Now about to go on air to talk about investment into uk
* SHORT SELL BANS: Italian and Spanish financial market regulators extend temporary bans on short selling of financial shares, Spain will expand until market conditions allow to amend, Italy will expand till Nov 11th
* HONG-KONG: Hong Kong shut financial markets, schools, courts and government offices after raising its highest storm signal in two years as Typhoon Nesat swept gale-force winds and rain into the city.
* GERMANY: German lawmakers are set to back an expansion of the euro-area rescue fund ’s firepower as European officials turn to look at what next steps may be needed to stem the debt crisis.
* GERMAN BANKS: Plans to introduce a European financial-transactions tax is a “mistake,” according to the BdB Association of German Banks. “Such a tax is dangerous for European financial markets and ultimately puts at risk economic growth,” said Michael Kemmer, general manager of the BdB.
* DEUTSCHE TELEKOM: Reuters reports that DT is rethinking its investments in Germany and that the company will introduce more “capex efficient” plans shortly. The revised plans aim to reduce vendor prices, make the network infrastructure more efficient and be more selective with new investments.
* LUFTHANSA: The German government said the introduction of an emissions- trading system should be delayed if a “competitively neutral” solution cannot be found for European airlines, Frankfurter Allgemeine Zeitung reported, citing a letter from Angela Merkel’s Chief of Staff Ronald Pofalla to the association for the German air industry.
* BP: Europe’s second-largest oil company is considering selling its 36.9 percent stake in the Atlas Methanol plant, its joint-venture with Methanex, Deal Reporter reports.
* HSBC: The bank is seeking to sell its global general insurance unit and has approached European and Japanese insurers, the South China Morning Post reported, citing unidentified people familiar with the situation.
* RBS: Banco Santander may buy more than 300 branches from Royal Bank of Scotland for about 100 million pounds less than the price originally agreed, Sky News reported, without saying where it got the information.
* EDF: The power generator said it would order 44 steam generators for nuclear reactors.
* TECHNIP: The company said it won a “major” contract from Petroleos de Venezuela.
* REPSOL: Following the creation of the Pemex/Sacyr shareholder pact Repsol’s Board of Directors met yesterday. Board expressed confidence in Chairman and top management, emphasised the preservation of the independence of Repsol, urged Pemex and Sacyr to terminate their agreement; resolved to study corporate governance to strengthen the company against conflicts of interest.
* H&M: BEAT. The comapny reported third-quarter earnings that fell less than analysts expected as costs to operate comparable stores dropped.
* UPGRADES: Oneok (Wells Fargo). Public Bank (RHB). CEZ, Metso (JPM). Nufarm (CS).
* DOWNGRADES: Electrocomponents, HSBC, Man Group, Nobel Biocare, Premier Farnell, Standard Chart, Straumann (UBS).Fortum (JPM). Lancashire, Unite (BofA). Man (RBS).
* CORP DIARY: H & M Q3 Results, Compass Group Q4 Pre-close Trading Statement, Renault SA AGM, Ryanair AGM, SEB AGM, ICAP plc FY Trading Statement, London Stock Exchange Pre-close Statement, ASOS Plc AGM, Aer Lingus Analyst Day
* MACRO DIARY: EC – Eurozone Consumer Confidence (10:00). UK – Nationwide House Prices (7:00), Mortgage Approvals (9:30). GE – Unemployment Rate. US – GDP (13:30), Personal Consumption (13:30), Initial Jobless Claims (13:30). Speakers: Fed’s Rosengren (7:50). ECB’s Nowotny (9:15). Fed’s Plosser (13:45). Fed’s Lockhart (18:00).
From Goldman Sachs
From GS trading: Cleared for external
Well its hard to be coherent let alone add any value after the some of the moves we have seen in the last few sessions. Gold fell 12% in 3 days to reach 1535 this morning before bouncing back to 1620 an hour later. Silver has fallen 33% in 3 days to $26.15 this morning having been at $40 last week and almost $50 back in May.
