Stock Market Forecast for December 2006

Transcription

1 Investment Research General Market Conditions 08 January 206 Weekly Focus Scandinavian inflation week in store Market Movers ahead In the US, a large number of Fed members are due to speak next week, which could shed more light on the Fed members thinking following the December hike. We should also get more information on the state of the US economy via the releases of industrial production and retail sales data. It is a very thin calendar in the euro area next week with the most interesting release being the Sentix investor confidence for January due out on Monday. In the UK, the most important event is the January meeting with the Bank of England s Monetary Policy Committee on Thursday. Recent developments both economically and in the financial markets mean that the BoE is not in a hurry to follow the Fed s liftoff despite the strong development in the labour market. Scandinavian inflation releases will be in focus. For Sweden, we expect CPIF to print 0.9 % y/y, which is 0.2 percentage points below the Riksbank s forecast. This is not in itself enough to trigger Riksbank action but we expect this margin to widen again in coming months. In Norway, we expect the weaker NOK to support inflation and we forecast a core inflation print of 3.% y/y. Finally, for Denmark, we expect an inflation print of 0.2% y/y but there is a fair amount of uncertainty. Global macro and market themes This year kicked off with global riskoff sentiment led by China. Despite China having calmed down at the end of the week, uncertainty is high and a significant problem is the lack of communication from the People s Bank of China. Increased speculation about easing again is too aggressive due to the better economic outlook. Contents Market movers... 2 Global Macro and Market Themes... 5 Scandi Update... 8 Latest research from Danske Bank... 9 Macroeconomic forecast... 0 Financial forecast... Calendar... 2 Financial views Major indices Source: Danske Bank 08Jan 3M 2M 0yr EUR swap EUR/USD ICE Brent oil Jan 6M 224M S&P % 58% US manufacturing at an infection point but the Fed is likely to wait until April to hike again. US manufacturing is struggling Inflation below the RB s projection Editors Source: Macrobond Financial Source: Macrobond F inancial Allan von Mehren alvo@danskebank.dk Las Olsen laso@danskebank.dk Important disclosures and certifications are contained from page 4 of this report.

2 Market movers Global The main theme in the US economy is the slowdown in the manufacturing sector and the concomitant steady growth in the service sector, which has left economic policy makers in a difficult position. The coming week will see the release of important data that will tell us more about how the US economy is doing. On Friday we get figures on the industrial and manufacturing production. The manufacturing sector is struggling and is currently at the edge of a recession. This is due to a combination of the strong USD, the slowdown in manufacturing globally and the slowdown in the US energy sector. While the lower oil price has lowered input costs, it has also hit demand for US manufacturing goods as the energy sector is a large buyer of them. The latest ISM figures on manufacturing have been very weak and hence we are not too optimistic on the hard manufacturing data. Next week we get data on retail sales also due on Friday. The latest figures have been positive and have supported the general impression of the domestic part of the economy being in good shape. We expect the retail figures to be positive due to growing real income, good consumer confidence and a boost to consumers purchasing power from the lower energy prices A large number of Fed members are speaking next week. The time after the FOMC meeting in December has been quiet due to Christmas and the New Year, so not much information from the Fed members has come out yet. Remember as the calendar now says 206 voting rights have changed. Among the speakers next week are voting members Dudley (dovish), Bullard (hawkish) and Rosengren (dovish) so focus will be on these speeches. Manufacturing is struggling Source: ISM, Federal Reserve Solid growth in retail sales to continue Source: US Census Bureau It is a very thin calendar in the euro area next week with the most interesting release being the Sentix investor confidence for January due for release on Monday. The index increased in November and December, but following the pressure on global risk sentiment from the tension in the Middle East and the sharp fall in stock markets in Asia in the first days of the year, we expect a decline in the index in January. We do not expect this to derail the recovery, which is supported by the low oil price, progress in the labour market, improved bank lending conditions and a small tailwind from fiscal easing. Euro area industrial production for November is released on Wednesday and in line with the German figure we look for a small decline. In the UK, the most important event next week is the January meeting of the Bank of England s Monetary Policy Committee on Thursday. As expected, the BoE took another dovish stance at the December meeting due to a combination of a poor risk environment and the lower oil price, which has lowered the inflation outlook. Since the December meeting, Q3 growth has been revised down from 0.5% q/q to 0.4% q/q and the oil price has dropped further. Risk appetite is still poor. The pressure from the strong GBP, however, has eased as the GBP has weakened significantly. Overall, we expect the Bank Rate, the stock of purchased assets and the vote count to be exactly the same as in December. We expect the first BoE hike in Q2 6 (probably in May) but the recent developments, both economically and in the financial markets, mean that the BoE is not in a hurry to follow the Fed s liftoff despite strong developments in the labour market, in our view. Also industrial and manufacturing production and construction output in November are due. The figures should give us more insight into how the UK performed growthwise in Q4. We think GDP growth picked up in Q4 following the slowdown in Q3. Sentix investor confidence to decline Source: Sentix, ZEW, Danske Bank Lower oil price means that BoE is not in a hurry to hike Source: UK GOV, EIA 2 08 January 206

