On Our Minds - : Week Ahead

ECONOMICS 17 February 2013
Important Notice: The circumstances in which this publication has been produced are such that it is not appropriate to characterise it as independent investment research as referred to in MiFID and that it should be treated as a marketing communication even if it contains a research recommendation. This publication is also not subject to any prohibition on dealing ahead of the dissemination of investment research. However, SG is required to have policies to manage the conflicts which may arise in the production of its research, including preventing dealing ahead of investment research.
Weak Ahead edition
Extract from a report
On our minds - Week Ahead

Italian Elections
Main data releases and events
P erio d P revio us
M o nd ay 18 F eb 2 0 13 EC EC Current Account n.s.a., EUR bln EU Foreign M inist ers Hold M eet ing in Brussels Dec 20.8R 27A
TOP CLIENT QUESTIONS

Co ns
SG
T uesd ay 19 F eb 2 0 13 AU US RBA Policy M eet ing - February M inut es NAHB Housing M arket Index Feb 47 49 48
W ed nesd ay 2 0 F eb 2 0 13 JN JN GE FR FR IT UK UK UK UK US US EC US Adjust ed M erchnds Trade Bal., JPY bln M erchnds Trade Export s (%YoY) CPI - EU Harmonised (%YoY) CPI - EU Harmonised (%YoY) Consumer Price Index (%YoY) Indust rial Orders s.a. (%M oM ) Bank of England Releases M PC M inut es ILO Unemployment Rat e (3mt hs) Claimant Count rat e (% ) Claimant Count Change, k Housing St art s, k Building Permit s, k Consumer Conf idence Dec Jan Jan Jan Jan Feb A 7.7 4.8 -1 2.1 954 909K -23.9 7.7 4.7 -1 0 965 930 -22.4 7.7 4.8 -5.5 924 920 -23.2 Jan Jan Jan F Jan Jan Dec -800.7 -5.8 2 1 .5 1 .3 -0.5 -701 .3 -1 1 .9 1 .8 1 .6 0.2 -586.7 5.6 1 .9 1 .6 1 .4
Fed Releases M inut es f rom Jan 29-30 FOM C M eet ing
T hur sd ay 2 1 F eb 2 0 13 FR FR GE GE EC EC UK US US US US PM I M anuf act uring PM I Services PM I M anuf act uring PM I Services PM I M anuf act uring PM I Services PSNB ex Int ervent ions, GBP bln Consumer Price Index (%YoY) Init ial Jobless Claims, k Cont inuing Claims, k Philadelphia Fed. Feb Feb P Feb P Feb A Feb A Feb A Feb A Jan Jan 42.9 43.6 49.8 55.7 47.9 48.6 1 5.4 1 .7 341 31 4 1 -5.8 43.5 43.9 51 .2 55.4 48.8 49.1 -4.4 1 .6 345 321 5 1 0 43.8 44.4 50.5 55.5 48.5 49 -8.7B 1 .7 360 31 61 1
F r i d ay 2 2 F eb 2 0 13 GE GE GE GE IT EC GDP s.a. (%QoQ) IFO - Business Climat e IFO - Current Assessment IFO - Expect at ions CPI - EU Harmonized (%M oM ) ECB Announces 3-Year LTRO Repayment 4Q F Feb Feb Feb Jan F -0.6 1 04.2 1 08 1 00.5 0.3 -0.6 1 05 1 08.6 1 .6 01 -2 -0.6 1 04.9 1 08.5 1 .4 01
Contents Economic calendar & Previews Policy event calendar the coming year 2012-2018 Election Calendar
p 5 23 25
IS A CURRENCY WAR BREWING? The key passage on exchange rates from the G20 communiqu read: We reaffirm our commitment to cooperate for achieving a lasting reduction in global imbalances, and pursue structural reforms affecting domestic savings and improving productivity. We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments and in this regard, work more closely with one another so we can grow together. We reiterate that excess volatility of financial flows and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will refrain from competitive devaluation. We will not target our exchange rates for competitive purposes, will resist all forms of protectionism and keep our markets open. In our opinion, this statement does not herald any immediate change in Chinas managed FX policy. Nor will it hold back Japan from pursuing Abenomics. Indeed, the first sentence of the communiqu noted, Thanks to the important policy actions in Europe, the US, Japan, and the resilience of the Chinese economy, tail risks to the global economy have receded and financial market conditions have improved. Where change is likely, however, is on policy-speak. Notably, in Japan, policymakers are likely to be more careful to highlight the domestic dimension of measures taken and avoid talk of targeting a weaker yen. MARKET ISSUES: Next on the agenda is the appointment of a new BoJ governor and two new vice-governors. The incumbents are due to leave office on 19 March. We continue to look for further policy accommodation and our FX strategists (cf. FX Weekly) target USD/JPY at 100 year-end. Compared to the recent movement, this does nonetheless imply a more moderate pace of adjustment towards to lower end of the 90-100 fair value band.
michala.marcussen@sgcib.com Continued page 2
Please see important disclaimer and disclosures at the end of the document
COULD MR BERLUSCONI REALLY WIN? As the Italian elections (24-25 February) approach, concern that something could go wrong is mounting. Italian regulation forbids the publication of opinion polls during the two weeks that precede an election. The final polls released on 8 February, still indicated a Berlusconi victory as unlikely, but given the prior trends in opinion polls and still undecided voters, such a scenario cannot be completely excluded. Furthermore, while the opinion polls point to a majority in the lower house for Pier Bersanis centre-left coalition, the outcome for the Senate is far less certain. At the heart of the election is the ability to pursue structural reform. This is important not just to secure Italys long-term growth potential, but is also seen as being part of the conditionality in the event that Italy would need support from the ESM/OMT. Mr. Berlusconi has made no secret of his dislike for the current policy of austerity and structural reform. Mr. Bersani, on the other hand, has signalled that he will continue Mario Montis policy of austerity and reform (reassuring markets and Italys euro area partners), but at the same time securing greater social fairness in policies (reassuring the more left leaning fractions of his Common Good alliance and trade unions). Striking the right balance between these two objectives will not be easy should Mr. Bersani become Italys new prime minister; be it with a full majority in both houses or in a coalition with Mario Monti. MARKET ISSUES: Removing the tail risk of a Berlusconi win could bring some short-term relief. How durable this would prove will then depend on the ability of the new government formed to agree and advance on a structural reform programme. As outlined above, the task will not be an easy one.
the forecasted recovery and developments on the cyclically adjusted budget deficits. Note, this will mark the first release in a new forecast schedule of three releases per annum (as opposed to two, with two interim updates). US HOUSING RECOVERY Presidents Day Monday means a shorter week focusing on housing and inflation data. We expect the NAHB housing sentiment indicator to hit a 7-year high in February and look for the housing data (January housing starts, building permits and existing home sales) to generally be in line with our central scenario of a housing recovery. January CPI is set to post its first monthly gain since October on the back of higher food and non-energy service costs. The February Markit PMI indicators should also point to recovery, forecast at 57 after 55.8 previously. While the risk that QE could ultimately trigger inflation remains a debate in the market, there is clearly no sign hereof in actual inflation data and nor do we see any for the foreseeable future. MARKET ISSUES: We do not expect the minutes of the 29-30 January FOMC (Wednesday) to give grounds for a shift in monetary policy expectations, but just when the Fed will slow the pace of QE is very much at the heart of the market debate as recovery gains traction. JAPAN TRADE TO IMPROVE It is still too early to expect the recent yen decline to show up in hard trade data in a significant way, but January trade data should benefit from a recovery in exports to China. As highlighted above, we see further yen depreciation ahead and this should prove a support for the trade data over time. Importantly, we note that for Japans policy stimulus to result in a sustainable recovery, wage gains are ultimately needed, which would erode some of the competitiveness gains that a weaker currency can offer. MARKET ISSUES: Focus is on the yen, and while we expect to hear less speak on the topic, we expect Japan to pursue the type of policy expansion that will see the yen at USD/JPY 100 by year-end. UK CLAIMANT COUNT TO DECLINE We expect a new decline in the January claimant count (10K), marking yet again the contrast between activity and unemployment data. We have previously discussed the surprisingly robust behaviour of employment relative to activity. One explanation is weak earnings growth and we expect December earnings to stand at just 1.3% 3M/yoy. We also note the lower level of business failures relative to activity, suggesting some degree of forbearance.
TOP ISSUES FOR THE WEEK AHEAD

EURO AREA SENTIMENT Kicking off with the February ZEW survey on Tuesday, this week will see the release of a string of sentiment indicators. We expect the German ZEW, euro area PMIs and German IFO to all post some further improvement on the back of continued easing in financial stress. Euro strength, however, may have been a headwind. Overall we expect improvements this month to be less than the previous month. The French INSEE survey is seen flat, however, after the decline last month reflecting still lacklustre demand. MARKET ISSUES: Economic data are set to take a backseat to the Italian elections this week. The release of the EU Commissions new set of economic forecast on 22 February should nonetheless attract some interest. Points of particular interest will be the strength of
17 February 2013
17 February 2013
EUROPE
Cyprus closing in on a bailout

