In the euro area, the first confidence surveys referred to September will be published this week: PMI flash estimates and euro area consumer confidence, German ZEW and Belgian BNB….
Sign up for our free newsletter to receive weekly news from BONDWorld
Click here to register for your free copy
All the indices should point to easing pessimism, going forward especially, in the wake of easing tensions on the financial markets on the ECB’s announcements. However, confidence indices remain depressed, and the road to overcoming the crisis still seems to be a long one. Economic data due for release this week in the United States should not change the assessment of the cyclical outlook. Regional surveys should remain weak in September. On the other hand, August real estate sector data should confirm the uptrend, with housing starts and sales of existing homes both on the rise.
Monday 17 September
United States
The NY Fed’s Empire Index should be up in September, to -1 from -5.9 in August. The survey sub-indices were not significantly worse in August than in July, when the overall index levelled off at 7.4. Orders and deliveries should stay in negative territory, whereas the prices paid index should stabilise on high levels in line with August. Survey indications should be consistent with persistently weak growth in 4Q.
Tuesday 18 September
Euro area
Germany. The ZEW confidence index, based on the expectations of analysts and institutional investors for the German economy, should reveal easing pessimism in September, in the wake of slackening tensions on the financial markets following the ECB’s announcements. The expectations component, after worsening sharply to -25,5 in August, could climb back to -18; assessments of the present situation should also improve, albeit not so strongly, to 18.5 from 18.2 previously.
Wednesday 19 September
United States
Housing starts are estimated to rise in August to 750k from 746k in July, in the wake of a significant increase in the single-family segment, as opposed to a contraction in the multifamily segment, as is physiological in the wake of markedly positive previous data. On the other hand, permits should correct to 790k, from a very high level in July (811k), converging back towards housing starts.
Sales of existing homes in August are expected to increase to 4.58 million from 4.47 million in July, based on the positive indications on June pending sales. Home sales are on an uptrend, higher by around 18% compared to the lows hit in 2008; however, their current level is still 38% lower than the 2005 peak, and 16% lower than the long-term average. Normalisation of the sector will take years.
Thursday 20 September
Euro area
The flash estimate of the euro area composite PMI index for September is expected to improve to 46.8 from 46.3 in August. Recoveries should be scored by both the manufacturing index (t 45.6 from 45.1) and the services PMI (to 47.7 from 47.2). While the indices are still in markedly recessive territory, easing tensions on the financial markets could, if nothing else, lead to a stabilisation of confidence indices and, consequently, of activity levels.
The preliminary estimate of the consumer confidence index for September may rebound to – 23, after plunging in August to -24.6 (a low since 2009). Prospects of a more effective management of the sovereign debt crisis may have improved, albeit only modestly, consumers’ perception of the economic situation. The indicator would in any case stay at historically low levels, pointing to persistently weak demand for consumption for at least a few quarters to come.
United States
The Philadelphia Fed index is expected to improve in September, to -2 from -7.1 in August, marking its third consecutive rise, after crashing in June to -16.6. The August survey was little changed in terms of single components, although the composite index improved significantly. Orders and deliveries should stay marginally negative. The six-month outlook in July had fallen to 12.5 from 19.3 in June, with a drop in capital expenditures and deliveries, indicating that concerns tied to the “fiscal cliff” are probably holding back the spending decisions of businesses.
Friday 21 September
Euro area
Belgium. The BNB index is forecast to rebound to -10.5 in September, from -11.8 in August, thanks to increased optimism on management of the sovereign debt crisis in the euro area. The index is considered as a leading indicator of the trend of the German IFO, and more in general of manufacturing activity in Germany, and thus in the euro area as a whole
Appendix
Analyst Certification
The financial analysts who prepared this report, and whose names and roles appear on the first page, certify that: (1) The views expressed on companies mentioned herein accurately reflect independent, fair and balanced personal views; (2) No direct or indirect compensation has been or will be received in exchange for any views expressed. Specific disclosures: The analysts who prepared this report do not receive bonuses, salaries, or any other form of compensation that is based upon specific investment banking transactions.
