Revenue season/Japan/HK/Spain/US

Revenue season continues to be difficult with CAT another large multinational reporting today sales below estimates. With y/o/y nominal global GDP growth slowing, we’re obviously seeing first hand its impact on company sales with more than half of the reporting S&P500 co’s missing revenue estimates. In Asia, Japan’s exports in Sept fell 10.3% y/o/y with exports to China down 14.1% and to Europe lower by 21.1% y/o/y. In response, the yen is down vs the US$ for an 8th straight day to the lowest level since July. With the yen, US$ and euro seeing their fair share of central bank largesse, money is flying into the Hong Kong $ as its trading right at the upper end of its band vs the US$ and the Hong Kong Monetary Authority intervened on Friday buying $600mm of US$’s to weaken the HKD. It’s inevitable that over the next few years the HKMA will repeg to the yuan from the US$ when full yuan convertibility takes place. In Spain, mixed regional election results for PM Rajoy has it still uncertain when he will ask for EU/IMF help and that has Spanish bonds trading off a touch and the IBEX flat on the day. In the US, ahead of this week’s 2 day FOMC meeting, the 10 yr note yield is back to 1.80% vs 1.76% the day before QE3 was announced.

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