3 The focus in China continues to be on the currency and stock markets. A new rate cut and/or cut in the reserve requirement ratio is also a clear possibility. We look for more easing very soon. Apart from that, credit growth (Total Social Financing) and trade data is released. We look for a further moderation in credit following a boost during autumn 205. Exports have rebounded a bit during the second half of 205 and we look for a slight further improvement. The same goes for import growth as production growth has bottomed out a bit, albeit from a low level. Exports up a bit end5 after sliding during most of 205 Scandi In Denmark the statistical office releases inflation figures for December on Monday. Inflation has been extraordinarily low over the past year, due mainly to the slide in oil prices pulling down manufacturers production costs. We expect inflation of 0.3% m/m or 0.2% y/y in December, but there is a fair amount of uncertainty. The registration duty on new cars was reduced with effect from December, and food prices are also expected to fall given the sharp drop in German food prices in December. Looking ahead just one month to January, however, we expect inflation to pick up due to strong base effects from last year s drop in petrol prices. Monday also brings current account and trade balance data for November. 205 generally brought recordhigh current account surpluses, and we see no reason for this to have changed in November. Source: Reuters Ecowin Recordlow inflation continues Source: Statistics Denmark In Sweden, Tuesday s budget figures will also be important. It is important to watch whether the strong underlying trend in tax revenues continues or not. In the background, the most recent figures from the Migration Agency show that the number of asylum seekers has dropped sharply to about,500 persons last week after government restrictions introduced on January. If it prevails, this level is much below the assumption in the Debt Office s most recent forecast. Finally, December inflation is out on Thursday. We expect CPIF to print 0.9 % y/y which is 0.2 percentage points below Riksbank s forecast. This is not by itself enough to trigger Riksbank action but we expect this margin to widen again in coming months. In Norway inflation is on the way up due to higher import prices in the wake of the weaker krone. The drop in the krone gained momentum during the autumn, which suggests that the upward trend in inflation will continue through to the end of the year. We therefore expect core inflation of 3.% y/y in December. We do not have the impression that Christmas trading was particularly slack, and heavy price discounting was limited. As the effect of the krone s decline will gradually phase out, there is reason to believe that the surge in inflation will be only temporary, and that lower wage growth will gradually help pull it back down again. This is also Norges Bank s view, which is why it has been relatively relaxed about inflation to date. However, we cannot rule out the possibility of inflation climbing to uncomfortably high levels during the year once importers begin to realise that it will be high for some time. In that case, we reckon inflation could quickly become an argument against cutting interest rates in Norway, at least on a proactive basis. Expect inflation below Riksbank Source: Macrobond Financial, Danske Bank Importdriven inflation Source: Macrobond Financial 3 08 January 206

