Recap 5-30-12

Main Items:

• Overnight, the FT carried a story that the ECB rejected Spain’s idea to use the bank to get money into Bankia. The ECB has since denied it has been contacted regarding the plan.
• EU has said that it envisages the use ESM to make direct recapitalizations into banks.
• US Pending Home Sales growth improved to 14.7% YoY vs 22.0% exp and 10.8% prev
• GS: In Spain, April saw €31 bn (or 1.9%) deposit outflow from banks. Within this only half is attributable to corporate (down €7 bn or -3.4%) and retail balances (down €8 bn, or -1.1%). The residual outflow is attributable to deposit reductions by others. (financial institutions / pension funds / etc) Germany recorded €25 bn of inflows. Note, however, that this was before recent market stress

Overseas:

• EU Industrial Confidence declined to -11.3 in May vs -10.2 exp and -9 prev
• EU M3 growth slowed to 2.7% SAAR over 3 months vs 3.1% exp and 2.8% prev
• Swiss KOF LEI improved to 0.81 in May vs 0.4 exp and prev
• Japan Mfg PMI was unchanged at 50.7 in Apr
• Australian retail sales declined 0.2% m/m versus +0.2% expected.

Upcoming Data:

• Thurs: Month End, Swiss GDP, German Retail Sales, German Employment, EU CPI Estimate, US ADP, Jobless Claims, 1Q GDP 2nd Rev, Chicago PMI
• Thurs Continued: Australia PMI, China PMI, HSBC PMI, South Korea PMI
• Fri: EU PMI, Swiss PMI, UK PMI, Italian Unemployment, EU Unemployment, Canadian GDP, US Payrolls, Unemployment Personal Spending, ISM

Commentary:

Well, yesterday’s expectations were way off. There’s no point being just a bit wrong when you can do it spectacularly!

In all seriousness, however, the US ADP and Chicago PMI prints tomorrow are especially important. Consensus estimates are for prints of 150k and 56.8, respectively. Disappointing prints will continue the trend of negative US data surprises, which appeared to be stabilizing of late. In turn that would likely confirm the view that last week’s price action was just a short covering bounce.