Wednesday, July 1, 2009

Energy Watch: As the financial crisis eases, an energy shortage lies ahead

Energy Watch: As the financial crisis eases, an energy shortage lies ahead

Goldman Sachs Global Economics, Commodities and Strategy Research June 3, 2009

Commodities Energy Watch

As the financial crisis eases, an energy shortage lies ahead With a credit dislocation in timespreads reversed and the risk of breaching storage capacity reduced, we are raising our oil price forecasts. Because the recent rally was driven mostly by credit normalization, the market has not yet priced in an economic recovery.
The credit normalization rally before the economic recovery rally WTI prices rallied to our end-of-year target of $65/bbl by the end of May, as timespreads strengthened in the face of rising inventories. In our view, this unusual behavior, suggests that the rally was driven by the unwinding of pricing dislocations caused by the credit crisis and the avoidance of breaching storage capacity.
Because this rally has been largely a reversal of pricing dislocations, we view it as the prologue to the rally in WTI prices that we continue to expect will accompany the economic recovery. With the risk of further pricing dislocations reduced, we are omitting the prior anticipated price pullback from our forecasts and have raised our 3-month ahead price target to $75/bbl from $52/bbl.
From financial crisis back to energy shortages The recent rally in WTI prices is likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity. In all, we expect the rally we have just observed to be followed by three more stages, creating a four-stage rally in oil prices in 2009 and 2010:
2009H2: A cyclical bull market as the economy stabilizes and OPEC maintains cuts to draw inventories to 10-year average levels. We are raising our end of 2009 WTI price forecast to $85/bbl from $65/bbl.
2010H1: A structural bull market as long-dated prices rise to motivate renewed Non-OPEC production capacity investment while OPEC spare capacity returns to the market in an attempt to bridge the gap. We are raising our 12-month WTI price target to $90/bbl from $70/bbl.
2010H2: A likely return to energy shortages as dwindling OPEC spare capacity is likely unable to meet rising demand as Non-OPEC production growth is restricted by limited investment in oil production infrastructure. We are introducing an end 2010 WTI price forecast of $95/bbl.

Daily Economic Briefing

We continue to make significant forecast changes. Revisions have been focused in the current quarter in Asia, reflecting a boom in IP growth. Last Friday, we raised our forecast for 2Q GDP growth in EM Asia to above 10%q/q, saar. Today we boosted our 2Q forecast for Japan to 4.5%. The main reason for the revisions is that Asian manufacturing output has boomed (probably about 35% annualized), in good part because of a surge in exports and because companies are liquidating inventory at a less rapid pace. There also are signs of stronger domestic demand in Asia. China stands apart, but data indicate that consumption is rising elsewhere as well (e.g., today’s reports on household spending in Japan and Korea). Inventory dynamics and a brighter forecast for the US and Europe (see below) suggest upside risk to Asian forecasts for 3Q as well.
• In the US and the Euro area, we revised down GDP growth for the current quarter, but up for the second half. Manufacturing output has yet to turn in these regions, where final sales are still falling (albeit much less rapidly) and the inventory adjustment remains intense (the US inventory dump is being exaggerated by developments in the auto industry). GDP is expected to lift in 3Q, however, as sales firm and companies destock less rapidly, following the pattern in Asia. Last Thursday we raised our forecast for US GDP growth to 2.5% in 3Q; today our Euro area team raised their 3Q forecast to 1.5% (from 0.0%) and their 4Q forecast to 2% (from 1.0%).
• The Conference Board’s index of US consumer confidence stumbled in June, falling from 54.9 to 49.3, after surging almost 30pts in the previous two months. The report tempered the more upbeat reading from the University of Michigan and stoked investor anxiety about the path of consumer spending.
• There were more hints that the slide in US house prices is moderating. The Case-Shiller index fell 0.9%m/m (sa) in April, on the heels of 2% declines in the previous seven months. The FHFA house price index more or less has stopped falling altogether. That said, barring an upturn in sales, prices likely will remain under downward pressure in the near-term from excess inventory. In the UK, the evidence for a recent stabilization in house prices is stronger (e.g., today’s Nationwide release), although our team remains skeptical of its staying power.
• The June business surveys continue to look upbeat, with today’s Japan PMI and Shoko Chukin indexes up solidly, along with the BoK’s survey in Korea, and US regional Fed surveys from Chicago and Milwaukee. Our manufacturing PMI is out tomorrow; there is a good chance the new orders index will top 50 for the first time since March 2008.