4 Market movers ahead Global movers Event Period Danske Consensus Previous During the week Sat 09 CNY CPI y/y Dec.6%.5% Sun 0 CNY Money supply M2 y/y Dec 3.6% 3.7% Mon Jan Tue 2Jan 0:30 GBP Manufacturing production m/m y/y Nov 0.% 0.8% 0.4% 0.% Wed 3Jan CNY Trade balance USD bn Dec :00 EUR Industrial production m/m y/y Nov 0.2% 0.%.8% 0.6%.9% 4:00 USD Fed's Rosengren (voter, dovish) speaks 8:30 USD Fed's Evans (voter, dovish) speaks Thurs 4Jan PLN Polish central bank rate decision %.5%.5%.5% 3:00 GBP BoE announces asset purchase target GBP bn Jan :00 GBP BoE rate announcement % 0.5% 0.5% 0.5% 3:00 GBP BoE minutes 4:30 USD Fed's Bullard (voter, hawkish) speaks Fri 5Jan 9:00 EUR ECOFIN meeting in Brussels 4:30 USD Retail sales control group m/m Dec 0.3% 0.6% 5:00 USD Fed's Dudley (voter, dovish) speaks 5:5 USD Manufacturing production m/m Dec 0.% 0.0% 6:00 USD University of Michigan Confidence, preliminary Index Jan Scandi movers During the week Mon Jan 9:00 DKK CPI m/m y/y Dec 0.3% 0.2% 0.2% 0.3% 0.3% 0.3% 0:00 NOK Core inflation(cpiate) m/m y/y Dec 0.0% 3.2% 0.2% 3.% 0:00 NOK CPI m/m y/y Dec 0.2% 2.6% 0.4% 2.8% Tue 2Jan Wed 3Jan Thurs 4Jan 9:30 SEK Underlying inflation CPIF m/m y/y Dec 0.2% 0.9% 0.3%.0% 0.%.0% 9:30 SEK CPI m/m y/y Dec 0.% 0.0% 0.2% 0.% 0.2% 0.% Fri 5Jan Source: Bloomberg, Danske Bank 4 08 January 206

5 Global Macro and Market Themes Chinese FX policy confusion This year kicked off with global riskoff sentiment led by Chinese equities but also in Europe and the US, equity markets were down 23% on the first trading day. In China, trading was halted on Monday as the new circuit breaker system came into effect twice. First, the CSI 300 fell 5%, which led to a halt in trading followed by a resumed decline to 7%, which triggered a complete stop of trading for the rest of the day. Again on Thursday, Chinese shares fell 7% and the stock exchange was closed. Today, things have calmed down a bit and Chinese stocks were up over 2% after the Chinese government suspended the circuit breaker system after it being in place for only four days. The negative sentiment was initially driven by disappointing Chinese Caixin PMI manufacturing together with rising tensions in the Middle East. The decline in the PMI highlights the fragility of the Chinese manufacturing sector but does not change our expectation of a moderate recovery in growth in H 6 driven by a slight turn in housing investments and monetary and fiscal stimulus. In our view, the disappointing manufacturing PMI and positive surprise in the nonmanufacturing PMI reflect the ongoing rebalancing of the economy from investment and exportled growth to more consumer and service sectordriven growth (see Chinese PMI mixed markets off to a rocky start, 4 January 206). On Wednesday, the CNY was fixed at its weakest level since 20, prompting concerns that further currency depreciation could lead to liquidity problems in the wider economy. Notably, the USD/CNY fixing was set higher than the closing level the day before, in contrast with the new Chinese fixing regime announced in August, causing speculation of a deliberate CNY weakening. However, this would make no sense as it was reported that China intervened to support the CNY on Tuesday. In line with this, the Chinese currency reserve data for December indicated that China tried to dampen the weakening. Sharp depreciation of CNY versus USD but less so on tradeweighted basis Today s key points 206 kicked off with global riskoff sentiment led by China. Despite China calming down at the end of the week, uncertainty is high and a big problem is the lack of communication from the PBoC. Increased speculation about easing again is too aggressive due to the better economic outlook. US manufacturing at an inflection point, but the Fed will wait until April to hike again. Chinese housing market to recover Source: Macrobond Financial, Danske Bank Source: Macrobond Financial, Danske Bank 5 08 January 206

