were merely unchanged at 33.1. The price indices were unchanged at 29.0.

        • The readings from the local indices have been very mixed this month with a deterioration in Philly Fed, Empire, Cincinnati and improvements in Richmond, Dallas and Kansas. Overall the local indices suggest an ISM reading of 35.6.

        • Tomorrow we expect a small increase in the ISM index with a reading of 36.5, which is slightly higher than the consensus forecast of 36.0.

        • Going forward, we still expect to see a recovery in the ISM over the coming quarters. With demand stabilising and inventories declining rapidly, manufacturing production will begin to stabilise in the coming months.

        Published on  Tue, Mar 31 2009, 16:15 GMT

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        Global: Business Cycle Monitor

        Wed, Mar 4 2009, 17:01 GMT
        by Allan von Mehren

        Danske Bank A/S


        • Overall signs of a bottom in the global industrial cycle have continued in the February indicators. China has been leading the way showing a further rise in PMI and the US managed to eke out a small rise in ISM - despite declines in some regional surveys. In Europe data have been more mixed, with manufacturing PMI falling in both Euroland and the UK. OECD's leading indicators are showing signs of bottoming out in most regions and a stabilisation in commodity prices and the Baltic Freight Index offers further evidence for stabilisation in manufacturing production.

        • In Emerging Markets indicators have improved lately. BRIC PMI showed a further rise in February. And even in central and eastern Europe (CEE) Russia's PMI has increased - despite the recent turmoil. In Asia the increase in Chinese PMI has been supplemented with a significant improvement in South Korean exports.

        • Going forward we continue to look for a further rise in leading indicators as the inventory draw down comes to an end and the massive stimuli worldwide starts to kick in. We expect the rise to be strongest in Asia and the US, while European indicators will likely show a more muted increase. The next issue of our Business Cycle Monitor will be out on April 3.

        Published on  Wed, Mar 4 2009, 17:01 GMT

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        Global: Business Cycle Monitor

        Fri, Feb 27 2009, 10:39 GMT
        by Allan von Mehren

        Danske Bank A/S


        • Leading indicators are very important for most parts of the financial markets. Lately we have seen tentative signs of a turnaround in several leading indicators after a very rapid decline since summer 2008 and we expect to see further recovery in leading indicators (such as ISM) in the upcoming quarters. In order to follow this development we introduce a Business Cycle Monitor, which contains an overview of leading indicators for different regions of the global economy.

        • We will issue the Business Cycle Monitor on a monthly basis at the beginning of the month when data for PMI has been published worldwide. The next issue will be out on March 4.

        Published on  Fri, Feb 27 2009, 10:39 GMT

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        Financial crisis update

        Fri, Feb 13 2009, 15:50 GMT
        by Danske Research Team

        Danske Bank A/S


        • The focus of the financial crisis has moved away from fears of systemic risk in the financial sector and towards the economic consequences of the situation. The economic fallout from the financial crisis has thrown the world economy into the deepest recession seen at least since the 1970s. We still have the bulk of real economic losses (rather than the marked-to-market losses that have dominated so far) ahead of us, as unemployment and delinquencies surge higher. Default rates are heading for record highs.

        • For a long time, the main issue for banks has been constrained access to funding markets. After a series of central bank and government initiatives, now banks largely have access to (short-term) funding. As the negative impact of the financial crisis is being felt in the real economy, the focus has turned to the capitalisation levels of the banks, which are increasingly in need of government help to raise capital.

        • More quantitative easing may be on the cards in the US, and other countries, eg, the UK, are also moving in the same direction.

        • Intra-euroland spreads have exploded on the back of rating actions and an increased focus on economic imbalances. This has fuelled speculation that one or more countries may feel the need, or be forced, to default on their debt and/or leave the euro area.

        • Recently, emerging markets have been hit hard and more problems may be in the pipeline. Unwinding of carry and dwindling risk appetite is hitting the most imbalanced markets the hardest. Local emerging markets crises could flare up with little warning.

        Published on  Fri, Feb 13 2009, 15:50 GMT

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        Financial crisis update

        Thu, Dec 4 2008, 10:15 GMT
        by Danske Research Team

        Danske Bank A/S


        The aim of this publication is to provide an overview of current stories/issues in relation to the financial market crisis. We update this publication regularly. The previous Financial Crisis Update was published on October 23, 2008.

        • The financial crisis has changed its focus away from fears of systemic risk in the financial sector and toward the economic consequences of the crisis.

        • For a long time the main issue for banks has been constrained access to funding markets. After a series of central bank and government initiatives, banks largely now have access to (short-term) funding. As the negative impact of the financial crisis is now being felt on the real economy, the focus has turned to the capitalisation levels of the banks.