Important Disclosures
This research has been prepared by Intesa Sanpaolo S.p.A. and distributed by Banca IMI S.p.A. Milan, Banca IMI SpA-London Branch (a member of the London Stock Exchange) and Banca IMI Securities Corp (a member of the NYSE and NASD). Intesa Sanpaolo S.p.A. accepts full responsibility for the contents of this report. Please also note that Intesa Sanpaolo S.p.A. reserves the right to issue this document to its own clients. Banca IMI S.p.A. and Intesa Sanpaolo S.p.A. are both part of the Gruppo Intesa Sanpaolo. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. are both authorised by the Banca d’Italia, are both regulated by the Financial Services Authority in the conduct of designated investment business in the UK and by the SEC for the conduct of US business.
Opinions and estimates in this research are as at the date of this material and are subject to change without notice to the recipient. Information and opinions have been obtained from sources believed to be reliable, but no representation or warranty is made as to their accuracy or correctness. Past performance is not a guarantee of future results. The investments and strategies discussed in this research may not be suitable for all investors. If you are in any doubt you should consult your investment advisor.
This report has been prepared solely for information purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any financial products. It should not be regarded as a substitute for the exercise of the recipient’s own judgement.
No Intesa Sanpaolo S.p.A. or Banca IMI S.p.A. entities accept any liability whatsoever for any direct, consequential or indirect loss arising from any use of material contained in this report.
This document may only be reproduced or published together with the name of Intesa Sanpaolo S.p.A. and Banca IMI S.p.A.. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. have in place a Joint Conflicts Management Policy for managing effectively the conflicts of interest which might affect the impartiality of all investment research which is held out, or where it is reasonable for the user to rely on the research, as being an impartial assessment of the value or prospects of its subject matter. A copy of this Policy is available to the recipient of this research upon making a written request to the Compliance Officer, Intesa Sanpaolo S.p.A., 90 Queen Street, London EC4N 1SA.
Intesa Sanpaolo S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest (“Research Policy”). The Research Policy is clearly explained in the relevant section of Banca IMI’s web site (www.bancaimi.com).
Member companies of the Intesa Sanpaolo Group, or their directors and/or representatives and/or employees and/or members of their households, may have a long or short position in any securities mentioned at any time, and may make a purchase and/or sale, or offer to make a purchase and/or sale, of any of the securities from time to time in the open market or otherwise. Intesa Sanpaolo S.p.A. issues and circulates research to Qualified Institutional Investors in the USA only through Banca IMI Securities Corp., 245 Park Avenue, 35th floor, 10167 New York, NY,USA, Tel: (1) 212 326 1230. Residents in Italy: This document is intended for distribution only to professional investors as defined in art.31, Consob Regulation no. 11522 of 1.07.1998 either as a printed document and/or in electronic form. Person and residents in the UK: This document is not for distribution in the United Kingdom to persons who would be defined as private customers under rules of the FSA.
US persons: This document is intended for distribution in the United States only to Qualified Institutional Investors as defined in Rule 144a of the Securities Act of 1933. US Customers wishing to effect a transaction should do so only by contacting a representative at Banca IMI Securities Corp. in the US (see contact details above).
Valuation Methodology
Trading Ideas are based on the market’s expectations, investors’ positioning and technical, quantitative or qualitative aspects. They take into account the key macro and market events and to what extent they have already been discounted in yields and/or market spreads. They are also based on events which are expected to affect the market trend in terms of yields and/or spreads in the short-medium term. The Trading Ideas may refer to both cash and derivative instruments and indicate a precise target or yield range or a yield spread between different market curves or different maturities on the same curve. The relative valuations may be in terms of yield, asset swap spreads or benchmark spreads.
Coverage Policy And Frequency Of Research Reports
Intesa Sanpaolo S.p.A. trading ideas are made in both a very short time horizon (the current day or subsequent days) or in a horizon ranging from one week to three months, in conjunction with any exceptional event that affects the issuer’s operations. In the case of a short note, we advise investors to refer to the most recent report published by Intesa Sanpaolo S.p.A’s Research Department for a full analysis of valuation methodology, earnings assumptions and risks. Research is available on IMI’s web site (www.bancaimi.com) or by contacting your sales representative.
Source: BONDWorld – Intesa Sanpaolo – Research Department
Newsletter
