Recap 11-01-11

Main Items:

  • The media reported that a referendum will not occur, but then reported that it will. The parliamentary confidence vote is still scheduled for Friday.
  • 6 Greek ruling party members called for Papandreou to resign, and one quit, leaving the Pasok party majority at 152 – GreekState news Agency
  • US ISM declined to 50.8 vs 52 exp and 51.6 prev. The new orders component was the strongest since April. There is a confidence vote scheduled for Friday.
  • 700mm of customer cash was reportedly missing at MF Global.
  • RBA cut 25bps to 4.5% as exp


  • UK Mfg PMI declined to 47.4 in Oct vs 50 exp and 51.1 prev
  • UK 3Q GDP printed 0.5% QoQ vs 0.3% exp and 0.1% prev
  • China Mfg PMI declined to 50.4 vs 51.8 exp. And 51.2 prev. The HSBC measure was finalized at 51.
  • South Korea HSBC Mfg PMI improved to 48 vs 47.5 prev
  • Australia Mfg PMI improved to 47.4 in Oct vs 42.3 exp


The details of the ISM data was very positive. But with news that the Greek referendum was and wasn’t occurring, along with news that Papandreau will and won’t win the confidence vote meant that the market completely disregarded the fundamentals. These types of headlines basically make informed bets impossible, so most managers are likely to avoid trading ahead of the confidence vote on Friday. In the meantime, the Troika is likely to release the 8bn tranche this month despite the referendum, as a failure to do so will result in an immediate default. In the coming weeks, we’ll see various informal polls that will gauge the likely result of the referendum. As a result, the markets are likely to price in the likely yes/no result well before it happens.