        • US dollar money markets have improved, but show little progress in Europe. We doubt that BOR-OIS spreads will show much improvement in euro terms until next year.

        • The Fed continues to take drastic measures to combat the credit crisis. The escalation of quantitative easing with purchasing direct obligations of GSEs and mortgage-backed securities has caused a steep drop in US mortgage yields. This will probably cause a wave of refinancing and the US housing affordability index is heading for an all-time high.

        • Emerging markets have been severely hit recently and more may be in the pipeline. Unwinding of carry and dwindling risk appetite is hitting the most imbalanced markets the hardest.

        • The economic fallout from the crisis is increasing and the economic outlook appears very dire. A global recession is on the cards. We have the bulk of real economic losses (rather than the marked-to-market losses that have dominated so far) ahead of us, as unemployment and delinquencies surge higher.

        Published on  Thu, Dec 4 2008, 10:15 GMT

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        Financial crisis update

        Fri, Oct 24 2008, 07:51 GMT
        by Peter Possing Andersen, Lars Rasmussen

        Danske Bank A/S


        The aim of this publication is to provide an overview of current stories/issues in relation to the financial market crisis. We update this publication regularly. The previous Financial Crisis Update was published on September 26, 2008.

        • The financial crisis is changing its nature at the moment, away from fear of systemic risk attached to money and credit markets and toward emerging markets and the economic consequences of the financial crisis.

        • Money markets are very far from functioning properly, but the worst is probably over following a series of initiatives from governments and central banks worldwide. Getting money markets to function normally again is probably key longer term. Banks look able to raise capital following government guarantees easing the fear of a full-blown credit crunch.

        • The crisis has spread to global currency and equity markets as risk aversion is fuelling further deleveraging and forced selling. Global stock markets are down almost 50% from the in peak last autumn.

        • Emerging markets have been severely hit recently and more is probably in the pipeline. Unwinding of carry and dwindling risk appetite is hitting the most imbalanced markets - these markets include CEE, Russia, the Ukraine, Turkey and South Africa.

        • The economic fallout from the crisis is increasing and the economic outlook appears dire. A global recession is on the cards. We have the bulk of real economic losses (rather than the marked-to-market losses that have dominated so far) ahead of us as unemployment and delinquencies continue to climb higher.

        Published on  Fri, Oct 24 2008, 07:51 GMT

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        Financial crisis update

        Fri, Sep 26 2008, 07:06 GMT
        by Danske Research Team

        Danske Bank A/S


        This publication provides an overview of current stories/issues in relation to the financial market crisis. We update this publication regularly. The previous Financial Crisis Update was published on September 3, 2008.

        • The financial crisis just keeps escalating: Since we last published Financial Crisis Update on 3 September, Lehman Brothers has filed for Chapter 11, Bank of America has bought Merrill Lynch, Fannie Mae and Freddie Mac have de facto been nationalised, AIG has been rescued by the Fed, leading central banks around the globe have provided extra USD funding in a coordinated attempt to help money markets, and last but certainly not least, the US Treasury has proposed using USD 700bn to buy troubled mortgage assets.
        • Key for the short term is the passing of the USD 700bn bailout package in the US Congress. If the bailout legislation passes it will provide some relief, but it is far from certain that it will solve all the problems. Getting money markets to function normally again is probably key longer term.
        • Credits have had a rough time and are far from out of the woods yet. A slowing global economy, rapidly tightening lending standards and ongoing deleveraging will continue to weigh on credits for some time to come. In terms of valuation, much is already discounted in spreads, but we fail to see any significant relief in the credit market for the remainder of 2008. A stabilisation of money markets is a precondition for credit markets to stabilize again.
        • While new losses from financial institutions continue to be revealed, they have been on a smaller scale than earlier. However, as Lehman has demonstrated, raising capital can be very difficult. Further losses and funding pressures remain in focus. If banks can raise capital (like Goldman Sachs), it is positive. But depressed share prices will make this difficult.
        • Lending standards continue to be tightened in both Europe and the US, underlining the overall picture of tightening credit availability globally. Along with pressure from high commodity prices and declining asset prices, this is likely to feed the deleveraging of the global financial system further.

        Published on  Fri, Sep 26 2008, 07:06 GMT

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        Financial crisis update

        Wed, Sep 3 2008, 16:51 GMT
        by Danske Research Team

        Danske Bank A/S


        • The financial crisis just will not go away. Since we last published Financial Crisis Update, jitters have remained on financial markets and risk appetite has been scaled down. Problems in the money markets remain unresolved. Credit spreads have generally widened and financial equities have been close to their mid-July lows. The need for recapitalisation in the government sponsored agencies, Freddie Mac and Fannie Mae - the largest providers of prime mortgage loans to the US mortgage market - remains at the forefront of things.