GS OVERNIGHT WRAP JULY1 - ROCK CLIMING: DJIA -0.9% @ 8447 | S&P500 -0.8% @ 919 | GOLD SPOT -1.4% @ $927 | CRUDE SPOT -2.3% @ $69.8

World Bank Zoellick - Economic recovery still uncertain
Kansas City Fed Hoenig - Taking on "too big to fail" key for reform
St. Louis Fed Bullard - Deflation risks easing but not gone
Chicago PMI for June rises to 39.9 from 34.9 – better than expected
US consumer confidence for June drops to 49.3 from 54.8 – weaker than expected
% Change 1-Jul-09 Last Trade Change % Change High Low YTD DOW JONES 8447 -82 -0.97% 31.06 -135 -3.75% S&P 500 919 -7.91 -0.85% 2.78 -14 1.78% NASDAQ 1835 -9.02 -0.49% 10.63 -19 16.36% RUSSELL 2000 508 -2 -0.46% 3.23 -4 1.77% FTSE 100 4249 -45 -1.04% 17.20 -63 -4.17% NIKKEI 225 9958 175 1.79% 216.83 111 9.54% ASX 200 3955 68.00 1.75% 68.60 0 6.25% NYSE Volume 1.32 b

Alamo Economic Actual Consensus Prior Revised From S&P/Case-Shiller Home Price Index Apr -18.12% -18.63% -18.72% -18.70% Chicago PMI Jun 39.9 39.0 34.9 -- Consumer Confidence Jun 49.3 55.3 54.8 54.9
US Market
U.S. stocks slid as a surprising drop in a gauge of consumer confidence sparked caution about the economy's recovery prospects, hurting industrial, technology and energy shares.
Among industrial stocks, shares of Caterpillar, a maker of bulldozers and excavators, slumped 4.7%, while on the technology front, IBM tumbled 1.4%.
Sliding oil prices gave investors a reason to sell some energy shares, with Exxon Mobil down 1.3% at $69.69. The S&P energy index fell 0.9% as risk aversion resurfaced after the confidence data and helped lift USD.
For the quarter the Dow rose 11%, the S&P rose 15% and the Nasdaq rose 20% while the VIX dropped 39%.
S&P still finished +15% for best quarterly performance since 1998…however US mkts took a dive on concern over the health of the consumer.
The consumer confidence had risen each month since Feb (increased by 30pts in past 4mths) but today's print suggests the shopper's enthusiasm appears to be leveling off. GS think the recent run-up in gas prices played a key role in this fall. But in combination with the personal savings rate rising to 15yr highs (last week)…alludes to a more frugal national attitude on spending (which shouldn’t really be viewed as a negative!!!).
In housing, home prices continued to fall in April, however the rate of decline slowed. Delinquency rates on the least risky mortgages more than doubled in the 1Q from a year earlier…
Prime mortgages 60 days or more past due climbed to 2.9%, from 1.1% at the same point in 2008.
Ford +2.3% bucked the trend of falling consumer stocks, after saying it has begun to capture market share following the bankruptcies of both GM and Chrysler.
AIG -13% after AGM where commented that impact of previous CDS sales may impact the business for longer than anticipated.
George Soros predicts a stop-go economy for the US, saying fears on inflation will drive up interest rates and choke off growth
Participants sent all 10 major sectors in the S&P 500 into the red following the release of the June Consumer Confidence Index, which came in at 49.3 to miss expectations and mark a decline from the previous reading. Meanwhile, the Expectations Index also missed expectations and declined from the previous reading.
Materials stocks were among the hardest hit sectors this session. They shed 1.3% as steel stocks (-1.8%) showed weakness after Schnitzer Steel (-12.2%) reported some disappointing quarterly earnings results and other basic commodities prices were weakened by a stronger dollar. The greenback's 0.4% gain helped send gold prices $10.30 lower to $927.65 per ounce and oil prices down 2.24% to $69.89 per barrel. Still, both the CRB Commodity Index and the materials sector gained roughly 16% during the second quarter.
Financials saw the best gains of any major sector during the second quarter. The sector shrugged off today's 1.1% loss to finish the quarter with a 44% gain.
Leadership from the financial sector helped the S&P 500 post a second quarter gain of 15% which marks a rebound from the first quarter's near -12% decline and the near -24% drop registered in the fourth quarter of 2008. Still, the second quarter rebound is the best quarterly performance since the fourth quarter of 1998.
Such strong gains have many market watchers calling for a pullback in stock prices. However, such consolidation could also be accomplished with stocks moving sideways for an extended period of time. To that point, the S&P 500 finished June flat; or up just one-fifth of a point, to be exact.
Bonds U.S. government bonds were slightly lower (10 Years 3.53% +5) as weaker stocks kept a floor under safe-haven Treasuries while thin trading conditions left the market choppy.
However bonds took a swift u-turn upon the release of the consumer confidence data and as equities fell, returning to pre-open levels. Corporate related flows of rate-lock unwind-buying also providing late support to the market.
Consumer confidence index fell to 49.3 in June from 54.8 in May. Forecasts were for a reading of 55.0 for the month. S&P/Case Shiller home price index dipped 0.6%(y-o-y -18.1%) which was far less dire than the 1.8% decline forecast.
Chicago PMI was slightly better than forecast at 39.9, though still indicating weakness. NY-NAPM index of current business conditions tumbled to 44.8 in June from 61.3 in May, while the six-month outlook index rose to 58.3 from 56.1.
Dow move last night