6 Today, the CNY fixed at a stronger level than the closing level, which helped to stabilise sentiment but, at the same time, added to the confusion over how the fixing is set. The People s Bank of China (PBoC) may try to use the fixing to calm markets. However, it creates confusion, as the idea of using the closing level in the new fixing regime was that it should be marketbased as this was a condition of the IMF. Currently, a significant problem is the lack of communication from the PBoC. Any other central bank would immediately comment on events and try to explain what the goals are and how the system works. The market is left guessing in a situation with very high uncertainty, which is clearly a risk when it comes to further capital outflows from China. See more details about the Chinese foreign exchange system in CNY Outlook: More weakness ahead, 7 January 206. Increased speculation about easing is too aggressive Lower oil price, but base effects fade Source: Bloomberg, Eurostat, Danske Bank Speculation that the will ease again increased this week as the low oil price together with the weakerthanexpected inflation prints for December could force it to defend its inflation mandate. A full 0bp deposit rate cut is priced in for October 206 while a cut in March is priced with around a 50% probability. In our view, particularly the pricing in March is aggressive and keeping in mind the light menu of easing announced in December, we believe more is needed to convince the majority of the Governing Council to step up the easing. Even the very dovish chief economist Peter Praet said this week, But if oil and commodities prices tumble, it is more difficult to allow inflation to rise. If a whole series of such factors occur, you can t do anything other than somewhat postpone the date on which you seek to reach the higher rate of inflation. Our expectation of a patient should be seen in light of the latest activity indicators, which point to a reacceleration of activity in 206 after the soft patch in mid205. Particularly, the German and Italian figures indicate a pickup in activity consistent with our view that these countries will be the main drivers of the stronger recovery in 206. Added to this, the unemployment rate in the euro area continues to decline and was 0.5% in November, which is the lowest level since October 20 and not far from the structural level, which is estimated to be as high as 9.9%. The structural unemployment rate could be lowered towards precrisis levels of 9.0% when the actual unemployment rate approaches it but while this is happening more easing is, in our view, quite unlikely. Particularly the March deposit rate cut seems to be priced too aggressively, in our view. At the March meeting, the will release updated inflation projections and for the first time it will include a forecast for 208. This horizon is close to what is seen as the medium term; hence, a low forecast could be expected to be accompanied by more easing. But when the in March 204 for the first time included a threeyear inflation projection, it did not ease although it forecast inflation to be only.5% in the third year. In the latest forecast from December, the expected inflation to be.6% in 207 and although this forecast might be lowered, we expect the to release a 208 inflation forecast above.5%. In our view, an unwarranted financial tightening could force the to ease again. This could follow through a stronger effective euro or higher real rates as a consequence of lower inflation expectations. US manufacturing inflection point US economic data has also added some uncertainty about a more severe downturn in the global manufacturing cycle as the manufacturing ISM index declined to 48.2, which is the lowest since June The weak print was driven by a drop in the easing is priced aggressively bp date Eonia swaps assuming 6bp spread to Deposit rate Jan6 Mar6 6. Apr6 7.6 Jun6 Source: Bloomberg, Danske Bank Euroarea activity reaccelerates Source: Eurostat, Markit PMI, Danske Bank Euro unemployment rate declining quickly Source:, European Commission, Eurostat, Danske Bank 8.7 Jul6 9.4 Sep6 0.2 Oct6 9.4 Dec January 206