        • While technical movements and forced selling set the agenda at the beginning of the crisis, focus is now turning to the consequences for - and the state of - the real economy. So far this is not a pretty sight and for the moment we fail to see any room for substantial tightening of credit spreads despite the current high levels.

        • Credits have had a rough time and are not out of the woods yet. A slowing global economy, rapidly tightening lending standards and ongoing deleveraging will continue to weigh on credits for some time to come. In terms of valuation, much is already discounted in spreads but we fail to see any significant relief in the credit market for the remainder of 2008. Consequently, we believe spreads will remain at current levels or drift slightly wider, driven by the unfavourable technical situation in the market.

        • While new losses from financial institution continue to arrive it has been on a much smaller scale than earlier. Bloomberg currently report USD511.3bn in losses from financial institutions worldwide. Recapitalisation has continued and Bloomberg reports USD321.6bn in capital raised at the moment. Nevertheless, potential losses might be much bigger when compared with the standing IMF estimate of mortgage-related losses of in total USD1 trillion. Great uncertainty regarding the size of future losses prevails. However, it remains very likely that more bad news is in the pipeline. Hence the risk of negative surprises going forward remains high.

        • Lending standards continue to be tightened in both Europe and the US, underlining the overall picture of tightening credit availability globally. Along with pressure from high commodity prices and declining assets prices, this is likely to feed the deleveraging of the global financial system further.

        • Lending standards continue to be tightened in both Europe and the US, underlining the overall picture of tightening credit availability globally. Along with pressure from high commodity prices and declining assets prices, this is likely to feed the deleveraging of the global financial system further.

        Published on  Wed, Sep 3 2008, 16:51 GMT

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        Global: Inflation expectations monitor

        Wed, Sep 3 2008, 08:35 GMT
        by Signe Roed-Frederiksen

        Danske Bank A/S


        • • Consumer short- and long-term inflation expectations have in general broken the increasing trend. UK short-term and Norway long-term expectations are the only ones to rise recently. If sustained this is comforting news for the central banks.

        • • Forecaster inflation expectations generally remain stable across the surveyed countries. The only exception is Sweden, where the Prospera five-year inflation forecast continues to increase. 

        • • Market implied long-term inflation expectations have also declined. Only the UK has risen recently but that was on the back of a sharp decline. France, the UK and Sweden appear to have reversed the sharp increases they previously experienced. US expectations have moved sideways.

        Published on  Wed, Sep 3 2008, 08:35 GMT

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        USA: Preview on August's ISM

        Mon, Sep 1 2008, 11:36 GMT
        by Peter Possing Andersen, Signe Roed-Frederiksen

        Danske Bank A/S


        • • July's ISM index fell back to 50.0 following the surprise increase to 50.2 in June. New orders dropped to 45.0 from June's 49.6 and the inventory index declined to 45.0 from 51.2, suggesting the inventory adjustment is still ongoing. 

        • • Indications from the regional indexes have been mixed this month, but overall the local indexes suggest a reading of 49.6. 

        • • We expect ISM to stay unchanged at 50.0 in August, in line with consensus expectations. Watch new export orders for signs of weakness starting in this part of the economy. 

        • • Over the next three months we expect weakening domestic demand to weigh on the ISM index. However, we do not expect a sharp deterioration as the run-down in inventories has been faster and earlier than we usually see in times of fading demand. On a six-month horizon we expect the ISM index to move above 50 as economic growth starts to pick up.

        Published on  Mon, Sep 1 2008, 11:36 GMT

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        USA: Preview of July's ISM

        Fri, Aug 1 2008, 08:58 GMT
        by Peter Possing Andersen

        Danske Bank A/S


        • • June's ISM figure surprised by rising to 50.2 from 49.2 in May. The increase was mainly driven by the "bad" sub-indices, namely inventories and supplier deliveries. The increase in the inventories index could be a sign of stalling demand, while high readings in the supplier deliveries index are usually a sign of underlying inflation pressures. 

        • • We have expanded our coverage of the local indices to include the PMIs from Cincinnati and Mil-waukee. The local indices have been very mixed this month, and overall indicate an ISM reading of 48.5

        • • We expect an ISM reading of 48.5, which is below the consensus forecast of 49.0, but once again higher than our one-month model's forecast. We expect the price index to remain high at 90.

        • • Going forward, we still expect to see sub-par readings in the ISM over the coming quarters, mainly due to weakening domestic demand in H2. However, unusually low inventories will probably prevent the ISM dropping as low as forecast by some of our models.