CCCP EUROPE FTSE: -45pts (-1%) DAX: -76pts (-1.6%) CAC: -53pts (-1.7%) Eco: UK GDP for Q1 -2.40% q/q and -4.90% y/y - lower than expected. UK GfK Consumer Confidence Survey for June -25 - in line with expectation. Mkt: Euro Stoxx -1.3%. Market was just a bit underwater for most of the day but collapsed in the last hour and half or so of trading when US consumer confidence and mortgage delinquency stats were disclosed.
Newsflow in UK wasn't that flash (sharper UK GDP decline, Swiss economy faltering, Lloyds 2k job cuts, HSBC chairman comments (said that the world financial and economic crisis is “far from over” two years after it began)) so market was doing well to hold ground initially.
UK economy shrinks most in 50 years and UK consumer confidence increased to the highest level in 14 months in June as shoppers became more optimistic that the recession is past its worst.
Swiss economy may have slowed further in Jun qtr - Switzerland’s recession probably deepened in the second quarter after the economy contracted at the fastest pace in almost 15 years in the previous three months.
Sectors: Banks +0.3%...Insurance -0.5%, Energy -0.5%, Retail -0.7%, Miners -1.6%, Airlines -1.7%
UK house prices rise for a second month U.K. house prices unexpectedly increased for a second month in June on Nationwide Building Society’s measure, adding to signs that the worst of the property slump is over. The average cost of a home climbed 0.9% to £156,442 after rising 1.3% in May, the mortgage lender said in a statement today. Economists predicted a 0.5% drop, according to the median of 16 forecasts in a Bloomberg News survey. From a year earlier, prices fell 9.3%, the smallest annual drop since July 2008.
Resources LME: Copper -2.6%, Aluminium -0.6%, Nickel -2.7%, Zinc -0.7%
Resources- Were all up for most of the day in London but collapsed in the last hour and half or so of trading when some disappointing U.S data (US consumer confidence and mortgage delinquency stats) hit the tapes. BHP -0.5% (ADR’s -1.2% to $33.95), RIO -2.2%, Anglo -2.7% & Xstrata -2.2%. In news, the FT reported that China and the world’s largest miners failed to agree on the annual price of iron ore by Tuesday’s deadline.
Oil- Tumbled from an 8 month high as U.S consumer confidence declined in June, indicating lower fuel demand. Oil dropped -2.2% after the Conference Board’s sentiment index unexpectedly weakened and delinquencies on the least risky U.S mortgages more than doubled. Oil also retreated on forecasts that U.S fuel supplies rose last week.
Commodities last night LME METAL PRICES ($/lb) Last Chg % Chg LME Aluminium 72.43 -0.46 -0.64% LME Copper 224.47 -6.07 -2.63% LME Lead 75.77 -0.62 -0.82% LME Nickel 693.59 -19.14 -2.69% LME Zinc 69.06 -0.50 -0.72% GOLD Spot $/oz 927.4 -13.30 -1.41% S&P 500 GOLD INDEX 96.22 -3.43 -3.44% S&P/TSX GOLD INDEX 2631.52 -75.24 -2.78% CRUDE OIL - Spot 69.82 -1.65 2.30% CRUDE OIL - 6M 73.13 -1.38 -1.85% S&P OIL & GAS INDEX 381.44 -3.03 -0.79%
COMMENTS Markets climbed the wall of worry this quarter. S&P500 records its best performance since 1998. Yet the month ends in a fizzle and those that chase moment whether in equities, FX or commodities – all are going home expecting trouble in the summer. The June performance for equities was lackluster – we see shares down almost 1% today and flat on the month, DJIA was down 0.6% for June. The 2Q S&P500 is up 35.9%. You can find a similar story in bond yields as they move from 2.5% to 4% in US 10Y or the USD as it moves from EUR 1.25 to 1.40. Yet today wasn’t about the data – which proved confusing to some as the Case-Shiller home price index showed a modest month-on-month improvement even while prices continued to be down 18% y/y. The consumer confidence got worse – and was well below expectations even as inflation outlooks went up and jobs proved harder to find. Net the downturn on the day whether it was in equities or commodities all proved to be joined at the hip again. Oil up 3% yesterday goes down 2% today. EUR goes from 1.4150 this morning to 1.40 this afternoon. Bonds moved lower most of the day as profits were taken ahead of a new month, more supply and some doubts