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10 Feb 2009 06:00 GMT =DJ EUROPEAN MORNING BRIEFING: Mkts Anxiously Await US Bailout
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February 10th, 2009, 11:50 am | By CFDSpy | Published in Daily Fundamental | Comments on this postComments Off

10 Feb 2009 06:00 GMT =DJ EUROPEAN MORNING BRIEFING: Mkts Anxiously Await US
Bailout

SNAPSHOT:
========

European bourses, govt debt seen lower; euro well lower; spot gold, oil up

-Obama: U.S. Faces ‘Profound’ Crisis

-Obama says stimulus plan not perfect but urges passage

-Fed’s Fisher: Economy To Contract Throughout 2009

-Kuwait Open To Rework Dow Deal If Terms Changed – FT

-Rio Tinto stands by sale of assets to Chinalco

-Nissan to shed 20,000 jobs worldwide

-ECB Weber: Shouldn’t Avoid Cutting Rates Aggressively – Reuters

-Genentech’s Price Exceeded Roche’s Offer

-FedEx Cuts 900 Jobs in Freight Unit

-Deflationary pressures mounting in China

-Russia Bank To Seek Foreign Debt Rescheduling – Nikkei

Watch for: 0930 GMT UK Dec Trade; 1600 GMT US Tsy Secy Geithner unveils
financial recovery plan; 1800 GMT US Fed Chairman Bernanke testifies before
U.S. House
EUROPEAN OUTLOOK & US/ASIAN SUMMARIES:
========

Global markets are anxiously looking to the U.S. and President Obama to push
through bailout plans to stop the world economy’s slide. European bourses
are set to open lower with government bonds also under pressure. The euro is
sliding, while gold and oil are higher.
STOCKS:
======

European stocks markets are expected to open lower Tuesday, after bourses
powered higher Monday due to the banking sector.

For Tuesday’s opening, Matt Buckland at CMC Markets is calling the FTSE down
39 at 4268, the DAX off 51 at 4616 and the CAC off 46 at 3089.

“The market is living in expectations of the Obama plan and is holding up
well,” said Meeschaert investment counselor Frederic Rozier, referring to a
plan by U.S. President Barack Obama to stimulate the recession-hit U.S.
economy with billions of dollars in public works spending and tax cuts.

Obama on Monday aimed to turn up the heat on Republican foes of his plan,
with his first White House press conference and a trip to
unemployment-blighted Indiana.

The president argued the case for his economic stimulus package and left the
door open for the U.S. to spend billions more on a bank-bailout plan. The
Senate cut off debate on the stimulus bill, setting the stage for a final
vote Tuesday.

In another move by the U.S. administration the U.S. Treasury on Tuesday
plans to unveil a stabilization plan aimed at troubled U.S. banks.

The U.S. Treasury Department’s plan to unclog the credit markets and
stabilize the financial system could eventually involve more than $2
trillion of financing to help deal with illiquid assets and boost consumer
lending, Obama administration officials told congressional staff Monday
evening.

Analysts at Charles Schwab & Co said stocks were under pressure as “the
Street is showing some anxiety toward the timeliness and structure of
President Obama’s economic stimulus plan” being hotly debated in the Senate.

“Traders are reserving conviction and are anxiously awaiting” details, they
wrote.

U.S. stock futures are lower Tuesday, after markets ended mixed Monday as a
jittery market awaited news on the fate of a massive economic stimulus
package being considered by the U.S. Congress as well as a financial
recovery plan.

Traders were playing “their cards close to their vest, anxiously awaiting
the details of the structure of President (Barack) Obama’s economic stimulus
plan,” experts at Charles Schwab said.

“We’ve had a good debate – now it’s time to act, that’s why I am calling on
Congress to pass this bill immediately,” Obama said Monday in Elkhart,
Indiana, a city where unemployment has rocketed to 15.3%.

Asian share markets are lower Tuesday before an expected U.S. Senate vote on
a $827 billion stimulus package. Financial shares were higher in Tokyo while
shipping stocks were lower on profit-taking despite yet another rise in a
key shipping index.

“Many investors have already squared positions and are likely to sit tight,”
said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo.

“We expect risk aversion to stay. Investor focus will likely remain on
global growth conditions as the banking bailout will likely not provide the
quick fix that some are expecting and market expectations remain firmly to
the downside,” said analysts at UBS.
FOREX:
======

The euro is sliding Tuesday, along with the Australian dollar, on reports
Russian banks and companies may look for help to reschedule $400 billion in
loans.

Traders in Sydney and Tokyo cited a report in the Nikkei which quoted the
head of Russia’s biggest banking association as saying Russian banks and
businesses may ask foreign banks to reschedule loans worth $400 billion.