        Published on  Fri, Aug 1 2008, 08:58 GMT

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        Global: Inflation expectations monitor

        Tue, Jul 29 2008, 10:57 GMT
        by Peter Possing Andersen

        Danske Bank A/S


        Credibility of monetary anchoring is vital to central banks. One important indicator of credibility is inflation expectations. Current elevated headline inflation has made the monitoring of expectations even more important. This monthly monitor tracks developments in the most recognised measures of inflation expectations in the US, Euroland, the UK, Norway and Sweden.

        • • Consumer short-term inflation expectations have continued to trend higher in most of Europe, whereas they are unchanged in the US. The important long-term inflation expectation indicators have declined in the US and the UK.
        • • Forecaster's inflation expectations generally remain relatively stable across the surveyed countries. The only exception is Sweden, where the Prospera five-year inflation forecast continues to move higher.
        • • Market implied long-term inflation expectations still indicate an upward trend, but in the UK and Sweden expectations have rebounded somewhat in recent weeks.

        Published on  Tue, Jul 29 2008, 10:57 GMT

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        Financial crisis update

        Fri, Jul 11 2008, 09:32 GMT
        by Peter Possing Andersen

        Danske Bank A/S


        The aim of this publication is to provide an overview of current stories/issues in relation to the financial market crisis. We update this publication regularly. The previous Financial Crisis Update was published on May 21, 2008

        •  Since we last published Financial Crisis Update, jitters have returned to financial markets and risk appetite has been scaled down. Problems in the money markets remain unsolved, but have generally not worsened. Credit spreads have generally widened and financial equities have seen new cyclical lows. Most recently the jitters have centred on a further need for recapitalisation in the government sponsored agencies, Freddie Mac and Fannie Mae - the largest providers of prime mortgage loans to the US mortgage market.

        •  While technical movements and forced selling set the agenda in the beginning of the crisis, focus is now turning to the consequences for - and the state of - the real economy. So far this is not a pretty sight and for the moment we fail to see any room for substantial tightening of credit spreads despite the current high levels.

        •  While new losses from financial institution continue to arrive it has been on a much smaller scale in Q2 than was the case in Q1 and Q4. Bloomberg currently report USD403.5bn in losses from financial institutions worldwide. Over the course of Q2 recapitalisation has continued. Bloomberg reports USD320.1bn in capital raised, of which USD171.9bn came in Q2. Still potential losses might be much bigger when compared with the standing IMF estimate of mortgage-related losses of in total USD1 trillion. Great uncertainty regarding the size of future losses prevails. However, it remains very likely that more bad news is in the pipeline. Hence the risk of negative surprises going forward remains high.

        •  Lending standards continue to be tightened in both Europe and the US, underlining the overall picture of tightening credit availability globally. Along with pressure from high commodity prices and declining assets prices, this is likely to feed the deleveraging of the global financial system further.

        Published on  Fri, Jul 11 2008, 09:32 GMT

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        USA: Preview on June'’s ISM

        Tue, Jul 1 2008, 08:30 GMT
        by Peter Possing Andersen

        Danske Bank A/S


        • • May's ISM rose to 49.6 from 48.6 in April. The increase was mainly driven by the production index and the new orders index, and can mainly be explained by strong external demand and very lean inventories.

        • • All local indices have shown a declining trend this month, especially Richmond. When looking into the details we find that all local indices have shown declines in the Production and New Orders subcomponents, and only Empire and Chicago showed an increase in Employment. This reduces the overall signal from the local indices – which are pointing to an ISM level of 47.9, down from 49.4. When looking at the price indices, the local indices indicate an increase of 3.4 index points.

        • • Tomorrow we expect an ISM reading of 48.0 for June, which is below the consensus forecast of 48.6 but once again higher than our one-month model forecast. We still expect the ISM to weaken in the coming months due to weakening domestic demand. However, the downside – compared to our model – may be limited due to dynamic effects from the tax rebates, which have had an early impact on consumer demand.

        Published on  Tue, Jul 1 2008, 08:30 GMT

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        0

        Global: Inflation expectations monitor

        Fri, Jun 20 2008, 09:57 GMT
        by Peter Possing Andersen

        Danske Bank A/S


        • • Consumer’s short- and long-term inflation expectations have continued to trend higher in most countries over the recent months. Particularly the upward move in consumers’ long-term inflation gauge is of importance for the central banks.

        • • Forecaster’s inflation expectations generally remain relatively stable across the surveyed countries. The only exception is Sweden, where the Prospera five-year inflation forecast continues to move higher.

        • • Market-implied long-term inflation expectations have been increasing over the past few months. France and the UK show the highest reading for the year, while the US and the Swedish market have not yet moved above recent highs.

        Published on  Fri, Jun 20 2008, 09:57 GMT


        Archive

        Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
        http://www.danskebank.com/ | danskeresearch@danskebank.com

        Legal disclaimer and risk disclosure

        This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.


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