about the ability of the FED to find a good exit and the US Treasury to hold back debt. The political story remains behind many markets and in the US the news came from the Senate with Minnesota finally getting a second Democrat Senator Franken and with it the 60 seat majority in the Senate – effectively filibuster proof. What have we learned today or this month? The constructive mood of expecting a cyclical recovery for 2H appears to be priced and the fat tails of failing off the mountain have been removed. As the speakers on the day underscored – things not getting worse doesn’t mean they are getting better. So we move from June to July with trepidation – like a rock climber reaching for the next rope and praying the anchor holds. Investors have a blind faith that they will make it to the next time – yet consumers have no such hope and there was the day. FX saw the USD gain on month-end flows and a return of doubt as risk on flipped modestly to risk off. The twist is that no one was concerned about a carabineer cracking or a rope snapping as we see another drop in FX volatility. The new outlook for summer is for modest ranges and quiet trends – leaving money with out momentum but also without the fear that has gripped most since last September. So investors are climbing the wall of worry as consumers watch anxiously pulling back from the next ascent until we see some confirmation that not worse means truly getting better. The overnight data set will be the first storm to survive with Tankan, Chinese PMI and Korean Trade all key parts for building out the view that the rest of the world will remain on track for a bounce as well. But expect the ISM, ADP and European PMIs to steal the show – all told being on the face of a mountain expecting a shift in weather is no place to expect calm. Perhaps we should be looking for another rope just in case.
CURRENCIES Cross Low High USD/EUR 1.4 1.4148 Close: 1.4042 JPY/USD 95.79 96.52 Close: 96.35 JPY/EUR 134.88 135.75 Close: 135.2947 USD/GBP 1.6422 1.6618 Close: 1.6465 GBP/EUR 0.8502 0.8536 Close: 0.8528 CHF/USD 1.0783 1.0891 Close: 1.0857 CHF/EUR 1.523 1.5268 Close: 1.5245 USD/AUD 0.8039 0.8156 Close: 0.8074 CAD/USD 1.1511 1.164 Close: 1.162 NZD/USD 0.6438 0.6535 Close: 0.6461
CURRENCY VOL Cross 1m RR 1m Vol 1y RR 1y Vol ARS/USD 5.0000 11.0000 15.0000 27.0000 AUD/USD 0.7000 17.7500 2.0000 18.0000 BRL/USD 4.6000 20.3000 5.6000 19.9000 CAD/USD 0.1000 14.1000 -0.0500 15.2000 CLP/USD 2.8 14.9 5.0 16.4 EUR/CHF -0.5000 5.3000 0.3000 4.6200 EUR/GBP -0.4865 11.1500 -0.7508 11.9000 EUR/JPY 1.899993 15.5000 5.149991 17.1500 EUR/USD -0.5700 12.8000 -0.6800 14.0000 GBP/USD 0.5500 14.2500 0.7000 14.5500 MXN/USD 2.7357 14.2209 5.7491 15.4973 USD/CHF 0.8700 12.4000 1.2300 13.2000 USD/JPY 1.999998 13.2500 5.099996 13.7000
FLOWS (Bonds, Equities, Commodities) US Bonds - 10 Yr UST Down 0-12+ at 96-22 -- YTM 3.525%. 30 Yr UST Down 0-17+ at 99-13 -- YTM 4.285%. DJIA Down 82.38 at 8447.00 (-0.97%) S&P500 Down 7.91 at 919.32 (-0.85%) NASDAQ Down 9.02 at 1835.04 (-0.49%). Gold Down 10.15 at 927.75 Oil Down 1.33 at 70.16.
World Bank Zoellick - Economic recovery still uncertain. World Bank President Robert Zoellick said on Tuesday global financial markets have 'broken their fall' but urged caution, saying there was still a lot of uncertainty as the crisis shifts to developing countries. "There seems some opportunities for improvement on the financial market side but there is still great uncertainty about the scope and timing of recovery," Zoellick told reporters. "There are risks that could threaten the turnaround and I have emphasized the world needs to recognize that dangers will come in waves," he added.