European markets were generally calm and the euro broadly stable following the G20 meeting this weekend. In Cyprus, the chances for a bailout has increased following the first round win of Mr. Anastasiades, who is expected to resume talks on a Cypriot bailout, although parties opposing austerity also performed well (second round will be held on 24 Febraury). While we expect such bailout in March, positions have hardened lately and we dont exclude demands for deep-rooted structural reform, especially of the Cypriot banking sector. In Germany, the Bundesbank voiced some concern over the recent Irish debt swap while in Spain the ratio of bad loans to total loans declined in December to 10.4%.
national central banks, and we have earlier pointed out the risks that this kind of solutions might be attractive also in other countries (see our Week Ahead of 11 February Is the Irish debt deal unique?). Separately, Bundesbank board member Dombret on Monday argued for caution with keeping interest low for too long from a financial stability perspective, while also arguing that the ECB should not lose sight of an exit strategy. With the German economy expected to remain recover more strongly and faster than euro area countries in the south, we may see increasingly divergent views on ECB policy this year. Non-performing loans in Spain falling
Cyprus heading for a vote on austerity In the Cypriot presidential election, the centre-right leader Nicos Anastasiades easily won the first round with 45.4% of the vote. A second round will be held on 24 February against Mr. Malas from the left, who together with Mr. Lillikas, who came third, opposes austerity. In terms of votes the two latter got more votes than Mr. Anastasiades. Should Mr. Anastasiades win, analysts expect that he would be able to secure a bailout with EU/IMF relatively soon, as he has strongly advocated a deal with international lenders. However, such deal may come with stronger conditionality than expected, as recent comments (from Germany) still suggest that not everyone believes that Cyprus constitutes a systemic risk, for which ESM money should be used. From this perspective, additional conditionality cannot be excluded; although most signs suggest that a deal should be possible in the course of March (Cyprus faces a 1.4 bn euro debt repayment in June). Another issue discussed has been whether investors would be forced to take losses in the bailout, with the latest signals suggesting that they would not be affected. Bundesbank unhappy with the Irish promissory notes deal In its latest Monthly Bulletin, the German Bundesbank raises some concerns over the recent Irish debt swap of promissory notes to government bonds, viewing the deal as problematic. In particular does the deal point to the growing interdependence between fiscal and monetary policy, for which the ESM was established and given responsibilities. This points to the growing unease among
Bank of Spain today reported a lower ratio of bad loans of 10.44% in December compared with 11.38% in November. While positive, a key reason for the decline was the transfer of troubled bank assets to the bad bank Sareb.
anatoli.annenkov@sgcib.com
17 February 2013
17 February 2013
EMERGING EUROPE
Poland: the lowest inflation rate since August 2007

Together with the release of Czech and Hungarian CPI data, Polands preliminary January inflation data surprised on the downside. Polands CPI inflation decelerated to 1.7% yoy in January from 2.4% in December, undershooting our expectations and the market consensus by 0.3pp. Inflation is below the 2% level for the first time since August 2007. In our view, the figure visibly increases the probability of another 25bp rate cut to be delivered at the March meeting.
Contributions to Polands monthly CPI (pp.)
1.2 0.9 0.6 0.3 0.0 -0.3 -0.6 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13
Source: GUS, SG Cross Asset Research/Economics
Food Core inf lation
Utilities CPI, % mom
Fuel
On a monthly basis, consumer prices grew by a very modest 0.1%. As we previously noted, the CPI downswing was mainly linked to the significant disinflation in supplydriven price categories. As a result of the 10% reduction in gas prices and almost flat energy costs, utility prices have decreased by 0.1% mom. We did not record a negative monthly growth rate in this category during the 2000s. Transport costs fell by 0.7% on a monthly basis, mainly driven by declining fuel prices. Food prices also supported the disinflation process, recording an increase of 1.2% mom. Core price categories supported the CPI downswing as well, but the preliminary data did not provide a detailed breakdown in this area. Our estimates suggest a significant downswing (of 1.1% mom) in communication costs, most probably resulting from the decrease in mobile tariffs. The headline figure is subject to revision in March, together with the release of a new inflation basket. Based on the released data, core inflation (to be published in March) decreased to 1.3% yoy from 1.4% recorded in December. Looking ahead, we expect the disinflation process to continue with the CPI staying between 1.0-1.2% in the Q2 of 2013. In our view, the figure visibly increases the probability of another 25bp rate cut, likely at the March meeting. We note that the CPI is lower due to one-off factors which is important for forward-looking interest rate setters.
jaroslaw.janecki@sgcib.com
17 February 2013
17 February 2013
Economic Calendar & Previews

During the week
GMT Period Previous SG Forecasts CNS/Actual
China Russia South Korea Ireland
Russia Ireland Russia
Hungary
Actual FDI (% YoY) Industrial Production (% YoY) Discount Store Sales (% YoY) Department Store Sales (% YoY) CPI (EU Harmonised) (% MoM) CPI (EU Harmonised) (% YoY) CPI (% MoM) CPI (% YoY) Producer Prices (% MoM) Producer Prices (% YoY) PPI (% MoM) PPI (% YoY) Disposable Income (% YoY) Real Wages (% YoY) Retail Sales (Real) (% MoM) Retail Sales (Real) (% YoY) Unemployment Rate (%) Investment In Productive Capacity Economic Sentiment Business Confidence Consumer Confidence
Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Feb Feb Feb
-4.5 1.4 -5 -0.2 0 1.7 0.1 1.2 -1.1 5.1 -0.9 1.3 4.9 0.3 20.8 5 5.3 -0.7 -19.6 -11.3 -43.4
. . . . . . . . . . . . . 4.8 . 4.8 5.7 1.5 . . .
-4.2
0 5.3
4.8 3.3 -25.5 4.8 5.7 0.5
17 February 2013
17 February 2013
Russia Domestic demand Retail Sales (% YoY) Investment in Productive Capacity
GMT
Period January January
Previous 5.0 -0.7
SG Forecasts 4.8 1.5
Consensus 4.8 0.5
Consumer demand to stabilise at modest levels Consumer demand surprised on the upside in December as retail sales accelerated to 5.0% yoy. However we doubt that a pick-up in consumer demand will be long lasting in the environment of decelerating consumer lending and wage growth, with retail sales growth also expected to decelerate in January to 4.8% yoy. Fixed asset investments, dragged down by deteriorating borrowing conditions and the uncertain global outlook, showed sluggish dynamics in H2 12. Moreover, the December yoy growth rate slid into negative territory (-0.7%). That said, although the structural and cyclical impediments remain unchanged, we expect some rebound in investment activity in January after the huge drop in the previous month.
Retail sales, yoy % 30% FAI, yoy % 40% 30%
20%
10% 0%
20% 10%
0% -10%
-10%
-20% 2006 2007 2008 2009 2010 2011 2012
Source: CEIC, Rosstat, SG Cross Asset Research, Economic
-20% -30%
Russia Labour market Unemployment Rate (%) Real Wages (% YoY)
GMT
Previous 5.3 0.3
Consensus 5.7 3.3
Vanishing fiscal support weighing on wage growth Real wage growth plunged to 0.3% yoy in December following the 6.7% yoy print in November. Although the unfavourable base effect explains some of the deceleration in wage growth, the actual deterioration exceeded the most pessimistic forecasts. That said, the previous months numbers tend to be revised significantly in the following reporting period after Rosstat gets hold of the more detailed data. Hence, we believe a further slowdown in wage growth is likely (due to less aggressive pay hikes in the public sector and moderate growth in the private sector) but it should be more gradual. Moreover, the tight labour market situation (we anticipate an increase in the unemployment rate, but solely due to seasonal factors) points to a less abrupt slowdown in wage growth.
10%
9% 8%
Unemployment rate, SA% NAIRU Real Wages, yoy%, inv rhs
-10%
-5% 0% 5%
7%
6% 5%
10%
15% 20%
4% 2006 2007 2008 2009 2010 2011 2012

Source: CEIC, Rosstat, SG Cross Asset Research, Economic
25%
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17 February 2013
Monday 18 Feb 2013

South Korea UK Australia Japan Euro area Czech Republic Poland
Producer Price Index (% YoY) Rightmove House Prices (% MoM) Rightmove House Prices (% YoY) New Motor Vehicle Sales (% MoM) New Motor Vehicle Sales (% YoY) Machine Tool Orders (% YoY) Current Account n.s.a., EUR bln Current Account s.a., EUR bln Czech Central Bank Governor Singer to Speak Avg Gross Wages (% MoM) Avg Gross Wages (% YoY) Employment (% MoM) Employment (% YoY) Van Rompuy Speaks to EU Parliament on EU Budget Proposal ECB Calls for Bids in 7-Day Main Refinancing Tender ECB's Draghi Speaks in Brussels at Quarterly Hearing on ECB ECB's Draghi Speaks in Brussels at Quarterly ESRB Hearing Steinbrueck, Di Rupo Speak at Socialist Event in Brussels EU Foreign Ministers Hold Meeting in Brussels Consumer Confidence
21:00(1D) 00:01 00:01 00:30 00:30 06:00 09:00 09:00 10:00 13:00 13:00 13:00 13:00 13:00 14:30 14:30 16:30 18:30 00:00
Jan Feb Feb Jan Jan Jan F Dec Dec
-1.2 0.2 2.4 2.2 17.9 -26.1 20.8R 15.9R
. . . . . . . . . . . . . . . . . . . .
-1.6A 2.8A 1.1A -2.4A 10.8A -26.4A 27A 13.9A
Jan Jan Jan Jan
8.8 2.4 -0.4 -0.5
-10.8 1 0.5 -0.9
Euro area
Norway
1Q
25.4
17 February 2013
17 February 2013
Tuesday 19 Feb 2013