The British pound and Swiss franc were also hurt against the U.S. dollar and
the Japanese yen, due in part to their geographic proximity to the Russian
woes.

“This may be refocussing attention back on Eastern European financial
troubles. The way things are going today, we could be on the cusp of a major
breakdown in the euro,” said ABN Amro strategist Greg Gibbs.

There was selling of the euro and Australian dollar by Japanese companies
and institutional investors, with this likely to continue in the lead-up to
the Japanese fiscal year end in March, said Westpac strategist Robert
Rennie.

On Monday, the euro and U.K. pound gained against the dollar on heightened
risk appetite as investors awaited the details of the U.S. administration’s
financial rescue package.

Geithner’s plan will likely entail a joint effort between the public and
private sectors to purchase banks’ troubled assets.

Lawmakers also are expected to vote Tuesday on a stimulus package worth $827
billion.

“We’re not quite sure what the packages are going to be, when they’re coming
out and what’s going to be in them, but everybody seems quite happy that
something is at last gaining a bit of traction, here,” said Shaun Osborne,
chief currency strategist at TD Securities.

Analysts say the rally in risk appetite, though, could turn into a sell-off
once all the facts become clear.

BONDS:
=====

Euro government bond prices might start slightly down Tuesday, after markets
headed lower Monday in thin trading as market participants brace for this
week’s plentiful government bond supply. The Netherlands auctions around
EUR6 billion of new 10-year DSL Tuesday while Austria taps EUR1.65 billion
of the 3.9% 2020 RAGB. Germany taps EUR6 billion of its 3.75% 2019 bund
Wednesday.

“We expect the rest of the week to be very tough for bonds, especially in
the 10-year sector of the curve where the supply burden is concentrated,”
said Calyon market strategist Peter Chatwell.

Sentiment in the residential property market in England and Wales
deteriorated in January, with housing sales and confidence in the outlook
for prices falling to the lowest level on record, the Royal Institution of
Chartered Surveyors said Tuesday.

But U.K. retailers had a surprisingly positive start to the year, with the
value of same-store sales rising in January for the first time since May.

Prices of most Treasury securities are higher Tuesday, after markets fell
Monday as investors demanded higher interest rates to absorb the whopping
$67 billion in government debt supply coming this week.

The Treasury will sell $32 billion in three-year notes Tuesday, followed by
$21 billion of 10-year notes Wednesday and $14 billion of 30-year bonds
Thursday. Of the three auctions, analysts said the three-year note sale
faces the biggest risk since demand for the maturity usually lags the other
sectors of the yield curve. The three-year Treasurys were reintroduced late
last year after being dropped out of the market in mid-2007.

The U.S. government also needs to compete with the governments of other
major economies as well as the private sector for investors’ money.

“We have a global competition and you hit all the nails on the head. That is
why we have yields at such high levels given that we have poor payroll data
and the economy is in a recession,” said Gary Pollack, who helps oversee $12
billion as head of fixed-income trading in New York at Deutsche Bank AG’s
private wealth management unit.

The U.S. economy faces a very difficult year in 2009 and is likely to see
unemployment rise substantially from its already elevated level, a U.S.
central bank official said Monday.

After a notable drop in the final quarter of last year, the economy is “on
pace to contract further throughout this year” amid falling industrial
production and lower consumer and business spending, Federal Reserve Bank of
Dallas President Richard Fisher said.

Japanese government bonds Tuesday were lower on gains in the Nikkei and
before an auction of five-year notes. China government bonds were slightly
lower on the January inflation data, which showed January consumer price
inflation eased for the ninth straight month and wholesale price inflation
fell deeper into negative territory.
ENERGY:
=======

Oil is trading higher Tuesday but the New York benchmark stayed below $40 as
dealers said there was little prospect of a near-term price recovery.

New York’s main oil futures contract, light sweet crude for delivery in
March, rose 18 cents to $39.74 per barrel. Brent North Sea crude for March
rose nine cents to $46.11 a barrel.

“I think prices will trade lower in the next week or so … due to demand
weakness,” said Jonathan Kornafel, Asia director of Hudson Capital Energy, a
trading firm.
METALS:
======

Spot gold is at $898.80/oz, up $3.80 since the New York close but price
action is fairly muted as the market awaits passage of the U.S. fiscal
stimulus bill, plus details of its latest financial sector bailout.
ScotiaMocatta remains bullish from the technical perspective, but the upside
pressure is waning after gold failed to test the $930 resistance in the past
week.

Base metals are drifting while a nervous market awaits the uncertain fate of
the U.S. bailout plans. “This bill has got to be so baked into the cake,”
said Sterling Smith, vice president with FuturesOne. “I don’t see how the
market could not have priced this in.”