7 employment index but the December ADP job report was strong and new jobs were still added to the manufacturing sector, despite the ISM index being in recessionary territory. The weakness in the US manufacturing sector does not seem to follow on from weaker demand, which together with the difference between orders and inventories suggests US manufacturing is at an inflection point. In our view, the latest weak figures reflect the global manufacturing slowdown, the stronger USD and spillover from a challenged energy sector. These uncertainty factors are likely to have implied that businesses have lowered inventories in fear of a more severe slowdown despite real demand having remained high. In such a scenario, production eventually needs to catch up with the higher demand. When this happens, the previous reduction in inventories can strengthen the recovery additionally as stocks also need to be built up again. Although we look for higher ISM manufacturing in coming months, the weak figure is one reason why we expect the Fed to wait until April to hike again. In line with this, the minutes of the 56 December FOMC meeting, where the Fed delivered its first hike since June 2006, were more dovish than the statement and Janet Yellen s tone at the press conference. Despite a unanimous hike, it was a close call for some FOMC members. In particular, the subdued core inflation seems to be a major concern for the most dovish members (see FOMC Minutes: Not all members are as confident as Yellen despite the unanimous hike, 6 January 206). US demand above ISM manufacturing Source: ISM, Macrobond Financial, Danske Bank The difference between orders and inventories points to higher ISM man. EUR/USD set to go higher in 206 At the end of this week, EUR/USD moved higher, defying the selloff in equities and oil prices. The former suggests that the single currency is increasingly regarded as a safehaven currency while the latter underlines that the historically close comovement of the oil price and EUR/USD is challenged. One reason for this is that the weaker oil prices now benefit the euro area relatively more than the US. Thus, an oil price that is set to stay 'lower for longer' boosts the potential for EUR/USD to move higher further out. Currently, EUR/USD is in our view caught in the.05.0 range, but later on we expect a rebound on no renewed policy divergence and strong EUR fundamentals. Source: ISM, Macrobond Financial, Danske Bank Global market views Asset class Equities Moderately positive on 3M horizon, posive on 2M horizon Main factors We expect the current market turmoil led by confusion over China's FX policy and scare over its growth outlook to pass as it did in August 205. After which the earings growth differences between Europe, Japan and the US will continue to support our overweight in Europe and Japan vs. US. Despite we find it likely with less strong growth in Q, we still expect sufficient growth ahead to support equities Bond market Core yields: Bund yields bottoming, higher medium term USEuro spread: Wider Peripheral spreads to tighten further from here Spreads to stay stable/tighten as central bank boost liquidity FX EUR/USD rangebound near term, rebound further out USD/JPY rangebound on a mediumterm horizon EUR/SEK stuck between near term, lower medium term EUR/NOK higher short term, then lower as cycle turns is done easing and spillovers from US yields Policy divergence to widen spread QE, improving fundamentals and search for yield support but emerging markets instability the risk Caught in.05.0 range for now, then rebound on no renewed policy divergence and strong EUR fundamentals Upside from Fed hikes and BoJ on hold countered by stretched fundamentals Battle between Riksbank and the market for now, further out EUR/SEK to fall on strong Swedish fundamentals Relative rates and liquidity to cap downside short term, but eventually lower due to positioning and fundamantals Commodities Oil prices rangebound near term, subdued recovery in 206 Metal prices staying low Gold prices flat near term Agricultural risks remain on the upside Source: Danske Bank Price support from OPEC is gone; now awaiting nonopec supply cuts ahead as costs weigh on producers Chinese manufacturing slowdown to cap upside; consolidation in mining industry puts a floor under prices Low oil price and Fed getting ready to hike keeps a lid over gold price Trending up again as El Niño weather is key upside risk 7 08 January 206