Japan Australia Japan Euro area
Sweden
Euro area
Germany Euro area Portugal Poland
US Euro area Greece Spain
BOJ Minutes for Meeting on Jan. 21-22 RBA Policy Meeting - February Minutes Leading Index CI Coincident Index CI EU27 New Car Registrations EU's Almunia Speaks at CER Breakfast Meeting in Brussels EU's Barnier Speaks at Conference in Brussels CPI - Headline Rate (% MoM) CPI - Headline Rate (% YoY) SW CPI - CPIF (% MoM) SW CPI - CPIF (% YoY) CPI Level Unemployment Rate (%) Unemployment Rate SA Construction Output s.a. (% MoM) Construction Output WDA (% YoY) ZEW Survey (Econ. Sentiment) ZEW Survey (Current Situation) ZEW Survey (Econ. Sentiment) ECB Announces Allotment in 7-Day Main Refinancing Tender Producer Prices (% MoM) Producer Prices (% YoY) Sold Industrial Output (% MoM) Sold Industrial Output (% YoY) Producer Prices (% MoM) Producer Prices (% YoY) Revisions of Consumer Price Index NAHB Housing Market Index ECB's Asmussen Speaks in Bratislava Current Account, EUR mln Trade Balance, EUR mln
23:50 (-1D) 00:30 05:00 05:00 07:00 07:00 08:00 08:30 08:30 08:30 08:30 08:30 08:30 08:30 10:00 10:00 10:00 10:00 10:00 10:15 11:00 11:00 13:00 13:00 13:00 13:00 13:30 15:00 19:15
Dec F Dec F Jan
93.4 92.7 -16.3
Jan Jan Jan Jan Jan Jan Jan Dec Dec Feb Feb Feb Jan Jan Jan Jan Jan Jan Feb Dec Dec
0.3 -0.1 0.3 1 314.61 7.6 8 -0.4 -4.7 31.2 7.1 31.5 -0.4 3.6 -14.2 -10.6 -0.6 -1.1 47 -850 -1407
. . . . . . . -0.9 0 -0.6 1.2 311.73 8.2 7.8 . . . 8 40.6 . . . -3 -8.6 0.3 -0.9 . 49 . . .
-0.8 0 -0.7 1.1 311.95 8.5 8.1
9 35
2.7 -3 0.2 -1.1 48
Germany ZEW survey ZEW Survey (Economic sentiment) ZEW Survey (Current Situation)
GMT 10:00 10:00
Period Feb Feb
Previous 31.5 7.1
Consensus 35.0 9.0
ZEW to climb slower For February, we expect the Economic Sentiment measure of the ZEW survey to rise further, albeit more moderately than in January given the recent softening in equity markets. We have already seen the Sentix future expectations index take another strong leap in February, although this indicator was surveyed early in the month. Again, we expect the current situation measure to improve less than expectations and the Economic Sentiment index. Expectations in most surveys have recently been rising more strongly than expected, but at one point we expect some moderation. As we are still in a situation of readjusting expectations and activity from the weakness at end-2012, the current strength may overshoot if hard data disappoint in the coming weeks and markets are reminded of the current weakness in European growth. Still, German expectations and production may remain on the higher side given the continued strong domestic economy, with resilient employment growth.
30 80
20
10
60
40 20
0 -10
-20
0
-20
-30
-40 Jan-09
Sentix FUTURE EXPECTATION NADJ ZEW ESI - NADJ

Oct-09 Jul-10 Apr-11 Jan-12 Oct-12
-40
-60
-80
Source: Datastream, SG Cross Asset Research/Economics
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17 February 2013
Poland Industrial production Industrial production,% mom Industrial production,% yoy
GMT 13:00 13:00
Previous -14.2 -10.6
SG Forecasts -3.0 -8.6
Consensus 2.7 -3.0
Industrial sector still demonstrating signs of weakness We expect industrial output to decrease by 8.6% yoy in January, signalling a moderate improvement on the -10.6% recorded in December. We are therefore forecasting much less of a decline than the market. In our opinion, the favourable calendar effect (i.e. one additional working day in comparison to the previous year) is entirely responsible for this improvement. Thus, we expect industrial production to shrink by 6.7% yoy in SA & WDA terms. Polish PMI rose in January for the fourth consecutive month to 48.6 from Decembers 48.5. The volume of new orders fell for the 12 month in a row. Survey data suggested that the domestic market was the main source of weakness, as new export business showed only a marginal contraction. The level of manufacturing output was broadly flat, as compared with December. Production was partly supported through the completion of outstanding business.
20 15 10 52 5 0 -5 -10 42 -15 -20 Jan-06 40 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 38 Jan-13 50 48 46 44 58 56 54
Industrial production, % y oy (lhs)
Manuf acturing PMI (rhs)
Source: GUS, Markit, SG Cross Asset Research/Economics
Poland PPI PPI, % mom PPI, % yoy
GMT 13:00 13:00
Previous -0.6 -1.1
SG Forecasts 0.3 -0.9
Consensus 0.2 -1.1
PPI to record a marginal increase In our view, PPI should rise from Decembers -1.1% yoy to -0.9% in January, as a result of higher oil prices and slight PLN depreciation. The low statistical base (related to the rapid appreciation of the zloty in early 2012) also provides support for the PPI upswing. According to PMI survey data, the cost pressures faced by goods manufacturers eased marginally in January, as average input prices fell for the fifth time in seven months as a result of lower raw materials costs. Meanwhile, manufacturers cut their output prices for the sixth time in seven months, i.e. the fastest rate since February 2010. Overall, lower charged prices reflected changes in product ranges, weak demand and lower input costs.
1.8 1.6 Mining and quarry ing Manuf acturing Electricity , gas Water, sewerage PPI, % mom
1.4
1.2 1.0 0.8
0.6
0.4 0.2 0.0
-0.2
-0.4 -0.6 -0.8 Jan-11 May -11 Sep-11 Jan-12 May -12 Sep-12 Jan-13
Source: GUS, SG Cross Asset Research/Economics
United States HMI Annual Revisions of Consumer Price Index Series NAHB Housing Market Index
GMT 13:30 15:00
Period Feb
Previous 47
SG Forecasts 49
Consensus 48
Single-family permits and starts gradually following the HMI higher Improved sales assessments, combined with an anticipated pickup in prospective buyer traffic, probably propelled the National Association of Home Builders sentiment gauge two points higher to 49 in February the highest reading since April 2006. While single-family building permits and housing starts have improved over the past two years, their levels remain well below those normally associated with our Housing Market Index (HMI) forecast (see accompanying chart).
diffusion % 85 75 65 55 thous, saar 1900 1700 1500 1300
45
35 25 15 Housing Market Index (lhs)
1100
900 700 500
Single-Family Starts rhs) Single-Family Permits (rhs)
5 300 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Sources: Census Bureau, National Association of Home Builders , SG Cross Asset Research, Economics
17 February 2013
17 February 2013
Wednesday 20 Feb 2013

Australia Japan
Australia
Japan South Korea Japan Germany
Conference Board Leading Index Westpac Leading Index (% MoM) Merchnds Trade Balance Total, JPY bln Adjusted Merchnds Trade Bal., JPY bln Merchnds Trade Exports (% YoY) Merchnds Trade Imports (% YoY) DEWR Internet Skilled Vacancies (% MoM) Wage Cost Index (% QoQ) Wage Cost Index (% YoY) BOJ Board Member Morimoto Speech External Short-Term Debt, USD bln All Industry Activity Index (% MoM) Producer Prices (% MoM) Producer Prices (% YoY) Consumer Price Index (% MoM) Consumer Price Index (% YoY) CPI - EU Harmonised (% MoM) CPI - EU Harmonised (% YoY) Convenience Store Sales (% YoY) Own-Company Production Outlook Production Outlook Indicator Business Confidence Indicator CPI - EU Harmonised (% MoM) CPI - EU Harmonised (% YoY) Consumer Price Index (% MoM) Consumer Price Index (% YoY) CPI Ex Tobacco Index ECB Calls for Bids in 7-Day Dollar Tender Total Number of Employees (% YoY) Industrial Orders s.a. (% MoM) Industrial Orders n.s.a. (% YoY) Industrial Sales s.a. (% MoM) Industrial Sales n.s.a. (% YoY) Bank of England Releases MPC Minutes ILO Unemployment Rate (3mths) Employment Change (3M/3M) Claimant Count rate (%) Claimant Count Change, k Average Weekly Earnings (Total) 3M/(% YoY) Average Weekly Earnings (ex Bonus) 3M/(% YoY) Credit Suisse ZEW Survey (Expectations) ECB Announces Allotment in 7-Day Dollar Tender Bundesbank's Dombret Speaks on Euro Crisis at ESMT, Berlin MBA Mortgage Applications Housing Starts, k Housing Starts (% MoM) Building Permits, k Building Permits (% MoM) Producer Price Index (% MoM) PPI Ex Food & Energy (% MoM) Producer Price Index (% YoY) PPI Ex Food & Energy (% YoY) Consumer Confidence Fed Releases Minutes from Jan 29-30 FOMC Meeting Bank Of Japan Board Member Morimoto Speaks in Kochi
23:00 (-1D) 23:30 (-1D) 23:50 (-1D) 23:50 (-1D) 23:50 (-1D) 23:50 (-1D) 00:00 00:30 00:30 01:30 03:00 04:30 07:00 07:00 07:00 07:00 07:00 07:00 07:00 07:45 07:45 07:45 07:45 07:45 07:45 07:45 07:45 08:00 08:30 09:00 09:00 09:00 09:00 09:30 09:30 09:30 09:30 09:30 09:30 09:30 10:00 10:00 11:30 12:00 13:30 13:30 13:30 07:12 13:30 13:30 13:30 13:30 15:00 19:00
Dec Dec Jan Jan Jan Jan Jan 4Q 4Q 4Q Dec Jan Jan Jan F Jan F Jan F Jan F Jan Feb Feb Feb Jan Jan Jan Jan Jan 4Q Dec Dec Dec Dec Dec Dec Jan Jan Dec Dec Feb
-0.2 0.6 -643.3R -800.7 -5.8 1.9 -2.8 0.7 3.7 132.6 -0.3 -0.3 1.5 0.9 2.1 0.9 2 -2 -15 -36 86 0.4 1.5 0.3 1.3 125.02 0.9 -0.5 -6.7 -0.2 -5.4 7.7 90 4.8 -12.1 1.5 1.4 -6.9
. . . -701.3 -1 3 . 0.9 3.6 . . . . . -0.5 1.7 -0.7 1.9 . . . 86 -0.2 1.8 -0.1 1.6 124.86 . . 0.2 -10.4 . . . 7.7 . 4.7 -10 1.4 1.3 . . . . 965 1.2 930 2.3 1.1 0.3 2.2 1.7 -22.4 . .
-1384 -586.7 5.8 2.2 0.8 3.4
1.6 0.3 1.2 -0.5 1.7 -0.7 1.9
Japan France
87 -0.3 1.6 -0.2 1.4 124.68
Euro area Sweden Italy
UK
7.7 117 4.8 -5.5 1.4 1.3
Switzerland Euro area Germany US
Euro area US Japan
15 Feb Jan Jan Jan Jan Jan Jan Jan Jan Feb A
-6.4 954 12.1 909R 1R -0.2 0.1 1.3 2 -23.9
924 -3.2 920 1.2 0.4 0.2 1.5 1.7 -23.2
17 February 2013
17 February 2013
10
Japan January Trade Balance

