ECB Lowers Growth Forecasts As It Confirms Plan To End Easy Money

"Making money by going short is not as easy as it seems," he writes describing his findings.

"Since the UK stock market hit its latest low on 27 December, just six of the 30 most-shorted shares have fallen in value." Ouch....

Sure, the picture is different for the last 12 months where the top 30 shorted stocks lost 21.8 percent but still, the recent rally must have hurt among the shortselling crowd.

You can see AJ Bell's chart below, but let's remind readers that not only is short-selling tricky but there is also - in theory - no limits to the losses investors can sustain.

Whereas the only risk you take going on a good old plain-vanilla buy-and-old strategy is losing all your savings. In theory.

(Julien Ponthus)

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CAR TARIFFS WOULD BULLDOZE (WHAT'S LEFT OF) EURO ZONE GROWTH (1154 GMT)

More trouble for Germany could be looming.

After Trump told his Secretary of Commerce last year to determine whether U.S. security was threatened by car imports, the Department of Commerce should release its investigation report no later than Feb 17 - and once that's released, the president has 90 days to decide on a course of action.

Given Trump's repeated threats of car tariffs on Europe, this looming deadline means the relative peace that's reigned, helping the autos sector .SXAP rise nearly 9 percent this year, could be shattered quite soon.

The U.S. is the main export destination of European Union cars, well ahead of China, and the impact is significant for Germany especially which has the biggest value added in exports of cars to the U.S. (see below).

Pictet strategist Nadia Gharbi says tariffs would "markedly" reduce their 2019 growth outlook for the euro area, by 0.2 to 0.3 percentage points at least (it's currently at 1.4%).

"The indirect impact from the shock to confidence (affecting investment and consumption) could be much greater than the direct impact from trade," she notes.

Pictet assumes an increase in auto tariffs from 2.5% to 25% will cause investment in car industry to decline by 15-30%. On the trade side, they assume, given the price effect, a decline of car exports to the US by 20-30%.

A key question, according to Pictet's Gharbi, is whether the U.S. administration will also impose tariffs on car parts.

That would hurt U.S. car manufacturers too, as their final products will suffer from more expensive intermediate goods - so Trump may well refrain from imposing them.

Only time will tell.

(Helen Reid)

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GERMANY'S RED, TRADE WARS ARE BLUE (1144 GMT)

Brexit is gloomy

But stocks are cool

European bourses are not letting the dismal German GDP data ruin Valentine's Day even if the indexes' good mood is rising eyebrows.

"Eurozone equity markets are in positive territory, which is odd given the German GDP numbers," wrote David Madden from CMC Markets.

Longer term though, "European stocks are at risk of being left trailing behind the US," reckons IG's Chris Beauchamp.

Another consequence pointed out by Neil Wilson from Markets.com, is that Germany "could easily be heading for recession" and that would probably change Draghi's plan.

"I remain wedded to the thesis that the ECB will have to loosen policy again (more QE perhaps) before it can tighten". In an earlier note, Nomura also took the view that both in the U.S. and the Euro zone "it now appears increasingly likely that monetary policy will be left on hold".

Anyhow, the data is definitely not the best to be showing up on a date with both DekaBank and ING economists going with the "black eye" analogy for Germany.

(Julien Ponthus)

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WHAT'S UP WITH BANKS "THE THEME IS CAPITAL MISS" (1011 GMT)

Banks are today's outlier in Europe. Their shares are broadly lower in an otherwise positive market and it looks that weak capital is a common feature emerging from the raft of updates released this morning from Credit Suisse to Commerzbank - and low capital is a key reasons that's keeping investors away from the battered sector.

"The theme today is capital miss," says a European trader.

Here's his recap on the capital numbers:

* Credit Suisse: Capital fell from 12.9% to 12.6%

* KBC : Capital a slight miss at 16% pct vs 16.1% expected

* Credit Agricole : Capital at 11.5% is 10bps below expectations

* Commerzbank: Capital of 12.9% was below the 13.1% expected

European banks .SX7P were last down 0.5 percent, leading sectoral losers, while the broader STOXX 600 .STOXX was up 0.4 percent.

In the snapshot you can see how (poorly) European banks have performed over the last 2 years. The sector has been hit hard by the global financial crisis in 2007-2008 and has struggled to meaningfully recover from the lows hit then.

