U.S. Morning Call for Monday, December 14, 2009

Overnight Developments

* The European DJ Stoxx 50 this morning is up +0.71% and Mar S&Ps are up +5.60 points. Global stock markets received a boost today following news that Abu Dhabi will provide $10 billion to Dubai's Nakheel PJSC in order to avoid a default. Abu Dhabi's pledge reassured investors who had worried about a possible worldwide contagion from Dubai World's threat of defaulting on its debt as it will allow Dubai World's Nakheel real-estate subsidiary to make $4.1 billion of payments on bonds that mature today. European bank stocks that had exposure to the U.A.E. rallied with HSBC up 2.2% and Standard Chartered gaining 3.4%. Banks pared some gains after Citigroup said it reached an agreement with the US government and its regulators to repay the $20 billion that the government holds in its Troubled Asset Relief Program (TARP) trust preferred securities and to terminate the loss-sharing agreement with the government. Daimler AG rose 1.8% after saying it expects growth and sales to continue to rise in China and said it will triple production capacity at a Beijing venture for a new Mercedez-Benz E-Class sedan. Nomura Holdings predicts the Euro Stoxx 50 Stock Index will rise to 3,200 by the end of 2010, as the rally in 2009 was a "macro trade" while gains in 2010 will have a different complexion, as "the emphasis will switch to the micro, with themes within the market becoming more important."

* The Asian markets today closed mixed with Japan down -0.02%, Hong Kong +0.84%, China +1.06%, Taiwan +0.31%, Australia +0.41%, Singapore -0.04%, South Korea +0.34%, India -0.13%. Japan's Q3 Tankan large manufacturers sentiment survey rose +9 to -24 and showed that large companies planned deeper spending cuts to protect earnings that are under threat from a rising yen that surged to a 14-year high against the dollar last month. The Xinhua news agency reported the China's government will target "excessive" growth in property prices in some cities as it plans to "speed the construction of low-cost housing" and strengthen supervision of the real-state market. Norman Chan, the head of Hong Kong's de facto central bank warned that Asia's experience in the past 20 years shows the biggest threat to financial stability in Asia "is from asset bubbles, rather than inflation." Korea's Samsung C&T, builder of the world's tallest tower in Dubai, closed 3.3% higher after Abu Dhabi agreed to provide the money for Dubai's financial support fund.
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IWAN CAHYO SURYADI, "The Trend is Your Friend"