Adjusted merchandise trade balance, bn Exports, % yoy Imports, % yoy
GMT 23:50(-1D) 23:50(-1D) 23:50(-1D)
Period Jan Jan Jan
Previous -800.7 -5.8 1.9
SG Forecasts -701.3 -1.0 3.0
Consensus -586.7 5.6 2.1
Export trend to improve on back of recovering exports to China The December trade balance showed a larger-than-expected deficit, owing mainly to weaker export growth and stronger imports. On an annual basis, Japans trade deficit for calendar year 2012 turned out to be the worst on record, going back 34 years, amounting to 6.93 tr yen. Although the recent depreciation of yen will help increase exports in the medium to longer term, the yen depreciation has so far mainly pushed up import prices. Imports of LNG natural gas are likely to remain strong as a result of the lack of nuclear power. However, we think that export trend will gradually improve on back of recovering global economic conditions, especially in China. We forecast export growth to have improved to -1.0% yoy in January while imports grew 3.0% yoy. As a result, the trade balance in January is likely to have improved slightly to - JPY701.3 billion on a seasonally-adjusted basis.
billion yen
8000 7500 7000
billion yen
1,000
800 600
6500
6000 5500 5000
400
200 0 -200
4500
4000 3500 3000 Jan-2008
RHS: Trade balance (SA) LHS: Exports (SA) LHS: Imports (SA)
-400
-600 -800 -1,000
Jan-2009
Jan-2010
Jan-2011
Jan-2012
Source: Ministry of Finance, SG Cross Asset Research/Economics
Australia Wage price index

Wage cost index, % yoy, s.a. Wage cost index, % qoq, s.
GMT 00:30 00:30
Period Q4 Q4
Previous 3.7 0.7
Consensus 3.4 0.8
Gently rising unemployment to have contained wage growth The fact that unemployment has been on a gentle upward trend over the past nine months or so is likely to have contained wage pressures in Q4. However, given that the degree of deterioration has been quite mild, a sharp slowing in wages looks unlikely. Indeed, we expect wages to have been slightly more dynamic than in Q3, when the rise was a mere 0.7% qoq the smallest increase since Q3 2011. One factor that may have played a role was the jump in inflation owing to the introduction of the carbon tax unions are likely to have attempted to roll some of that burden onto employers. But there are also downside risks: one, the pronounced cooling in the resource sector as iron ore and coal prices slid has led to postponements and suspensions of investment projects, and may have led to a more pronounced slowdown in wages in that sector. Two, with the government realiszing that its balanced budget promise will not be met, a greater squeeze on public sector wages may have taken place.
4.5 4.0
4.0
4.5
3.5
5.0
3.0
Wages, % y oy (LHS)
Unemploy ment rate, % (inv erted)
5.5
2.5 Mar 05
6.0 Mar 07 Mar 09 Mar 11
Source: ABS, CEIC, SG Cross Asset Research/Economics
17 February 2013
17 February 2013
11
Germany CPI
Consumer Price Index (% MoM) Consumer Price Index (% YoY) CPI - EU Harmonised (% MoM) CPI - EU Harmonised (% YoY)
GMT 07:00 07:00 07:00 07:00
Period Jan F Jan F Jan F Jan F
Previous 0.9 2.1 0.9 2.0
SG Forecasts -0.5 1.7 -0.7 1.9
Consensus -0.5 1.7 -0.7 1.9
German CPI to confirm preliminary figures In 2012, the harmonized measure of German inflation remained on a downtrend during most of the year, even though a rebound was seen in August and this was reflected in the yearly average at 2.1% yoy. We expect the January HICP figure to be confirmed at 1.9% yoy which translates into a contraction of 0.7% from the previous month. Exceptionally, we had no regional data for this preliminary release due to a change of the base year in the calculation of the index. Yet, we mainly see two factors that are responsible for this slowdown in inflation. First, health expenses have been reduced following a government decision to cut a 10 fee paid to doctors. In addition, recent euro appreciation impacted inflation via imported prices. Looking ahead, we expect the HICP to grow at a slow pace during the first four months of the year and to accelerate to above 2% yoy through the remainder of the year. As part of our central scenario, we still expect inflation in Germany to continue growing more slowly than the euro average for the first four months of the year and to grow faster than the euro average once the VAT effect drops out of annual comparison in the peripheral countries.
5 SG forecasts euro area core countries peripheral
4 3
2 1 0 -1 1997
1999
2001
2003
2005
2007
2009
2011
2013
Source: Eurostat, SG Cross Asset Research/Economics
France Business Confidence Indicator Business Confidence Indicator
GMT 07:45
Period Feb
Previous 86
SG Forecasts 86
Consensus 87
Business Confidence to remain at low level in February The INSEE business confidence survey fell sharply last month and we expect it to remain unchanged this month, with weak demand prospects both domestically and internationally. This would reflect a reaction to the uncertainty surrounding the domestic reform agenda in France. Still, the survey should point to depressed activity levels in the manufacturing sector, particularly in the car sector.
9.0%
0.8 0.3 -0.2 -0.7 4.0% -1.0% -6.0% -11.0% -1.7 -2.2 -2.7 -16.0% -21.0%
-1.2
08
09
10
11
12
13
Standardized INSEE business confidence

Manufacturing output yoy
17 February 2013
17 February 2013
12
France CPI
CPI - EU Harmonised (% MoM) CPI - EU Harmonised (% YoY) Consumer Price Index (% MoM) Consumer Price Index (% YoY) CPI Ex Tobacco Index
GMT 07:45 07:45 07:45 07:45 07:45
Period Jan Jan Jan Jan Jan
Previous 0.4 1.5 0.3 1.3 125.02
SG Forecasts -0.2 1.8 -0.1 1.6 124.86
Consensus -0.3 1.6 -0.2 1.4 124.68
French HICP to accelerate in January on a year-on-year basis Last year, French HICP remained on a downward trend and grew at 1.5% yoy in December, hitting a 34-month low. The immediate consequence of this low inflation has been the cut in the yield of the Livret A (French preferred savings account) to 1.75% from 2.25%. However, we expect the January HICP figure to break this downward trend. Indeed, as we stated in our early December publication Energy prices to put upward pressure on French inflation in December and January energy prices will carry CPI higher during the beginning of 2013. Electricity and gas prices were increased by 2.5% in January 2013 and gasoline prices increased by more than 2% that month also, reflecting the gradual rise in excise duties. In addition, the summer 2012 surge in global food prices might also feed through to the January HICP figures. Downside risks could come from the recent appreciation of the euro which had a downward impact on imported prices. Regarding the CPI ex Tobacco, we expect a rate of 1.5% yoy in January.Looking ahead, we expect the French HICP to grow at 1.8% yoy in 2013 and to accelerate in the last quarter to average 2.0% yoy. In 2014, the HICP should average 2.4% yoy. Note that our forecast for FRCPIxt are available on Bloomberg, function SXEI.
4.0 3.5 3.0
Headline National CPI Core CPI
2.5 2.0 1.5 1.0

