16 October 2014 www.millenniumbp.ch FOREX MACRO ENVIRONMENT EUR / USD 80 Last 1 D 1 M 3 M 1.2792 -0.36% -1.30% -5.42% YTD -6.92% Overbought 40 Oversold 20 YTD 1.425 1.400 1.375 1.350 1.325 1.300 1.275 1.250 1.225 EUR / USD RSI 60 1 Y -5.48% Last 1 D 1 M 3 M EUR/CHF 1.2068 0.01% -0.14% -0.68% 1 Y GBP/EUR 1.2498 0.15% -0.48% -1.36% EUR/PLN 4.2130 -0.19% 0.62% 1.91% EUR/BRL 3.1545 3.78% 4.03% 4.75% USD/PLN 3.2933 0.16% 1.94% 7.77% 8.96% 7.02% USD/BRL 2.4576 0.15% 5.81% 10.65% 4.11% 13.07% -1.67% -2.37% 3.76% 6.04% 1.41% 1.15% -2.85% 7.04% ● The global economy faces its biggest test of confidence since the European sovereign debt crisis as investors fear it’s running out of engines.Japan and the euro area are throwing up fresh signs of weakness by the day and emerging markets such as China are dragging instead of driving growth. The sense of tumult is being exacerbated by war in the Middle East, the standoff in Ukraine, street protests in Hong Kong and the spread of Ebola to Dallas.The worry is that five years since the world limped out of recession, central banks have virtually exhausted their stimulus arsenals if activity keeps fading. That leaves the hopes of financial markets riding on the U.S. to resume its historical role as a locomotive robust enough to pull up demand elsewhere. ● Greece’s plan to escape the shackles of the biggest bailout in history is at risk of falling apart. A monthlong market selloff in stocks and bonds has pushed yields to a level that investors say threatens once again to cut Greece off from markets. A rally in Greek government bonds earlier this year emboldened Prime Minister Antonis Samaras, who announced plans to sever the 240 billion-euro ($307 billion) lifeline that has kept the country afloat since 2010. The bailout loans came with strict conditions on belt tightening that exacerbated Greece’s worst recession on record and triggered a political backlash.Samaras’s plans may yet be derailed by the selloff. MARKET HIGHLIGHTS FX COMMENTS ● EUR/USD: Next support at 1.2680/ Next resistance at 1.2941 ● The dollar has a high risk of falling versus the yen and adding to its biggest slide in six months, according to JPMorgan Chase & Co., with global markets roiled by concerns that growth and inflation are slowing. ● Asia’s resistance to the emerging-market currency rout is wearing off. An index tracking 10 of the region’s exchange rates has fallen 1.2 percent since the start of September, led by losses in Indonesia’s rupiah and South Korea’s won that have erased the gauge’s gains for the year. While Asia managed to resist an exodus from developing-nation currencies for months, the region’s $7.5 trillion in foreign reserves are no longer proving enough to offset the slump in global growth that threatens to curb demand for the region’s exports. EQUITY INDICES YTD 1 Y ● Just last month, Europe’s stocks were trading near their highest levels in six years, with optimism spreading that central-bank stimulus would ignite the economy. Much has changed. The Stoxx Europe 600 Index plunged the most in almost three years yesterday, closing down 11 percent from its June high to meet the definition of a correction. At one point, Greece’s ASE Index was down 10 percent from the previous day’s close, finishing with a loss of 6.3 percent. Italy’s FTSE MIB Index fell 4.4 percent and Portugal’s PSI 20 Index hit a two-year low. Europe is leading a rout that has wiped almost $5 trillion from the value of equities worldwide. While data on everything from industrial production in Germany to manufacturing in the U.K. has contributed to the gloom, sentiment began souring on Oct. 2, when European Central Bank President Mario Draghi stopped short of spelling out how many assets the ECB might buy to head off deflation. ● European and U.S. equity-index futures signaled rebounds as Asian stocks slid toward a six- month low and average bond yields for the biggest developed economies fell to a record on concern that Europe’s woes may scupper the