8 Scandi Update Denmark weak recovery set to continue in 206 Statistics Denmark has announced that gross unemployment fell by,00 fulltime equivalents in November, which means the labour market continued to improve despite the disappointing GDP figures for Q3. This is very much in line with our new forecast for the Danish economy. There was a slight recovery in 205 but it turned out to be weaker than we had expected. Economic growth fell short of expectations due mainly to disappointing exports. We expect 206 to be a little better but in our view the recovery will remain sluggish. We expect GDP to grow by.5% this year, driven primarily by growth in private consumption fuelled by rising real wages on the back of very low inflation. All in all, we expect 206 to be a slight improvement on 205 and therefore stick to our line that Denmark is in recovery, albeit one that is rather subdued. Further growth in coming years Source: Statistics Denmark, Danske Bank On Thursday 7 January, the Danish central bank hiked the CD rate by 0.0 pp from 0.75% to 0.65%. At the same time, monetary policy counterparties current account limits were reduced from DKK63bn to DKK32bn. Nevertheless, interest rates remain extremely low and thus are stimulating economic growth. However, our main scenario is still that the central bank will confine itself to this one rate hike, though more cannot be ruled out if the Danish krone begins to trade above parity again. Sweden Riksbank puts FX intervention in focus The news this week was that the Riksbank is now prepared to perform FX interventions as a means to bolster the rise in inflation. It is unclear as yet what the Riksbank will be aiming at but our expectation is that it will try to prevent the SEK from being too strong relative to its forecast. This is what we would term a defensive approach as the Riksbank has an SEK appreciation forecast. The opposite would be if the Riksbank aimed at actively putting the SEK on a depreciating trend but in our view this is not in the cards. SEK now just a little strong Currently, the SEK (in terms of the KIX krona index) is slightly stronger than the Riksbank s forecast. Hence, there is no immediate threat from the SEK right now. We do not envisage the Riksbank doing standalone FX interventions. Rather, such interventions will have much better chances of being successful if they are supported by a repo rate cut, a lower/flatter repo rate forecast and an extended QE programme. Source: Macrobond Financial Hence, we stick to the view that the Riksbank will have to cut the repo rate again in April. Norway Manufacturing outlook still weak Following a couple of months of improvements, it now seems the PMI has reversed again. This could just be temporary noise in the data but it may also be a sign that the fall in oil prices since the summer has prompted further reductions in activity at the oil companies that have further hit oilrelated industries. With oil prices falling even further in the past week, it is no surprise to see both the krone and yields falling. Our longer term expectations for the oil market are unchanged however and we still expect oil prices to climb towards USD60/bl later in the year. Remember too that the first contracts for the new Johan Sverdrup field will begin to have an impact on industrial production data during the year. Fresh decline in manufacturing Source: Macrobond Financial 8 08 January 206

9 Latest research from Danske Bank 7/ Denmark: DN increases the deposit rate by 0bp to 0.65% Danmarks Nationalbank (DN) this afternoon announced a 0bp increase in the interest rate on certificates of deposit from 0.75% to 0.65%. 7/ Nordic Outlook January 206 Quarterly update on the Nordic economies. 6/ FOMC minutes not all members are as confident as Yellen despite the unanimous hike The minutes of the 56 December FOMC meeting, where the Fed delivered its first hike since June 2006, were more dovish than the statement and Janet Yellen's tone at the press conference. 6/ US Labour Market Monitor: Wage inflation likely to have picked up further in December The development in the US labour market in 205 was a main reason why the Fed increased the Fed funds rate at its December meeting. 6/ Research UK: 'Brexit' uncertainty biggest threat to the upturn Although growth in the UK has slowed in recent quarters, the upturn remains on track. 5/ Denmark: The central bank stepped up FX intervention in December Denmark s FX reserve fell to DKK434bn in December, following DKK50bn of FX intervention by Danmarks Nationalbank (DN). 4/ German inflation: lower foodprice inflation dominates base effects from energy prices German HICP inflation surprised on the downside by declining to 0.2% y/y in December from 0.3% y/y in November (consensus was for an increase to 0.4% y/y). 4/ Chinese PMI mixed markets off to a rocky start Chinese markets got off to a rocky start in 206 as weak PMI data and rising tensions 9 08 January 206

10 Macroeconomic forecast Macro forecast, Scandinavia Year GDP cons. Private cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 Denmark Sweden Norway Macro forecast, Euroland Year GDP cons. Private cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 Euroland Germany France Italy Spain Finland Macro forecast, Global Year GDP Private cons. cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 USA China UK Source: OECD and Danske Bank. ) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP January 206