0.5 0.0 -0.5
-1.0 2000
2002
2004
2006
2008
2010
2012
2014
Italy Industrial orders Industrial Orders s.a. (% MoM) Industrial Orders n.s.a. (%YoY) Industrial Sales s.a. (% MoM) Industrial Sales n.s.a. (% YoY)
GMT 09:00 09:00 09:00 09:00
Period Dec Dec Dec Dec
Previous -0.5 -6.7 -0.2 -5.4
SG Forecasts 0.2 -10.4
Consensus
Italian industrial orders to stabilise in December Having seen a fairly precipitous fall in the early autumn, the Italian economy appears to have regained some poise in December with industrial production breaking three months of consecutive declines to rise by 0.4% mom. The manufacturing PMI orders index also recovered by over two points, to rise to 44.3. With orders and production levels broadly in line, after a 0.5% mom fall in orders in November, this suggests industrial orders should be well placed to make a modest gain. Overall therefore we look for Italian industrial orders to rise by 0.2% mom which should leave the level of orders virtually unchanged qoq. In non-working day adjusted terms, this should translate into a 10.4% yoy decline.
10 5 0 -5 -10 -15 Industrial production % 3m/3m -20 -25 1996 Industrial orders % 3m/3m
1998
2000
2002
2004
2006
2008
2010
2012
Source: ISTAT, SG Cross Asset Research/Economics
17 February 2013
17 February 2013
13
UK Labour data ILO Unemployment Rate (3mths) Employment Change (3M/3M) Claimant Count rate (%) Claimant Count Change, k Average Weekly Earnings (Total) 3M/(%YoY) Average Weekly Earnings (ex Bonus) 3M/(%YoY)
GMT 09:30 09:30 09:30 09:30 09:30 09:30
Period Dec Dec Jan Jan Dec Dec
Previous 7.7 90 4.8 -12.1 1.5 1.4
SG Forecasts 7.7 4.7 -10 1.4 1.3
Consensus 7.7 4.8 -5.5 1.4 1.3
Claimant count to fall again The striking contrast between the activity and the unemployment data is set to continue in the January data. The claimant count fell by 12.1k in December and, as the chart makes clear, it has been stuck in a fairly narrow range for all of the last year. We see little reason for that to have changed in January. Employment growth picked up to 91k 3mth/3mth in November after a postOlympics dip to 41k in October and that improved momentum probably continued in December. Part of the explanation for the amazingly high level of employment relative to activity has been the muted pace of earnings growth which reflects a high degree of realism on the part of workers about the fragility of the recovery. In December the rate of earnings growth ex bonuses should edge down from 1.4% 3mth yoy to 1.3%.
160 Claimant count 140 1mth change, k 120 100 80 60 40 20 0 -20 -40 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
Source: ONS, Datastream, SG Cross Asset Research/Economics
United States Housing starts Housing Starts, thousands saar Housing Starts, % change m/m Building Permits, thousands saar Building Permits, % change m/m
GMT 13:30 13:30 13:30 13:30
Period Jan Jan Jan Jan
Previous 954 12.1 909 1.0
SG Forecasts 965 1.2 930 2.3
Consensus 924 -3.2 920 1.2
Saw-toothed pattern in new housing starts continued in January Buoyed once again by unusually mild winter temperatures, the number of new housing units started likely climbed by 1.2% to a seasonally adjusted annual rate of 965,000 in January the strongest activity since June 2008. Singlefamily construction activity probably fuelled the projected gain (see accompanying chart). Stepped-up demand for new dwellings is expected to propel one-family starts 1.9% higher to 628,000, boosting the cumulative rise over the past six months to a little over 24%. The number of multifamily structures likely took a breather after Decembers 20% surge, retreating by 1,000 to 337,000. Mimicking the composition of housing starts during the reference period, the number of new building permits issued probably rose by 2.3% to 930,000, also the highest level since June 2008.
Sources: Census Bureau, SG Cross Asset Research, Economics
17 February 2013
17 February 2013
14
Euro area Consumer confidence Consumer confidence
GMT 15:00
Period Feb
Previous -23.9
SG Forecasts -22.4
Consensus -23.2
Euro area consumer confidence to continue modest gains Having hit a new cyclical low in November in the wake for further VAT increases in Spain and the Netherlands, euro area consumer confidence has recovered sharply. This continues to reflect the easing in financial market tensions and a noticeable reduction in labour market separations towards the end of the year. We broadly expect this trend to continue into February, albeit perhaps not quite with as much gusto as seen in January. A more modest increase should also reflect the re-emergence of sovereign concerns in Italy and Spain and the impact of the euro appreciation. Overall therefore, we look for euro area consumer confidence to rise to -22.4, up from -23.9 in January. This should be consistent with personal consumption continuing to contract in Q1 but at a significantly lower pace than observed in Q4.
4 10 5 3 0 -5 -10 1 -15 -20 0 -25
Consumption % y/y
-1 Consumer confidence
-30 -35
-2 1996
-40 1998 2000 2002 2004 2006 2008 2010 2012
Source: European Commission, SG Cross Asset Research/Economics
United States PPI Producer Price Index, % change m/m Producer Price Index, % change y/y PPI Excluding Food & Energy, % change m/m PPI Excluding Food & Energy, % change y/y Minutes from Jan 29-30 FOMC Meeting
GMT 13:30 13:30 13:30 13:30
Period Jan Jan Jan Jan
Previous -0.2 1.3 0.1 2.0
SG Forecasts 1.1 2.2 0.3 1.7
Consensus 0.4 1.5 0.2 1.7
Firmer food quotes nourished outsized jump in producer prices Powered by a vegetable-led surge in finished consumer food costs, the Producer Price Index (PPI) likely jumped by 1.1% in January, completely reversing the cumulative slide over the final three months of 2012 (see accompanying chart). Reflecting a near doubling of quotes for fresh and dry vegetables, the PPI for finished consumer foods leaped by 3.8% the largest one-month pop since November 1974. Wholesale energy prices are expected to rise for the first time in four months. Firmer gasoline costs, likely boosted the PPI energy gauge by 1.2%, accounting for almost one quarter of the forecast rise in the headline measure last month. Meanwhile, an anticipated rebound in capital equipment costs probably led a 0.3% rise in the PPI excluding volatile food and energy components. Our projections, if realized, would place the overall and core PPIs 2.2% and 1.7% above their respective year-ago readings.
Net Contrib % 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 Jan-11
May -11
Foods
Sep-11
Energy
Jan-12
May -12
Sep-12
Jan-13
Total
Excl Food & Energy
Sources: Bureau of Labor Statistics, SG Cross Asset Research, Economics
17 February 2013
17 February 2013
15
Thursday 21 Feb 2013

Australia China Japan Switzerland
Hungary France Switzerland Germany Euro area
UK
Poland UK US
Portugal
RBA Foreign Exchange Transactn, mln Conference Board China January Leading Economic Index Supermarket Sales (% YoY) Trade Balance, CHF bln Exports real s.a. (% MoM) Imports real s.a. (% MoM) Avg Gross Wages (% YoY) PMI Manufacturing PMI Services Money Supply M3 (% YoY) Real Estate Index Family Homes PMI Manufacturing PMI Services PMI Manufacturing PMI Services PMI Composite Public Finances (PSNCR), GBP bln PSNB ex Interventions, GBP bln Public Sector Net Borrowing (PSNB), GBP bln Central/Eastern European ZEW Indicator for February CBI Industrial Trends, Total Orders Consumer Price Index (% MoM) CPI Ex Food & Energy (% MoM) Consumer Price Index (% YoY) CPI Ex Food & Energy (% YoY) CPI Core Index s.a. Consumer Price Index n.s.a. Initial Jobless Claims, k Continuing Claims, k Markit US Purchasing Managers' Index Bloomberg Economic Expectations Existing Home Sales Revisions Existing Home Sales, mln Existing Home Sales (% MoM) Philadelphia Fed. Leading Indicators Fed's Williams Speaks on Monetary Policy in New York Current Account (EUROS)
00:30 02:00 05:00 07:00 07:00 07:00 08:00 08:00 08:00 08:00 08:00 08:30 08:30 09:00 09:00 09:00 09:30 09:30 09:30 10:00 11:00 13:30 13:30 13:30 13:30 13:30 13:30 13:30 13:30 13:58 14:45 15:00 15:00 15:00 15:00 15:00 18:00
Jan Jan Jan Jan Jan Dec Feb P Feb P Jan 4Q Feb A Feb A Feb A Feb A Feb A Jan Jan Jan Feb Jan Jan Jan Jan Jan Jan 16 Feb 10 Feb Feb Feb Jan Jan Feb Jan Dec
752 -1.5 0.9R -1.5 5.5 5.4 42.9 43.6 9.8 413.1 49.8 55.7 47.9 48.6 48.6 1.3 15.4 13.2 -20 0 0.1 1.7 1.9 231.475 229.601 341 3114 55.8 -7 4.94 -1 -5.8 0.5 -290.3
. . . . . . . 43.5 43.9 . . 51.2 55.4 48.8 49.1 49.1 . -4.4 . . . 0.1 0.2 1.6 1.9 231.97 230.321 345 3215 57 . . 4.87 -1.4 10 0.4 . .
3.9 43.8 44.4
50.5 55.5 48.5 49 49 -35 -8.7 -9.5 -15 0.1 0.2 1.7 1.8 230.297 360 3161
4.9 -0.8 1 0.2
Euro area - PMI PMI Manufacturing PMI Services PMI Composite
GMT 09:00 09:00 09:00
Period Feb A Feb A Feb A
Previous 47.9 48.6 48.6
SG Forecasts 48.8 49.1 49.1
Consensus 48.5 49.0 49.0
Euro area PMIs to reflect continuing improvement in sentiment Januarys euro area manufacturing PMI posted an outsized gain that seemed to shrug off the euros recent appreciation and reflect the impact of the easing in financial market tensions, especially in Germany. But beyond the headline figures there were also a number of cross-cutting dynamics at play. While we had expected services to be insulated from the euros appreciation, in fact the continued weakness of labour conditions weighed more heavily on service sector output especially in France and Italy. Spain meanwhile continues to make steady, albeit slow, progress towards a recovery. These trends should probably be reflected in February, put perhaps with significantly less gusto, reflecting the re-emergence of some sovereign concerns. On the other hand European equity markets are up 3% on the month, which is offset by a nearly 4% appreciation of the euro. Overall we look for a 0.9 increase in the manufacturing PMI (to 48.8) and a more modest 0.5 point increase in the services index (to 49.1). These levels should be consistent with a further 0.1% qoq contraction in euro area GDP in the first quarter.
1.4
1.2 1.0 0.8
4
2
0
-2
-4
0.6 -6
orders/inv entory ratio
0.4
Industrial production % 3m/3m
-8 -10 -12
0.2 0.0 1997
2000
2003
2006
2009
2012
Source: Markit, Eurostat, SG Cross Asset Research/Economics
17 February 2013
17 February 2013
16
UK Public finances Public Finances (PSNCR), GBP bln PSNB ex Interventions, GBP bln Public Sector Net Borrowing (PSNB), gbp BLN
GMT 09:30 09:30 09:30
Period Jan Jan Jan
Previous 1.3 15.4 13.2
SG Forecasts -4.4
Consensus -35 -8.7 -9.5
Key tax payment month likely to disappoint We remain sceptical of the OBR view that the PSNBex will show no slippage from its adjusted forecast of 80bn. Year to date, there has already been some overshoot and that trend is likely to persist. The weakest performance of the public finances tends to be in key tax payment months as a reflection of weak nominal income growth. January is just such a month. We predict that the PSNBex will move from a deficit of 15.4bn to a surplus of 4.4bn.
180 160
2009-2010
PSNBex, cumulative, bn
140
2010-2011
120 100 80 60 40 20 0 -20 -40 Apr May
2011-2012
2012-2013 Govt target
80
one-off effect of Royal Mail Pension Plan & SLS fee (30.3bn - 2% of GDP)
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Source: ONS, Datastream, SG Cross Asset Research/Economic
UK CBI Industrial Trends survey CBI Industrial Trends, Total Orders
GMT 11:00
Period Feb
Previous -20
SG Forecasts
Consensus -15
Some fall in output likely For the last few months, the output series of the CBI survey has run well ahead of the orders series. In January, output picked up from 0 to 8 as orders fell from -12 to -20. At the same time, as a consequence of the overly high production rate, stocks of finished goods rose from 6 to 15. In February, we expect that producers will have taken action to run down their stock levels, even if there is some revival in orders. Accordingly, the output index should fall into negative territory.
30 20 10 0
-10 -20
-30 -40 -50

