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Wednesday, October 24

24th Oct - EU Open: China positive, Draghi ahead

China's PMI came out better than expected (see link section). Wednesday will be a busy day, as we get the first glimpses of the Q4 economic activity. Given the worries over the dismal Q3 earnings and the related recent drops in major indices, and the fact that both the FED and the ECB are already committed policy-wise, today’s numbers will be watched closely. Incidentally, FOMC will conclude today, but no press conference is scheduled and important policy changes are not expected before December’s meeting. In Europe, Draghi will be speaking in Germany’s Bundestag on the ECB’s OMT program, followed by a scheduled press conference.

Germany IFO (08:00 GMT) Current Conditions is expected to drop moderately from previous month’s 110.3 to 109.7, while Business Expectations is seen rising to 93.8 from September’s 93.2. This would leave the main index roughly unchanged to 93.8 from 93.2. All three series have been in a downtrend since the summer of 2011. For graphics and further breakdown, see CESifo’s September’s press release.

Eurozone PMI (08:00 GMT) Consensus forecast for the October’s manufacturing PMI figure is a small improvement to 46.5, after September’s 46.1. While this would keep the number in recessionary sub-50 area, at least it would be a sign of stabilization. Last month France’s PMI disappointed while Germany’s was a positive surprise, and yesterday’s business confidence numbers from France suggest that this could be the case also now. If the differences between the two countries’ PMI’s continue to persist, markets could expect changes in growth vs. austerity preferences, with France becoming increasingly pro-growth.

Draghi speech (11:45 GMT) Draghi will begin talking to the Bundestag. The OMT program has been criticized by some lawmakers, and Draghi will defend his view. The talk will not be transmitted via Internet or the Parliament's TV. After the talk at around 14:00 GMT, Draghi and the President of the Deutsche Bundestag, Mr Lammert, will answer journalists’ questions. Any policy hints will be watched closely.

Previously on MoreLiver’s:

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News roundup – Between The Hedges
The 6am Cut London – alphaville / FT
Emerging Markets Headlines – beyondbrics / FT

Debt crisis: live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices

Morning Briefing (Asia): Higher plains driftingBNY Mellon
The EU’s crisis plans need a greater ‘here and now’ element

3 Numbers to Watch: EZ PMI, DE IFO, US Home Sales - Plus FOMC Saxo Bank 
Plenty of action ahead of the FOMC today, with a number of PMI data releases in the Eurozone to cover. The German IFO survey is expected to show business sentiment holding up. Meanwhile, US Home Sales data is likely to indicate a housing recovery. 

Asia Today: Higher Oz CPI questions the next RBA cut Saxo Bank 
We saw more activity in Asia today with a couple of data points to keep us busy. Australia’s headline Q3 inflation report confounded median forecasts with a spike higher. China's flash PMI was the highest in 3 months which helped the AUD to rally

Market Preview: Eyes on European PMIs Saxo Bank
European markets are expected to open higher Wednesday. Manufacturing and services data across Europe today is keenly eyed. Markets also await the US Fed's monetary policy decision due later today.

Danske DailyDanske Bank (pdf)
China’s Flash PMI improves to 49.1 in October. The US stock market dropped markedly on weak Q3 earning reports but stock markets have recovered in Asian trade on China’s PMI. We have a busy day ahead of us with focus on PMIs, Draghi’s briefing of German parliament and this evening’s Fed decision. Market movers today: EUR: Flash PMIs, GER: Ifo business climate, GER: Draghi briefs German parliament, USD: Fed meeting, USD: Markit manufacturing PMI, USD: New home sales, Q3 earnings: Volkswagen, Volvo

AamukatsausNordea (pdf)
Kiinassa teollisuuden luottamus tukee odotuksia kasvun vakautumisesta * Fed pitänee rahapolitiikan ennallaan * Espanjan autonomisten alueiden luottoluokituksen lasku painoi euroa

AamukatsausTapiola (pdf)
Aamulla julkaistu Kiinan ostopäällikköindeksin ennakko nousi tasolle 49,1 (edellinen 47,9) ja vahvistaa käänteen odotusta. Tämä käänsi tunnelman heikkojen perusteollisuusyritysten tulosten jälkeen. Markkinan suunta: Osakemarkkinoilla eilen myyntiaalto,  globaalit perusteollisuusyhtiöt varoittivat näkymistään. Kiinan aamulla julkaistu ostopäällikköindeksin ennakko pysäytti markkinoiden laskun Aasiassa. Osakefutuurit nyt plussalla, indikoiden nousuavausta pörssiin. 3Q12-tuloksia aamulla: Hyvät tulokset: Kesko, Konecranes. Neutraalit tulokset: Vacon. Heikot tulokset: Nordea, Okmetic, Outokumpu, Talentum.

Morning Briefing (EU/US): PatienceBNY Mellon 
The CAD is a glowing opportunity; but maybe not just yet


Draghi Takes Pitch Into Lion’s Den as German Faith WaversBB
Enter the dragonMacroScope / Reuters
Spain will probably loom largest for the German lawmakers but Greece continues to run it a close second with suggestions growing that it will get an extra two years to make the cuts demanded of it.

Moody's downgrade of Spanish regions should be a signal for Rajoy to request aidSober Look

Update on the banking union initiative in the EurozoneSober Look

S&P 500 Stocks Getting Hit Hard on EarningsBespoke

Time for bulls to throw in the towel?Humble Student

China Flash PMI improves
A work in progress – beyondbrics / FT
Slowing pace of contraction in October – ASA
PMI and Shanghai Composite – ASA
Improves and suggests moderate recovery ahead – Danske Bank (pdf)
Adds to improved growth prospects – Nordea (pdf)
Up, but there’s a catch – alphaville / FT
At 49.1, Three-month High – Global Macro Monitor
Rises as Easing Prospects Abate – BB
Modest Improvement Even As It Contracts For 12 Months In A Row – ZH

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