global recovery. Crude oil extended declines. NSN M9HES43PWT1C ● Wall Street’s declaration in recent weeks that it was all-clear to dive back into junk bonds is proving premature as new concerns over the health of the global economy collide with reports showing investors’ protections in the debt are the weakest on record. Bonds of riskier companies worldwide have lost more than 1.1 percent on average since Morgan Stanley published a report on Oct. 6 titled “Buy High Yield.” Two days later, Pacific Investment Management Co. said there were “compelling” opportunities in speculative-grade debt following a September selloff that was the steepest in more than a year. Last 1 D 1 M 3 M DOW JONES 16,141.74 -1.06% -5.78% -5.81% -2.62% 4.99% S&P 500 1,862.49 -0.81% -6.83% -6.01% 0.76% 8.19% NASDAQ 4,215.32 -0.28% -7.41% -4.76% 0.93% 9.79% EUROSTOXX50 2,892.55 -3.61% -10.22% -9.69% -6.96% -4.07% DAX 30 8,571.95 -2.87% -11.01% -13.06% -10.26% -3.10% FOOTSIE 100 6,211.64 -2.83% -8.55% -8.45% -7.96% -5.48% CAC 40 3,974.89 0.89% -9.85% -9.02% -7.47% -6.33% SMI 8,144.88 -2.32% -7.49% -5.48% -0.71% 2.04% IBEX 35 9,838.50 -3.59% -8.89% -7.78% -0.79% -0.41% PSI 20 5,111.21 0.62% -12.15% -18.86% -22.07% -19.28% INDICATOR COUNTRY EXPECTED PRIOR BANK RATE EZ 0.4% 0.1% US FED. RESERVE (FED) 0.25% EUROPEAN CNT. BK (ECB) 0.05% BANK OF ENGLAND 0.50% RECOMMENDATIONS & RATING CHANGES ● AXA SA OUTLOOK TO POSITIVE FROM STABLE BY S&P ● NETFLIX RAISED TO 'HOLD' AT JEFFERIES ● TELEFONICA DEUTSCHLAND CUT TO REDUCE VS HOLD: KEPLER CHEUVREUX ● VOLVO CUT TO 'REDUCE' AT KEPLER CHEUVREUX ● EBAY CUT TO 'SECTOR PERFORM' AT RBC CAPITAL ●NSN ASTRAZENECA M9738R3PWT1D ADDED TO EUROPE 1 LIST AT BOFAML ● VIVENDI RESUMED BUY AT BOFAML, PT EU20 ● ANTOFAGASTA RAISED TO NEUTRAL VS SELL AT UBS ECONOMIC INDICATORS RELEASE MAIN CENTRAL BANKS RATES 2,381.76 -0.88% -4.67% -0.64% -0.80% -4.93% CPI MoM 888.93 -6.25% -20.85% -25.30% -23.54% -20.99% CPI YoY EZ 0.3% 0.3% NIKKEI 14,738.38 -2.22% -7.37% -4.17% -9.53% 1.87% Gold and Forex Reserve RU -- 454.7B SHANGHAI 2,368.52 -0.22% 3.13% 14.57% 11.94% 8.00% Initial Jobless Claims US 290K 287K BANK OF JAPAN 0.10% KOSPI 1,918.83 -0.37% -6.07% -4.70% -4.60% -5.69% Industrial Production MoM US 0.4% -0.1% SWISS NATIONAL BANK 0.00% 0.29% Philadelphia Fed Business Outlook US 19.8 22.5 POLISH CENTRAL BANK Net Long-term TIC Flows US -- -18.6B SELIC RATE (BRAZIL) Retail Sales Ex Auto and Gas US 0.4% 0.5% WIG 20 ASE BOVESPA VOLATILITY 56,135.27 -3.24% -5.04% 0.75% 8.99% Last 1 D 1 M 3 M VIX 26.25 15.18% 106.21% 138.64% 91.33% 78.45% Business Inventories US 0.4% 0.4% V2X 28.76 23.00% 68.21% 94.16% 66.66% 54.65% Monthly Budget Statement US $90.0B $75.1B CREDIT SPREADS (bps) YTD 1 Y 1 D 1 M 3 M YTD 1 Y ITRAXX MAIN 73.23 -2.3 12.6 13.4 3.1 -14.5 ITRAXX HIVOL 77.91 2.9 11.6 11.2 -25.2 -57.2 ITRAXX X-OVER 390.64 -11.2 138.0 146.0 103.3 35.8 ITRAXX FIN SEN 72.44 -2.0 12.3 4.4 -14.3 -47.5 ITRAXX FIN SUB 170.33 -6.2 84.7 65.8 42.0 -6.3 COMMODITIES (USD) 1 D 1 M 3 M YTD 1 Y SPGS CMDTY IND 533.56 -1.16% -8.99% -15.02% -15.61% -16.16% UBS CMDTY IND 82.79 -0.40% -14.95% -21.38% -25.29% -25.37% GOLD OIL (WTI NY) NATURAL GAS 1240.80 -0.27% 0.41% -4.54% 3.20% -3.21% 80.62 -1.42% -15.03% -20.34% -18.09% -21.18% -4.71% 3.81 0.18% -7.57% -10.00% 1.01% WHEAT 507.25 0.25% 2.22% -5.72% -16.19% -25.57% SOYBEAN 953.25 0.08% -2.80% -19.71% -27.37% -25.32% COPPER 6781.00 0.01% -1.01% -4.53% -8.30% -5.64% ALUMINUM 1912.50 0.18% -2.35% -0.80% 8.39% 5.96% Sovereign (%) 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 USD EUR GBP JPY CHF PLN * * PLN right axis 2.00% 11.00% Money Market (%) 7.0 6.0 5.0 3.0 4.0 3.5 2.5 3.0 2.0 2.5 4.0 3.0 2.0 1.0 2yr 0.31 -0.06 0.56 0.04 -0.04 1.716 5yr 1.32 0.12 1.29 0.15 0.08 2.033 10yr 2.10 0.79 2.01 0.49 0.42 2.611 30yr 2.90 1.68 2.78 1.64 1.09 6.054 0.0 1.5 2.0 1.5 1.0 1.0 0.5 0.0 USD EUR GBP JPY CHF PLN * 0.5 1m 0.15 0.006 0.51 0.09 0.00 1.98 3m 0.23 0.08 0.56 0.11 0.01 1.93 6m 0.32 0.18 0.69 0.16 0.06 1.92 12m 0.54 0.34 0.99 0.32 0.17 1.91 0.0