Total orders
-60 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

Source: CBI, Datastream, SG Cross Asset Research/Economics
Output
17 February 2013
17 February 2013
17
United States CPI Initial Claims, thousands Continuing Claims, thousands Consumer Price Index, % change m/m Consumer Price Index, % change y/y CPI Excluding Food & Energy, % change m/m CPI Excluding Food & Energy, % change y/y Consumer Price Index, nsa Core CPI, sa
GMT 13:30 13:30 13:30 13:30 13:30 13:30 13:30 13:30
Period 16-Feb 9-Feb Jan Jan Jan Jan Jan Jan
Previous 341 3114 0.0 1.7 0.1 1.9 229.601 231.475
SG Forecasts 345 3215 0.1 1.6 0.2 1.9 230.321 231.97
Consensus 360 3161 0.1 1.7 0.2 1.8 230.297
Not much brewing on the consumer price front Higher food costs, combined with a services-led uptick in the core retail inflation gauge, probably pushed the Consumer Price Index (CPI) one tick higher in January the first increase since last October (see accompanying chart). Reacting to developments at the wholesale level, the CPI food cost measure likely rose by 0.3%, accounting for roughly half of the increase in the headline reading last month. Paced by anticipated pickups in shelter and medical care services costs, the CPI excluding food and energy is expected to climb by 0.2%, or by 0.214% before rounding, after a pair of 0.1% increases in November and December. In contrast to the above, energy prices are forecast to remain on a downtrend during the reference period. Led by yet another falloff in seasonally adjusted pump prices, the CPI energy barometer slipped by 1.4%, boosting the cumulative slide since September to 6%. Our estimates would place the overall and core CPIs 1.6% and 1.9% above their January 2012 levels.
Net contrib % 0.8
0.6 0.4
0.2 0.0 -0.2 -0.4 -0.6 Jan-11 Apr-11
Core Services
Jul-11
Oct-11 Jan-12 Apr-12

Energy
Jul-12
Oct-12 Jan-13
Total
Core Commodities
Food
Sources: Bureau of Labor Statistics, SG Cross Asset Research, Economics
United States Existing Home Sales Markit US Purchasing Managers Index Existing Home Sales, millions saar Existing Home Sales, % change m/m Leading Indicators, % change m/m Philadelphia Fed Manufacturing Index, % diffusion
GMT 13:58 15:00 15:00 15:00 15:00
Period Feb Jan Jan Jan Feb
Previous 55.8 4.94 -1.0 0.5 -5.8
SG Forecasts 57.0 4.87 -1.4 0.4 10
Consensus 4.90 -0.8 0.2 1.0
Closings on existing dwellings probably followed signed contracts lower Echoing the sharper-than-expected decline in pending home sales posted in December, the number of existing dwellings closed on probably fell by 1.4% to a three-month low seasonally adjusted annual rate of 4.87 million in January (see accompanying chart). With the total number of single-family homes, condos and co-ops available for sale expected to tumble by 9.4% to an alltime low of 1.65 million, the stock of such dwellings on the market contracted to an eight-year low of 4.1 months supply.
Index 115 mln, SAAR 6.0
105 5.0
95
4.0 85
75 2007 2008 2009 2010 Lagged Pending Home Sales Index (LHS)
3.0 2011 2012 2013 Existing Home Sales (RHS)
Sources: National Association of Realtors, SG Cross Asset Research, Economics
17 February 2013
17 February 2013
18
Friday 22 Feb 2013

China Germany
Czech Republic Euro area Sweden
Germany
Italy
Euro area US
China January Property Prices MNI February Business Sentiment Indicator GDP s.a. (% QoQ) GDP w.d.a. (% YoY) GDP n.s.a. (% YoY) Domestic Demand (% QoQ) Exports (% QoQ) Capital Investment (% QoQ) Government Spending (% QoQ) Construction Investment (% QoQ) Imports (% QoQ) Private Consumption (% QoQ) PPI (Industrial) (% MoM) PPI (Industrial) (% YoY) EU's Almunia Speaks on Competition Law in Paris Consumer Confidence Economic Tendency Survey Manufacturing Confidence s.a. IFO - Business Climate IFO - Current Assessment IFO - Expectations CPI (NIC incl. tobacco) (% MoM) CPI (NIC incl. tobacco) (% YoY) CPI - EU Harmonized (% MoM) CPI - EU Harmonized (% YoY) European Commission Releases Economic Growth Forecasts (Table) Consumer Confidence Ind. s.a. Retail Sales s.a. (% MoM) Retail Sales (% YoY) ECB Announces 3-Year LTRO Repayment ECB's Asmussen Speaks in Berlin Fed's Powell, Rosengren Speak in New York
01:30 01:35 07:00 07:00 07:00 07:00 07:00 07:00 07:00 07:00 07:00 07:00 08:00 08:00 08:00 08:15 08:15 08:15 09:00 09:00 09:00 09:00 09:00 09:00 09:00 10:00 10:00 11:00 11:00 11:00 12:00 15:30
4Q F 4Q F 4Q F 4Q 4Q 4Q 4Q 4Q 4Q 4Q Jan Jan Feb Feb Feb Feb Feb Feb Jan F Jan F Jan F Jan F Feb Dec Dec
-0.6 0.4 0.1 0 1.4 0.2 0.4 1.5 1 0.3 -0.3 1.2 -2.9 89.4 -18 104.2 108 100.5 0.2 2.3 0.3 2.6 84.6 -0.4 -3.1
. . -0.6 0.4 0.1 0.3 -3 -1.1 0.2 -0.4 -1.6 0.1 0.7 0.9 . -1.9 91.3 -14 105 108.6 101.6 0.2 2.2 -2 2.4 . 83.6 -1 -3.2 . . .
-0.6 0.4 0.1 -0.1 -2 -1.3 0.2 -0.8 -1 0.1 0.7 1 -1 91.5 -15 104.9 108.5 101.4
17 February 2013
17 February 2013
19
Germany GDP (breakdown) GDP s.a. (% QoQ) Exports (% QoQ) Capital Investment (% QoQ) Government spending (% QoQ) Construction Investment (% QoQ) Imports (% QoQ) Private Consumption (% QoQ)
GMT 07:00 07:00 07:00 07:00 07:00 07:00 07:00
Period Q4 Q4 Q4 Q4 Q4 Q4 Q4
Previous -0.6 1.4 0.2 0.4 1.5 1.0 0.3
SG Forecasts -0.6 -3.0 -1.1 0.2 -0.4 -1.6 0.1
Consensus -0.6 -2.0 -1.3 0.2 -0.8 -1.0 0.1
Weakness in Q4 mainly stemming from machinery investment and exports As we get final Q4 2012 GDP data, details for the components will also be presented for the first time. At this point, we dont expect any revisions to the flash GDP provided already last week. At that occasion, the German statistical office also provided some comments for individual components which were practically in line with what could be expected from the deep slowdown in growth in Q4. In particular, as expected, the largest contraction was seen for exports and machinery & equipment investment. This follows a similar pattern seen in times of larger financial stress and global trade weakness. What is perhaps more surprising is that the statistical office signalled weak growth in private consumption whereas we had expected a sizeable decline in line with retail sales which fell by 1.1% qoq in Q4. This suggests that the weak retail sales number for December may have been due to special factors. Also slightly surprising is the expected decline in construction activity, although weather-related factor seems to have played a part for December. Again, this is likely to be reversed in Q1, and we anticipate the same for other investment. Similarly, we see no profound reason for continued weakness in household consumption as wages run relatively high and unemployment is falling, and consequently expect a robust rebound in early 2013. All in all, the weak German Q4 number reflects Germanys relatively higher sensitivity to confidence and trade shocks, and the decline exaggerates the state of the German economy. In fact, we expect a robust rebound in Q1 and possibly a greater focus on domestic demand in 2013.
15.0 10.0
5.0 0.0 -5.0

