US Market Update: Euro PMI and US ISM Lift Markets



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US Market Update: Euro PMI and US ISM Lift Markets

01.10.2012 17:30 Monday
***Economic Data***
- (PE) Peru Sept Consumer Price Index M/M: 0.5% v 0.5% prior; Y/Y: 3.7% v 3.5% prior; Wholesale Prices M/M: 0.4% v 0.2% prior
- (CA) Canada Aug Industrial Product Price M/M: -0.1% v -0.1%e; Raw Materials Price Index M/M: 3.4% v 1.2%e
- (US) Sept Final Markit US PMI Manufacturing: 51.1 v 51.5e
- (BR) Brazil Sept PMI Manufacturing: 49.8 v 50.0e
- (EU) ECB completed €0.0M (nil) vs. €0.0M (nil) prior in weekly settlements in SMP program
- (MX) Mexico Aug Remittances: $1.9B v $2.2Be
- (US) Sept ISM Manufacturing: 51.5 v 49.8e; Prices Paid: 58.0 v 55.8e
- (US) Aug Construction Spending M/M: -0.6% v +0.5%e

- US equity indices are bouncing back smartly from last week's equity slide, thanks to some slight sequential improvements seen in Europe's September manufacturing PMI data and the strong showing in the September ISM manufacturing index. Recall that both China's official and the HSBC manufacturing PMI readings for September remained in contraction territory below the 50 threshold, while most of the European PMI data is only holding steady around 2009 lows. The September ISM numbers rose for the first time since May, rising above the key 50 level, while the new orders index picked up considerably over the prior month. Despite several months of better housing data, the August construction spending number fell sequentially for the second time in a row on a m/m basis, by the largest amount since last July. In Europe, Troika members are still disputing the Greek government's proposed cuts, and earlier this morning Moody's called Spain's bank recapitalization plan is credit positive but warned that it may be insufficient. The euro has come off its best levels from overnight in the face of some risk-on USD strength, after EUR/USD shot up from 1.2805 to highs above 1.2930 thanks to the PMI numbers.

- Oracle CEO Larry Ellison made somewhat of a reversal on his high-profile bashing of the cloud computing trend. Ellison has been on the record dismissing cloud computing for years, but over the weekend he outlined plans for Oracle's new 12c "container database" system. The 12c database's function is to hold lots of other databases, keeping data separate but allowing them to share underlying hardware resources like memory or file storage. The program would allow individual firms let multiple customers access a single database and help large enterprises running hundreds of Oracle databases consolidate onto less hardware and make the databases easier to manage.

- The big M&A news this morning was 3M's $860M deal to buy ceramics manufacturer Ceradyne. The $35 per share offer represents a 43% premium over Ceradyne's Friday closing. Ceradyne does about $500M in annual revenue and sells ceramics used in cars, oil and gas production and other industrial applications. The other significant deal news was Honeywell's agreement to acquire a 70% stake in Thomas Russell for $525M in cash. Thomas Russell is a privately-held provider of technology and equipment for natural gas processing and treating.

***Looking Ahead***
- 12:00 (US) Fed's Williams speaks in San Francisco
- 12:00 (IT) Italy Sept New Car Registrations Y/Y: No est v -20.2% prior
- 12:30 (US) Fed Chairman Bernanke speaks on monetary policy in Indiana
- 12:30 (AT) ECB members Asmussen and Nowotny speak in Vienna
- 13:00 (MX) Mexico Sept IMEF Manufacturing Index: No est v 53.0 prior; Non-Manufacturing Index: No est v 52.8 prior
- 13:00 (IT) Italy Sept Budget Balance: No est v -€6.0B prior; Budget Balance YTD: No est v -€33.5B prior
- 14:00 (BR) Brazil Sept Trade Balance: No est v $3.2B prior; exports: No est v $22.4B prior; Imports: No est v $19.1B prior
- 16:00 (US) Crop Condition Report