Kansas City Fed Hoenig-Taking on "too big to fail" key for reform The process needs to operate fairly and be free from political influence, or it could merely encourage new, risky behavior, Hoenig said in remarks prepared for a speech to the New York University Stern School of Business in New York. "It will not be realistic for any authority in any regulatory structure to oversee a system where incentives remain to take on excessive risk," Hoenig said. Management should be replaced at failed firms, Hoenig said. "Restructured firms must have new -- and more careful -- management and ownership." The policy-maker also decried a "dereliction of duty" among the top management of some financial firms in the lead-up to the financial crisis that helped trigger a global recession. "Far too few senior executives in these largest organizations believed it was their responsibility to understand the financial products their company was buying and trading in quantities of billions and trillions of dollars," Hoenig said. Hoenig, who is not a voting member of the U.S. central bank's Federal Open Market Committee in 2009, did not address the economic outlook in his prepared remarks.
St. Louis Fed Bullard-deflation risks easing but not gone. St. Louis Federal Reserve Bank President James Bullard said on Tuesday that the danger the United States suffer a Japan-style period of sustained falling prices had eased, but had not vanished altogether.” I think deflation risks are abating," he told reporters after a speech at a Global Interdependence Center event. He noted that inflation expectations implied by Treasury Inflation Protected Securities has recently risen back into positive territory, but said that financial markets still did not expect much inflation over the next couple of years. "I don't really think it has completely gone," he said. "If that leads to some sort of erosion, or even the appearance of an erosion, of the independence of the Fed, I think that could be very counterproductive in this environment," he said after giving his talk about monetary policy at the event. "We've got very large fiscal deficits. We've got the appearance...that the Fed is monetizing the deficit, pushing up yields. Anything that is going to erode the independence of the Fed is going to feed that expectation and drive yields higher. "So I think we are really in a delicate situation here as regards the independence of the Fed, and that is an important consideration going forward," he said in response to a question from the audience. "Without an exit strategy, expectations of high inflation may develop," Bullard said at the event, which was held at the Federal Reserve Bank of Philadelphia. "If expectations of inflation feed into today's long-term yields, those yields will rise today and hamper recovery prospects," he said in prepared remarks. "If that leads to some sort of erosion, or even the appearance of an erosion, of the independence of the Fed, I think that could be very counterproductive in this environment," he said. "We've got very large fiscal deficits. We've got the appearance...that the Fed is monetizing the deficit, pushing up yields. Anything that is going to erode the independence of the Fed is going to feed that expectation and drive yields higher. "So I think we are really in a delicate situation here as regards the independence of the Fed, and that is an important consideration going forward," he said in response to a question from the audience.
CFTC Chilton: Looking for signs of excessive speculation. "Yes, we're going to be looking at other commodities in the future and we're considering that right now, actually," Bart Chilton said in an interview with Reuters Television, noting "the energy complex, with specific emphasis on oil, is something we're very keen on." A recent jump in commodity prices could mean investors are betting on a recovery in the global economy. But other traders and analysts worry the fundamentals don't support such optimism and another bubble could be forming.
"Something is going on in these markets and it's our job to make sure it's nothing illegal. That there's not any overt manipulation to ensure that we can protect consumers so that they don't pay a high prices at the gas pump," said Chilton.
Chicago PMI for June rises to 39.9 from 34.9 – better than expected. Consensus was 39. New orders 41.6 from 37.3; prices paid 36.3 from 29.8; employment 28.9 from 25; production 39.3 from 38.1; Deliveries 43.1 from 43.
S&P Case-Shiller home prices for April -18.1% y/y – better than expected. Consensus was -18.5%. The 10 city index was -18% y/y. The April to March drop was -0.6% compared to -2.2% in March/February.