11 Financial forecast Bond and money markets Source: Danske Bank Currency vs USD Currency vs DKK USD 08Jan m m m EUR 08Jan m m m JPY 08Jan m m m GBP 08Jan m m m CHF 08Jan m m m DKK 08Jan m m m SEK 08Jan m m m NOK 08Jan m m m Equity Regional Risk profile 3 mth. Price trend 3 mth. Price trend 2 mth. Regional recommendations USA (USD) Strong USD, muted earnings growth, expensive valuation Medium 05% 58% Underweight Emerging markets (local curr) EM under pressure from change in China's FX policy High 03% 05% Underweight Japan (JPY) Reflation, corporate governance, earnings growth, fair value Medium 08% 05% Overweight Europe (ex. Nordics) Reflation, earnings growth, cheap EUR, fair value Medium 08% 05% Overweight Nordics Earnings growth, expensive valuation Medium 0% 50% Overweight Commodities Key int. rate 3m interest rate 205 2yr swap yield 0yr swap yield Average 08Jan Q Q2 Q3 Q4 Q Q2 Q3 Q NYMEX WTI ICE Brent Copper 4,524 5,808 6,043 5,380 5,000 5,300 5,500 5,700 5,900 5,558 5,600 Zinc,506 2,09 2,88,860,700,800,900 2,000 2,00,960,950 Nickel 8,505 4,40 3,065 0,650 9,800 0,000,000 2,000 3,000,98,500 Aluminium,475,83,787,625,525,600,700,800,900,688,750 Gold,02,29,93,25,075,075,00,5,30,53,05 Matif Mill Wheat ( /t) Rapeseed ( /t) CBOT Wheat (USd/bushel) CBOT Corn (USd/bushel) CBOT Soybeans (USd/bushel) Currency vs EUR 08 January 206

12 Calendar Key Data and Events in Week 3 During the week Period Danske Bank Consensus Previous Calendar Tue 05 0 GBP Halifax house prices m/m 3Ms/YoY Dec 0.5% 8.8% 0.2% 9.0% Sat 09 CNY CPI y/y Dec.6%.5% Source: Sat 09 Danske Bank CNY PPI y/y Dec 5.8% 5.9% Sun 0 CNY Aggregate financing bn CNY Dec Sun 0 CNY Money supply M2 y/y Dec 3.6% 3.7% Sun 0 CNY New Yuan loans CNY bn. Dec Continued Monday, January, 206 Period Danske Bank Consensus Previous Source: 9:00Danske Bank DKK Current account (nsa sa) DKK bn Nov :00 DKK CPI m/m y/y Dec 0.3% 0.2% 0.2% 0.3% 0.3% 0.3% 9:00 DKK Industrial production m/m Nov 0.4% 0.5% 9:00 DKK Trade balance ex ships DKK bn Nov :00 DKK Exports m/m Nov Calendar 9:5 CHF Retail sales y/y Nov 0.8% 0:00 NOK Core inflation(cpiate) m/m y/y Dec 0.0% 3.2% 0.2% 3.% 0:00 NOK CPI m/m y/y Dec 0.2% 2.6% 0.4% 2.8% Source: 0:00 Danske Bank NOK PPI m/m y/y Dec 0.5% 6.4% 0:30 EUR Sentix Investor Confidence Index Jan :00 USD Fed's LMCI m/m Dec 50.0% 8:40 USD Fed's Lockhart (nonvoter, neutral) speaks Continued 23:50 USD Fed's Kaplan (nonvoter, unknown) speaks Tuesday, January 2, 206 Period Danske Bank Consensus Previous Source: 0:50Danske Bank JPY Bank lending y/y Dec 2.3% 6:00 JPY Consumer confidence Index Dec :00 JPY Eco Watchers Survey Outlook (Current) Index Dec :30 SEK Budget balance SEK bn Dec 2.8 0:30 GBP Industrial production m/m y/y Nov 0.0%.7% 0.%.7% 0:30 GBP Manufacturing production m/m y/y Nov 0.% 0.8% 0.4% 0.% :30 EUR 's Praet Speaks in Paris 2:00 USD NFIB small business optimism Index Dec :00 EUR 's Lautenschlaeger speaks in Frankfurt 2:5 USD Fed's Lacker (nonvoter, hawkish) speaks Wednesday, January 3, 206 Period Danske Bank Consensus Previous CNY Trade balance USD bn Dec CNY Imports y/y Dec.0% 8.7% CNY Exports y/y Dec 8.0% 6.8% 0:50 JPY Money supply M2 y/y Dec 3.3% 3.3% 8:00 SEK PES unemployment % Dec 4.% 8:45 FRF HICP m/m y/y Dec 0.2% 0.% 0.2% 0.2% 0.% :00 EUR Industrial production m/m y/y Nov 0.2% 0.%.8% 0.6%.9% 2:00 EUR 's Lautenschlaeger speaks in Frankfurt 3:00 USD MBA Mortgage Applications %.6% 4:00 USD Fed's Rosengren (voter, dovish) speaks 6:30 USD DOE U.S. crude oil inventories K :30 USD Fed's Evans (voter, dovish) speaks 20:00 USD Budget statement USD bn Dec :30 CAD Retail sales m/m Oct 0.5% 4:30 CAD GDP m/m y/y Oct 0.5% 0.0% Source: Danske Bank 2 08 January 206