It seems hard to believe but Gold is still up 14% YTD and only back to the levels of beginning of August whereas silver is basically flat on the year. This reflects the separation of the monetary asset and industrial characteristics of gold and other precious metals. Indeed Palladium is now down over 22% on the year and Platinum down 15% suggesting real concerns about the outlook for industrial demand on a global basis where Asian demand for PGMs have been critical to prior price rallies..
This reminds me very much of late 2008 when gold fell from 1000 to 700 (30%) but the other metals and even equities fell over 50%. Then and now many commentators were wondering if the game was over for gold especially as Vols quickly spiked to such high levels in the prior run up, always an important indicator of coming corrections as the safe haven characteristics then become more suspect. What we are seeing in the market place is high volume turnover on the exchange but extremely low liquidity and huge activity on the screens rather than in the OTC discretionary space where most of our counterparties have had very little risk in gold for several weeks. Interbank flows are almost extinct.
There is no doubt that long risk in gold has been drastically cut back. The latest comex data show another 1.5m oz fall to 25m oz and I suspect the data for the week ending tomorrow could show a decline of over 3m oz. The ETF positions appear to have been more resilient. The concern will be if tech funds decide to cut entirely and even go short. In this liquidity that can still have a significant impact on prices. However in the context of the macro markets I am not convinced at all the game is over for gold. In fact far from it. The rally in the dollar is not from a position of strength but more a reflection of panic about the risk of disorderly outcomes to fiscal and monetary policies in the face of poor political coordination. The search is for liquidity and the prices of industrial metals suggest real fears about the future growth of demand.
I think such a backdrop will be a supportive environment for gold in the same way that it outperformed in 2008 into 2009 but also for nominal performance. At that time Central Banks were also sellers but now we have seen official sector demand throughout last week during the decline. Anecdotally we have heard that physical demand in India is picking up hard this morning.
I firmly believe that as we have seen several times since 2008 these financial spec corrections for gold allow the bull run to reset positions and cleanup the market for the overall trend to remain intact and take prices higher later.
It makes sense to be cautious with vols so high but those buying gold below 1550 for medium to long term views are being handed an opportunity where the risk reward seems a wonderful opportunity.
Gold options( Lars Ahlgreen )
Gold vols through the roof, and liquidity all but evaporated. 1mth vol trading up 8 vols from the close on Friday, with a large variety of smaller names buying. The velocity and extend of this down move has definitely surprised me, but in the context of metals it unfortunately makes sense.
Silver vols exploding. 1wk is up roughly 50 vols from the settle on Friday and the market is very wide and extremely illiquid.
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WHAT TO WATCH: U.S. new home sales probably fell in August to a 294,000 annual pace, economists forecast, 10 a.m. Pimco predicts advanced economies will stall over the next year as Europe slides into recession. Banks are paying the most to convert euro payments into dollars in almost three years. German Chancellor Angela Merkel and Greek Prime Minister George Papandreou will discuss Greek austerity at a dinner in Berlin tomorrow. The ECB may debate restarting covered bond purchases, a euro-region central bank official said.
ECONOMICS: Chicago Fed National Activity Index, 8:30 a.m. Dallas Fed Manufacturing Activity Index, 10:30 a.m. Fed’s Raskin, 9:15 a.m. Fed’s Bullard, 9:30 a.m. ECB’s Bini Smaghi, 9:30 a.m. ECB’s Weidmann, 12 p.m. Fed’s Kocherlakota, 3 p.m.
COMPANIES: Boeing hands over the first 787 Dreamliner today after more than three years of delays.
GOVERNMENT: U.S. banks would have to change the way they compensate traders involved in market-making activities under one of the proposed restrictions of the Volcker rule, according to a draft circulating among regulators.
MARKETS: The euro hit a decade low against the yen. Gold slid below $1,600 an ounce. The yuan may be fully convertible in five years, said a central bank adviser. An Australian-based exchange for gold, silver and platinum will start up Oct. 24.