US consumer confidence for June drops to 49.3 from 54.8 – weaker than expected. Consensus was 55. Present situation 24.8 from 29.7; expectations 65.5 from 71.5; jobs-hard-to-get 44.8 from 43.9; 1Y inflation 5.9 from 5.6. Conference board called this “less negative conditions” ahead rather than “strong growth.
SSGA investor confidence index for June jumps to 115.5 from 108.5 – highest in a year. The global State Street Investor Confidence Index hit 115.5 this month from an upwardly revised 108.5 last month. The index has been above 100 -- the level considered to be neutral -- for three consecutive months, coinciding with most of the stock market rally that began in March. It has also increased every month since December. "Notwithstanding some concerns around the long-run sustainability of fiscal positions and the impact of quantitative easing on inflation, institutional investors continue to endorse the long-run outlook," said Ken Froot, co-developer of the index. Confidence was up most strongly in Europe, where the index rose to 95.0. Morale also improved robustly among North American investors, climbing 6.2 points to 113.6. In Asia, risk appetite was down slightly, with the index falling 1.3 points to 92.1. The data is extrapolated from movements in around $11.3 trillion of assets State Street holds as custodian for institutional investors.
Turkey Trade Balance for May widens to -3.5B – slightly wider than expected. Consensus -3.4B. Previous -2.5B.
Canadian GDP for April -0.1% - ninth consecutive drop. This was as expected. Manufacturing output fell 1% - also the ninth drop – all linked to weaker exports. Energy sector fell 0.5% - third straight decline.
Canada Industrial Product Price for May declines to -1.1% m/m – worse than expected. Consensus -0.6% m/m. Previous -0.5% m/m. Canada Raw Materials Price Index for May rises to +2.2% m/m – higher than expected. Consensus +2.0% m/m. Previous -0.3% m/m, revised from -0.5% m/m.
ECONOMIC/POLITICAL EVENTS EXPECTED FOR WEDNESDAY: GS forecast Consensus Previous Wednesday, July 1: AUD and NZD 19:30 Australia AiG Performance of Mfg Index for June 37.5 21:00 Australia DEWR Skilled Vacancies for June -7.0% m/m 21:30 Australia Retail Sales s.a. for May +0.3% m/m 21:30 Australia Building Approvals for May +4.0% m/m +5.1% m/m -16.1% y/y 1:30 Australia RBA Commodity Index SDR for June -23.3% y/y 4:30 New Zealand PMI Manufacturing for June 46.1 45.4 4:30 New Zealand Index of Services for April -1.2% 3m/3m Japan 19:50 Loans & Discounts Corp for May +3.0% y/y 19:50 Tankan Lge Manufacturers Index for Q2 -42 -43 -58 19:50 Tankan Lge Mfg Outlook for Q2 -34 -51 19:50 Tankan Non-Manufacturing for Q2 -27 -31 19:50 Tankan Non-Mfg Outlook for Q2 -23 -30 19:50 Tankan Large All Indust Capex for Q2 -6.90% -6.60% 1:00 Vehicle Sales for June -19.4% y/y Europe 4:00 Euroland PMI Manufacturing for June 42.4 42.4 2:00 Germany Retail Sales for May +0.1% m/m -1.4% y/y +0.5% m/m -0.8% y/y 3:55 Germany PMI Manufacturing for June 40.50 40.5 3:50 France PMI Manufacturing for June 45.5 3:45 Italy PMI Manufacturing for June 42.50 41.1 12:00 Italy New Car Registrations for June -8.6% y/y 13:00 Italy Budget Balance for June -7.6B 13:00 Italy Budget Balance YTD for June -56.1B 2:30 Sweden Swedbank PMI Survey for June 45.00 43.7 3:30 Switzerland SVME-Purchasing Managers Index for June 41 39.8 UK 4:30 PMI Manufacturing for June 46.4 45.4 4:30 Index of Services for April -1.2% 3m/3m US and CAD Chicago Fed President Evans to speak in London 17:00 US ABC Consumer Confidence -47 -53 7:00 US MBA Mortgage Applications 6.60% 7:30 US Challenger Job Cuts for June +55.2% y/y +7.4% y/y 8:15 US ADP Employment Change for June -375K -532K 10:00 US ISM Manufacturing for June 44 42.8 10:00 US ISM Prices Paid for June 46.7 43.5 10:00 US Construction Spending for May -0.5% m/m +0.8% m/m 10:00 US Pending Home Sales for May +1.1% m/m +6.7% m/m 10:00 US Pending Home Sales for May +3.3% y/y 0:00 US Total Vehicle Sales for June 9.8M 9.9M 0:00 US Domestic Vehicle Sales for June 7.4M 7.4M No Canada Releases (by courtesy of my sales colleague Robert Savage and Richard Coppelson)