13 Calendar continued Thursday, January 4, 206 Period Danske Bank Consensus Previous PLN Polish central bank rate decision %.5%.5%.5% 0:50 JPY PPI m/m y/y Dec 0.4% 3.5% 0.% 3.6% 0:50 JPY Machine orders m/m y/y Nov 7.3% 6.3% 0.7% 0.3% :30 AUD Employment change 000 Dec :30 SEK Average house prices SEK m Dec :30 SEK Underlying inflation CPIF m/m y/y Dec 0.2% 0.9% 0.3%.0% 0.%.0% 9:30 SEK CPI m/m y/y Dec 0.% 0.0% 0.2% 0.% 0.2% 0.% 0:00 DEM Budget real GDP (Maastricht) % % 0.6% 0:00 DEM GDP % 205.7%.6% 0:00 ITL Industrial production m/m y/y Nov 0.3% 0.5% 2.9% 3:00 GBP BoE announces asset purchase target GBP bn Jan :00 GBP BoE rate announcement % 0.5% 0.5% 0.5% 3:00 GBP BoE minutes 3:30 EUR account of the monetary policy meeting 4:30 USD Initial jobless claims :30 USD Import prices m/m y/y Dec.5% 8.6% 0.4% 9.4% 4:30 USD Fed's Bullard (voter, hawkish) speaks 5:00 EUR Eurogroup meeting in Brussels Friday, January 5, 206 Period Danske Bank Consensus Previous EUR S&P may publish Belgium's debt rating 9:00 EUR ECOFIN meeting in Brussels 9:00 ESP HICP, final m/m y/y Dec 0.4% 0.% 0.4% 0.% 0.4% 0.% 9:30 SEK Household consumption m/m y/y Nov 0.2% 3.3% 0:00 NOK Trade balance NOK bn Dec 5.4 0:00 ITL HICP, final m/m y/y Dec 0.% 0.%... 0.% 0:30 GBP Construction output m/m y/y Nov 0.5% 0.0% 0.2%.0% :00 EUR Trade balance EUR bn Nov :30 USD Retail sales control group m/m Dec 0.3% 0.6% 4:30 USD Retail sales less autos m/m Dec 0.2% 0.4% 4:30 USD Retail sales less autos and gas m/m Dec 0.3% 0.5% 4:30 USD Retail sales m/m Dec 0.% 0.2% 4:30 USD PPI m/m y/y Dec 0.2%.0% 0.3%.% 4:30 USD PPI core m/m y/y Dec 0.% 0.3% 0.3% 0.5% 4:30 USD Empire Manufacturing PMI Index Jan :00 USD Fed's Dudley (voter, dovish) speaks 5:5 USD Industrial production m/m Dec 0.2% 0.6% 5:5 USD Manufacturing production m/m Dec 0.% 0.0% 5:5 USD Capacity utilization % Dec 76.8% 77.0% 6:00 USD University of Michigan Confidence, preliminary Index Jan The editors do not guarantee the accurateness of figures, hours or dates stated above For furher information, call (+45 ) Source: Danske Bank 3 08 January 206

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