-10.0 -15.0 -20.0 08Q1 09Q1 10Q1 11Q1 12Q1
Domestic demand Inventories

Net exports
GDP (% qoq ann)
Italy CPI CPI (NIC incl. tobacco) (% MoM) CPI (NIC incl. tobacco) (% YoY) CPI - EU Harmonized (% MoM) CPI - EU Harmonized (% YoY)
GMT 09:00 09:00 09:00 09:00
Period Jan F Jan F Jan F Jan F
Previous 0.2 2.3 0.3 2.6
SG Forecasts 0.2 2.2 -2.0 2.4
Consensus
Italian HICP to confirm preliminary figures Italian HICP has been trending lower but remained at high levels during the first three quarters of 2012. This is due to a VAT hike that took place in September 2011. The 2012 average has therefore reflected this base effect and printed at 3.3% yoy. We expect January HICP to grow at 2.4% yoy from 2.6% yoy in December. This translates to a 2.0% mom contraction in line with the earlier advance release. The monthly contraction in the HICP comes from seasonal sales that are not taken into account in the CPI NIC measure. On a year-on-year basis, Istat (the Italian statistics body) attributes the slowdown in inflation to the Housing, water, electricity, gas and other fuels component which grew at 4.7% yoy in January from 6.4% yoy in December. Looking ahead, we expect the Italian HICP to remain on a downward trend for the first half of the year. Then, we expect a VAT hike to take place in July pushing the basic rate up from 21% to 22%. This hike will carry the 2013 average of the HICP at 1.9%. As part of our central scenario, disinflation in Italy should then materialise in 2014 in common with the trend in a number of other euro area countries.
4.5
4.0
3.5 3.0
2.5
2.0 1.5 1.0

0.5
Core HICP
0.0
-0.5 2005 2006 2007 2008 2009 2010 2011 2012
17 February 2013
17 February 2013
20
Germany Ifo survey Business climate Expectations Current assessment
GMT 09:00 09:00 09:00
Period Feb Feb Deb
Previous 104.2 100.5 108.0
SG Forecasts 105.0 101.6 108.6
Consensus 104.9 101.4 108.5
Ifo survey to point to a steady improvement As investor and other forward-looking expectations have improved markedly in recent months, we also expect the broader Ifo business survey to continue pointing to gradually improving business conditions. However, as the pace of improvement was relatively strong in the past months, we also expect a moderation at some point, although probably in the coming months, as businesses are reminded of still weak demand conditions and headwinds from fiscal consolidation in Europe. Expectations should again be able to show a stronger increase than current conditions, with a narrowing in the coming months. Even if hard data do not fully mirror surveys in early 2013, there is likely to be a fairly large carry-over effect in industrial production into Q1, which suggests that growth could indeed be quite strong at the start of 2013. However, as part of this is just mechanical accounting, how factory orders, trade and confidence shapes up in the coming months will be key to judge the sustainability of the recovery in Germany into Q2. On current trends, it outlook is favourable but it will also be essential to monitor domestic conditions as measured by the Services PMI and retail sales.
2.0 Dev iations f rom long-run av erages in Standard Dev iations
1.0
0.0
-1.0
-2.0
IFO (Expectations)
-3.0 -4.0
PMI (Manufacturing) ZEW (Econ. Sentiment)
2005
2006
2007
2008
2009
2010
2011
2012
2013
Italy Consumer sentiment Consumer Confidence Ind. s.a.
GMT 10:00
Period Feb
Previous 84.6
SG Forecasts 83.6
Consensus
Consumer sentiment to fall further ahead of the weekends election Italian consumer confidence continues to plumb new lows reflecting the very weak outlook for consumers disposable income which is currently falling by around 5% yoy in real terms. Recent labour market data suggest no let-up in the bad news and January saw the Italian service sector PMI take another sharp fall. Februarys release is likely to be heavily influenced by the forthcoming election and the uncertainty this will bring will probably be reflected in a further fall in consumer confidence. Overall therefore, we look for Italian consumer confidence to fall by a further one point to a new record low of 83.6. What will be interesting is to watch this index in the coming months to gauge whether sentiment is bottoming out or whether the recession in Italy is actually accelerating. Private consumption meanwhile continues to fall sharply in Italy reflecting both the lack of consumer confidence and also the sharp falls in real disposable income. Neither of these trends are likely to be reversed quickly.
125 120 115 110 105 0 100 -1 95 90 85 80 1995 -2 -3 -4 -5 2013 Consumer confidence Private consumption % y/y 5 4 3 2 1
1997
1999
2001
2003
2005
2007
2009
2011
17 February 2013
17 February 2013
21
Italy Retail Sales Retail Sales s.a. (% MoM) Retail Sales (% YoY)
GMT 11:00 11:00
Period Dec Dec
Previous -0.4 -3.1
SG Forecasts -1.0 -3.2
Consensus
Consumer sentiment to fall further ahead of the weekends election Italian retail sales have now fallen for five consecutive months. With consumer confidence hitting record lows and real disposable income falling sharply, there seems to be little reason to believe that December will be any different. Euro area retail sales have already been released and show a sharp 0.8% mom decline in December following a 0.1% fall in November. While part of this decline reflects falls in Germany and Spain, it is likely that sales in Italy followed this trend and also contracted in December. Overall we look for the value of Italian retail sales to fall by 1% mom which follows a 0.4% fall in November. This would leave Italian retail sales down 3.2% yoy and down 2.1% 3m/3m which should be consistent with what we anticipate was a very weak quarter for Italian private consumption.
110 Italian Nominal Retail sales 105
100
95
90
85
80 1996
1998
2000
2002
2004
2006
2008
2010
2012
17 February 2013
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22
Policy event calendar the coming year

2013
February
22 24-25 Second repayment of LTRO Italy - Parliamentary election
June
5-6 6 10-11 13-14 17-18 18-19 19-21 20 21 21-22 27-28 BoE meeting ECB meeting BoJ meeting Civil 20 Summit (Russia) G8 Summit (UK) FOMC meeting International Economic Forum (Russia) Eurogroup meeting ECOFIN meeting BoJ meeting European Council
March
1 4 5 5 6-7 7 6-7 14-15 19-20 27 30 US - The sequester scheduled to go into effect Eurogroup meeting ECOFIN meeting China - Annual plenary session of the National Peoples Congress BoE meeting ECB meeting BoJ meeting European Council FOMC meeting US Current continuing resolution expires The 5th BRICS summit Malta Parliamentary election
July
1 3-4 4 10-11 19-20 EU presidency: Lithuania BoE meeting ECB meeting BoJ meeting G20 Finance Ministers and Central Bank Governors meeting Euro Bank Lending Survey FOMC meeting Eurogroup / ECOFIN meetings
April
3-4 3-4 4 11 12 15 18-19 19-21 24 26 30-1 BoE meeting BoJ meeting ECB meeting Eurogroup meeting ECOFIN meeting US No budget, no pay close to go into effect (still subject to Senate vote) G20 Finance Ministers & Central Bank Governors meetings World Bank spring meeting Euro Bank Lending Survey BoJ meeting FOMC meeting
24 30-31
August
31-1 1 7 7-8 31 BoE meeting ECB meeting BoE Inflation Report BoJ meeting BoE meeting
September
4-5 4-5 5 5-6 18 19 BoE meeting BoJ meeting ECB meeting G20 Leaders Summit (Russia) FOMC meeting ECB meeting Austria - Parliamentary elections Eurogroup / ECOFIN meetings
May
2 8-9 13 14 15 16 18 21-22 22 30 31 ECB meeting BoE meeting Eurogroup meeting ECOFIN meeting BoE Inflation Report ECB meeting US - Suspension of the debt ceiling to be lifted BoJ meeting European Council EU Summit OPEC meeting Italy Presidential election
October
2 3-4 9-10 10-11 11-13 17-18 24-25 29-30 27 30 ECB meeting BoJ meeting BoE meeting G20 Finance Ministers & Central Bank Governors meetings 2013 Annual meetings of World Bank group & IMF FOMC meeting European Council FOMC meeting Latest date for German Parliamentary election if held as a regular election (due between 1/9 and 27/10) Euro Bank Lending Survey Eurogroup / ECOFIN meetings
17 February 2013
17 February 2013
23
November
6-7 7 13 20-21 BoE meeting ECB meeting BoE Inflation Report BoJ meeting Eurogroup / ECOFIN meetings
December
4-5 5 17-18 19-20 19-20 BoE meeting ECB meeting FOMC meeting European Council BoJ meeting Eurogroup / ECOFIN meetings
17 February 2013
17 February 2013
24
Election calendar
EMEA
Euro area
Austria Parliamentary Presidential Belgium Parliamentary Sep-13 Apr-16 2014 Norway Parliamentary 9-Sep-13
Other EMEA Countries