-By Dennis Baker, Dow Jones Newswires; dennis.baker@dowjones.com

(MORE TO FOLLOW) Dow Jones Newswires

February 10, 2009 01:00 ET (06:00 GMT)

Copyright (c) 2009 Dow Jones & Company, Inc.

10 Feb 2009 06:00 GMT =DJ EUROPEAN MORNING BRIEFING: Market Prices, Data
Calendar
No=1#top>

DJIA 8270.87 -9.72 -0.12%
Nasdaq 1591.56 -0.15 +0.01%
S&P 500 869.89 +1.29 +0.15%
FTSE 100 4307.61 +15.74 +0.37%
Xetra DAX 4666.82 +22.19 +0.48%
CAC40 3134.87 +12.08 +0.39%
Above are closing prices

Nikkei 225 7938.37 -30.66 -0.38%
Hang Seng 13717.50 -51.56 -0.37%
S&P/ASX 200 3481.30 -27.30 -0.78%
Taiwan Index 4522.77 +28.18 +0.63%
S.Korea Kospi 1195.77 -6.92 -0.58%
Shanghai Comp 2226.20 +1.49 +0.07%
Bombay SenSex 9610.90 +27.01 +0.28%
Dow Future 8115.00 -81.00 -1.0%
NASDAQ Future 1267.25 -8.50 -0.7%
S&P Future 851.90 -13.20 -1.5%
Above are as of 0550 GMT

USD/JPY 91.36-39 -0.09
Range 91.65 91.01
EUR/USD 1.2825-31 -1.45
Range 1.3011 1.2811
AUD/USD 0.6688-90 -1.63
Range 0.6798 0.6677
GBP/USD 1.4833-39 -0.53
Range 1.4914 1.4775
USD/CHF 1.1754-58 +1.03
Range 1.1780 1.1637
EUR/GBP 0.8642-48 -0.95
Range 0.8746 0.8640
EUR/CHF 1.5075-80 -0.42
Range 1.5145 1.5057
Above are as of 0550 GMT vs NY close

USD/JPY Vol Option Contract 16.70%/19.70%
Day earlier: 17.75%/19.0%
EUR/USD Vol Option Contract 17.80%/18.20%
Day earlier: 18.00%/18.80%
AUD/USD Vol Option Contract 25.92%/27.92%
Day earlier: 9.41%/9.81%
GBP/USD Vol Option Contract 18.55%/21.05%
Day earlier: 7.85%/8.15%
USD/CHF Vol Option Contract 14.51%/15.69%
Day earlier: 14.91%/16.09%
Above are 1-Mo prices as of 0530 GMT

2Y Tsy 99 22/32 -3/32 1.04% +5.2
5Y Tsy 98 28/32 -6/32 1.99% +4.0
10Y Tsy 106 6/32 -9/32 3.01% +3.2
10Y JGB 1.3100% +0.0050
Closing Treasury prices vs prior NY close; JGB as of 0500 GMT

Asian Spot Gold $898.80 +$3.80 +0.4%
Comex Gold $900.00 +$7.70 +0.9%
Brent Crude Oil $46.11 +$0.09 +0.2%
Above are as of 0500 GMT vs NY close

CALENDAR:

All dates are in GMT.

Tuesday, February 10, 2009 Exp Prev
GMT
0500 JPN Jan Consumer Confidence Survey
Survey result 26.2
0745 FRA Dec Industrial Production
0900 ITA Dec Industrial Production
0930 UK Dec Trade
Global Goods Trade Balance
(Adjusted) -8.1B -8.3B
Non-EU Trade Balance
(Adjusted) -4.8B -5.3B
1245 US Feb 7 ICSC/Goldman Sachs Chain Store Sales
+1.6%
1355 US Feb 7 Johnson Redbook Index
-2.7%
1500 US Dec Wholesale Trade
Inventories -0.8% -0.6%
1600 US Tsy Secy Geithner unveils financial recovery plan in
Washington
1800 US Fed Chairman Bernanke testifies before U.S. House
Financial Services panel in Washington
1930 US Tsy Secy Geithner testifies before U.S. Senate Banking
panel on the new TARP panel in Washington
2130 US Feb 6 API Oil Industry Report
Crude Stocks (Net Change) +8.13M
Gasoline Stocks (Net Change) +2.15M
Distillate Stocks (Net Change) -184K
Refinery Runs 83.9%
2200 US Feb 7 ABC/Washington Post Consumer Confidence Index
-52
N/A JPN Auction of 5-yr Government bonds worth Y2.0T

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