***Economic data***
– (GE) Germany Sept Factory Orders M/M: -4.3% v +0.1%e; Y/Y: 2.4% v 7.5%e
– (CA) Canada Oct Net Change in Employment: -54.0K v +15.0Ke; Unemployment Rate: 7.3% v 7.1%e
– (US) Oct Change in Nonfarm Payrolls: +80K v 95Ke; Change in Private Payrolls: +104K v +125Ke ; Change in Manufacturing Payrolls: +5K v +2Ke
– (US) Oct Unemployment Rate: 9.0% v 9.1%e; Underemployment Rate: 16.2%
– (US) Oct Avg Hourly Earning M/M: 0.2% v 0.2%e; Avg Weekly Hours: 34.3v 34.3e
– (CA) Canada Sept Building Permits M/M: -4.9% v +2.6%e
– (CA) Canada Oct Ivey Purchasing Managers Index: 54.4 55.4e
– (MX) Mexico Oct Consumer Confidence: 90.6 v 90.1e
European and US equity markets traded lower into the US premarket and through the first hour of trade following a mixed Oct payrolls report and continued handwringing surrounding Greece. The government of PM Papandreou is hanging by a string in the lead up to the confidence vote later today and it remains unknown whether he has the votes he needs to stay in power and, maybe more importantly, whether a unity government can be formed regardless of how the parliament votes this evening. Italian bond yields are surging (and the spread over bunds remains dangerously close to 450bps which could trigger damaging increases in clearing margin requirements for Italian debt) and comments by PM Berlusconi, who seems to think everything in Rome is just fine and claims he turned down additional IMF funding at the G20 meeting. The draft statement out of the G20 has widely been panned as weak and inadequate. In the US, both the headline payrolls number and the private payrolls figure missed expectations, although analysts hopefully point to the fact that the prior month figures were hiked substantially, while the August figure benefitted from a big benchmark revision. Spot gold is sustaining yesterday’s gains, trading above $1,750. Treasury prices are benefiting from safe haven flows once again but the gains are modest. The US benchmark 10-year yield is holding just above 2%.
– AIG lost more than $4B in its Q3, as the firm’s aircraft leasing unit took a huge impairment charge, coped with natural disaster payouts and saw the value of its stake in Asian insurer AIA decline. Recall that this is the 10th time in the 15 quarters since 2008 that AIG has lost at least $1B in a quarter. Starbucks had a good quarter, with solid profit growth slightly ahead of expectations. Starbuck’s CEO said that the firm is seeing a great deal of strength in the domestic US business, where comps were up a whopping 10% in the quarter. Refiner Sunoco crushed revenue expectations, although the firm took a huge loss related to the sale of two East Coast refineries. Solar name Sunpower’s profits blew away expectations, however the firm slashed its guidance for FY11. In addition, it said it would reorganize operations and replace its CFO. Online deals site Groupon’s IPO opened for trade at $20, above the recent pricing range of $16-18. Engineering giant Fluor’s quarterly profits disappointed investors and the firm failed to raise its full-year view to meet expectations. And finally, battery maker A123 Systems trimmed its FY11 outlook due to an unexpected decline in orders from partner Fisker Automotive.
– The greenback rebounded from the weaker non-farm payroll data as upward revisions to August and September data helped sentiment. The birth-death component of +102K did not provide too much confidence as it hinted that the payrolls would have been a negative number without the plug. Risk aversion sentiment picked up momentum after German Chancellor Merkel stated in her post G20 press conference that the members failed to agree on IMF resources but did agree on action plan for boosting economic growth. The G20 was to set framework for IMF cooperation on EFSF facility and that potential investors were awaiting details thus hardly any countries had stated that they would participate in EFSF. EUR/USD was below 1.3740 by the mid-NY morning after testing 1.3869 after the initial release of the Oct Non-Farm payroll data. Lingering concerns of the AAA rated European sovereigns continued to linger with Austria being the most recently mentioned.
***Looking Ahead***
– 13:00 (US) Fed’s Tarullo speaks in Washington
– 17:00 (CO) Colombia Oct Producer Price Index M/M: No est v 0.8% prior; Y/Y: No est v 6.6% prior
– 17:00 (CO) Colombia Sept Exports FOB: no est v $5.0B prior
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