Czech Rep. Parliamentary Presidential Denmark Parliamentary 2014 11-Jan-13 Sep-15
Cyprus
Presidential Parliamentary
17-Feb-13 2016 Mar-15 Aug-2016 Apr - 15 2018 2017 2017 22-Sep-2013 2017 Feb-15 2016 2016 2018
Romania
Presidential
2014
Estonia
Parliamentary Presidential
Hungary
Parliamentary
April 2014
Finland
South Africa
Apr-14 2014 Sep-14
France
Sweden
Parliamentary
Germany
Turkey
2014 2015
Greece
UK
Scottish independence referendum Parliamentary
June-14
Ireland
07-May-15
Italy
Poland
Parliamentary Presidential 24-Feb-13 May-13 2014
Presidential
2015
Americas
Argentina Parliamentary Presidential Oct-13 Oct-15 Oct-14 Oct-14 2016
Luxembourg
Parliamentary
Malta
9-Mar-13 Apr-14 May-15
Brazil
Netherlands
Parliamentary
Canada
Parliamentary
Portugal
2015 Jan-16 2014 2016 2015
Mexico
2018 Jul-15 Nov-16 4-Nov-14
Slovakia
United States
Presidential Congressional
Slovenia
Parliamentary
Asia
Australia Parliamentary Nov 13 India
Spain
Parliamentary
2015 Presidential Parliamentary Indonesia Presidential Parliamentary Japan Parliamentary 2017 May-14 Jul-14 2014 30-Aug-13
South Korea
Parliamentary
2016
Thailand
Parliamentary
Mar-14
17 February 2013
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25
Recent publications
Special Report What if China lands hard? (01/2012)
Our core scenario is that China will grow by 7.4% in 2013. There is still a chance however that China could land hard, with growth of less than 6%. A survey of global investors suggests that most underestimate how much asset prices would fall if China does land hard. We believe base metals could drop 50%, while the USD rallies and treasuries outperform other debt markets and global equity markets.
Asian Themes Japan elections shaking the Tree (12/12/2012)

Japan will elect a new Lower House of Parliament and government on Sunday. Regardless of who wins, monetary policy and FX policy look set to change drastically. - Return of the LDP and PM Abe almost certain - Monetary policy, and BoJ-bashing center stage - FX policy holds the key - Energy policy at a cross roads - Public sector debt problem sidelined - Foreign policy debate focused on China and Free Trade
European Themes Crunch time for Osborne. The UK fiscal plan is slipping. (3/12/2012)
On 5 December, the UK Chancellor, George Osborne, will deliver his Autumn Statement.There is a significant risk that he will report that the debt part of the fiscal mandate will be met one year late. The markets have been softened up for this and should not react strongly. The rating agencies might be less forgiving, though.
CEE Themes Cars driving CEE (16/11/2012)

Since the fall of communism and especially since EU accession, CEE countries have benefited from significant FDI inflows, much of which were destined for local car industries. In 2011, some 3.1 million cars were produced in CEE61, which represents about 20% of total EU production. Slovakia and the Czech Republic are the leading auto producers per capita in the world overall at present (more than 10 per 100 inhabitants).
European Themes - Structural reform in Europe - more needed with better design (30/10/12)
Having long delayed progress on structural reform, many EU countries, especially the large ones, are now facing a choice of protracted sub-par growth or making substantive progress on reform. A welldesigned package of reform has the potential to deliver more than 10 per cent extra GDP over a decade in the average EU country, and even more for larger EU countries and in steady state. In our new European Theme, we discuss the framework for reform, focusing on the four largest euro area countries (Germany, France, Italy, Spain).
Global Economic Outlook Exiting Uncertainty (16/09/2012)

Lead Anchor: Exiting Uncertainty
Anchor #2: US from stall speed to sustainable recovery Anchor #3: Euro area : more compromise, more reform Anchor #4: Trade : offshoring to onshoring Anchor #5: Asia :cyclical recovery in a structural slowdown Anchor #6 Inflation: managing expectations in the euro area Anchor #7 New unorthodox in monetary policy
For further details on the Global Economic Outlook see our latest country notes
Recent Editorials
Chinas monetary policy to twist and turn like a snake (15 February) German Q4 dip may be followed by a brisk recovery (14 February) France to face no growth backdrop (13 February) US Retail Sales: The first big piece of the Q1 GDP puzzle (12 February) Economic weakness and the euro (11 February)
17 February 2013
17 February 2013
26
Global Head of Research Patrick Legland (33) 1 42 13 97 79

patrick.legland@sgcib.com
CROSS ASSET RESEARCH ECONOMICS

Global Head of Economics Michala Marcussen (44) 20 7676 7813 michala.marcussen@sgcib.com SGCIB, London Euro area James Nixon Anatoli Annenkov (44) 20 7762 4676
anatoli.annenkov@sgcib.com
Michel Martinez (33) 1 42 13 34 21

michel.martinez@sgcib.com
United Kingdom Brian Hilliard (44) 20 7676 7165

brian.hilliard@sgcib.com
North America Aneta Markowska (1) 212 278 66 53

aneta.markowska@sgcib.com
Brian Jones (1) 212 278 69 55

brian.jones@sgcib.com
Asia Pacific Klaus Baader (852) 2166 4095

klaus.baader@sgcib.com
China Wei Yao (852) 2166 5437

wei.yao@sgcib.com
Japan Kiyoko Katahira (81) 355 49 5190

kiyoko.katahira@sgcib.com
Themes Dev Ashish (91) 0 80 2802 4381

dev.ashish@socgen.com
Inflation Herv Amourda (91) 80 2808 6779

herve.amourda@sgcib.com
Central Europe Anne-Franoise Blher * (420) 222 008 524

anne_bluher@kb.cz
Czech Republic Jiri Skop * (420) 222 008 569

jiri_skop@kb.cz
Poland Jaroslaw Janecki (48) 22 528 41 62

jaroslaw.janecki@sgcib.com
Romania Roxana Huela * (40) 21 301 44 72

roxana.hulea@brd.ro
Slovakia Miroslav Frayer * (420) 222 008 567 miroslav_frayer@kb.cz Russia Vladimir Kolychev * (74) 957 255 637
vkolychev@mx.rosbank.ru
Vladimir Tsibanov * (74) 957 255 637

vntsibanov@mx.rosbank.ru
Research Associates Harriett Beattie Ludovic Martin
Fabien Bossy Yacine Rouimi
Sabine Chaubet Sami Srensen
Claire Huang
* Contributions from other SG Group entities: Komercni Banka, Rosbank, BRD.
17 February 2013
17 February 2013
27
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On Our Minds - : Week Ahead

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On Our Minds - : Week Ahead

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ECONOMICS 17 February 2013

Weak Ahead edition

Extract from a report

On our minds - Week Ahead

TOP CLIENT QUESTIONS

Fed Releases M inut es f rom Jan 29-30 FOM C M eet ing

michala.marcussen@sgcib.com Continued page 2

On our minds - Week Ahead

TOP ISSUES FOR THE WEEK AHEAD

On our minds - Week Ahead

Cyprus closing in on a bailout

On our minds - Week Ahead

Poland: the lowest inflation rate since August 2007

Food Core inf lation

Utilities CPI, % mom

On our minds - Week Ahead

Economic Calendar & Previews

China Russia South Korea Ireland

Russia Ireland Russia

. . . . . . . . . . . . . 4.8 . 4.8 5.7 1.5 . . .

4.8 3.3 -25.5 4.8 5.7 0.5

On our minds - Week Ahead

Russia Domestic demand Retail Sales (% YoY) Investment in Productive Capacity

Period January January

Previous 5.0 -0.7

SG Forecasts 4.8 1.5

Consensus 4.8 0.5

Russia Labour market Unemployment Rate (%) Real Wages (% YoY)

Period January January

Previous 5.3 0.3

SG Forecasts 5.7 4.8

Consensus 5.7 3.3

Unemployment rate, SA% NAIRU Real Wages, yoy%, inv rhs

4% 2006 2007 2008 2009 2010 2011 2012

On our minds - Week Ahead

Monday 18 Feb 2013

South Korea UK Australia Japan Euro area Czech Republic Poland

Jan Feb Feb Jan Jan Jan F Dec Dec

-1.2 0.2 2.4 2.2 17.9 -26.1 20.8R 15.9R

-1.6A 2.8A 1.1A -2.4A 10.8A -26.4A 27A 13.9A

Jan Jan Jan Jan

8.8 2.4 -0.4 -0.5

-10.8 1 0.5 -0.9

On our minds - Week Ahead

Tuesday 19 Feb 2013

Japan Australia Japan Euro area

Germany Euro area Portugal Poland

US Euro area Greece Spain

Dec F Dec F Jan

93.4 92.7 -16.3

-0.8 0 -0.7 1.1 311.95 8.5 8.1

2.7 -3 0.2 -1.1 48

GMT 10:00 10:00

Period Feb Feb

Previous 31.5 7.1

SG Forecasts 40.6 8.0

Consensus 35.0 9.0

Sentix FUTURE EXPECTATION NADJ ZEW ESI - NADJ

Source: Datastream, SG Cross Asset Research/Economics

On our minds - Week Ahead

Poland Industrial production Industrial production,% mom Industrial production,% yoy

GMT 13:00 13:00

Period January January