(Danilo Masoni)

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THE HEAVYWEIGHTS ARE BACK: NESTLE AT NEW RECORD, AIRBUS VERY CLOSE (0851 GMT)

Solid updates from the likes of Swiss food giant Nestle NESN.S to aerodefence group Airbus AIR.PA and UK drugmaker AstraZeneca AZN.L are bringing the STOXX 600 benchmark into its fourth straight day of gains, with hopes for a breakthrough in the Sino-US trade talks lingering in the background.

The STOXX has hit its highest level in three months, while Nestle has broken a new record and Airbus went very close.

Here's your opening snapshot:

(Danilo Masoni)

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LIFT OFF FOR AIRBUS SHARES AS IT GROUNDS ITS SUPERJUMBO (0757 GMT)

European stock futures are making tentative gains this morning as investors continue to draw comfort from generally positive noises from Beijing overnight as U.S.-China talks aimed at resolving the protracted trade spat between the world's two largest economies kicked up a level.

The mood is cautious ahead of Q4 euro-zone GDP data, although the DAX futures took weaker-than-expected German GDP numbers in their stride.

Earnings season continues, with Airbus, Astrazeneca, Commerzbank, Credit Agricole, Credit Suisse and Nestle among the big names reporting.

Airbus comforted investors with a better-than-expected set of Q4 results as it confirmed plans to scrap production of the A380 superjumbo, abandoning its dream to challenge Boeing's legendary 747. The shares were seen up as much as 5 percent.

British drugmaker Astrazeneca is expected to be rewarded for stronger-than-expected Q4 product sales on the back of strong demand for newer drugs including cancer medicines. The shares are indicating higher.

Otherwise it was a mixed bag of results from German and French industrial players from chemicals to elevator makers.

Air Liquide shares were seen under pressure after its results, Swiss elevator and escalator maker Schindler posted a 14-percent rise in full-year net profits and French electrical equipment producer Schneider Electric said expects earnings growth to ease this year but at a pace slower than the market expects.

Dutch speciality chemicals company DSM pledged to buy back 1 billion euros ($1.13 billion) in shares, as its fourth-quarter core profit topped expectations.

More bank earnings - Commerzbank and Credit Agricole both delivered better-than-expected Q4 profits. Commerzbank shares are up more than 5 percent in pre-market trade.

Credit Suisse said it sees markets starting to steady, as it reported its first annual profit since 2014, while Deutsche Bank will be in focus after an FT report that major shareholders called for cuts at its struggling investment bank. The bank has rebuffed the report.

German stock exchange operator Deutsche Boerse shares are expected to drop after it posted a much bigger-than-expected fall in Q4 net profit and said it had become more cautious about this year's outlook.

Consultancy services group Capgemini's was seen under pressure after missing FY profit expectations.

Nestle said it expected its organic sales to rise by more than 3 percent this year after an improving performance in China and North America helped growth accelerate in 2018 after six years of slowdowns. But dealers said the outlook may not be good enough to meet the market's high expectations.

The monthly survey of British property surveyors showing the most downbeat for house prices in nearly eight years is likely to pour some cold water over the recent run-up in UK housebuilders.

In dealmaking, Spanish supermarket DIA is reported to be a takeover target of Lidl, Carrefour and Sonae.

Here are some more headlines (others in previous blogs):

AstraZeneca product sales top forecasts with 8 pct rise 

Insurer Lancashire swings to profit in 2018, expects higher rates ahead 

Indivior 2018 operating profit rises 51 pct on lower expenses 

Ashmore Group H1 assets buoyed by $2.4 bln in net inflows 

UK's Restaurant Group CEO Andy McCue To Leave 

Credit Suisse sees markets steadying in early 2019 

Aegon's H2 underlying profit drops, lags estimates 

French retailer Casino to sell catering arm 'R2C' to Compass 

French minister says government backs Fincantieri's deal: newspaper 

(Josephine Mason and Danilo Masoni)

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TENTATIVE GAINS SO FAR IN EUROPE (0729 GMT)

European stock futures are making tentative gains so far - between 0.2 and 0.3 percent -, with DAX futures taking a weaker-than-expected GDP reading in their stride.

GDP in Europe's biggest economy grew by 0.0 percent quarter-on-quarter, slower than the 0.1 percent growth forecast. Perhaps there is some relief it escaped recession by the narrowest of margins, although a downbeat number may have been priced in 

Here's your futures snapshot and some of the major headlines so far this morning:

Four big shareholders of Deutsche Bank call for cuts at investment bank - FT 

Airbus to scrap production of A380 superjumbo 

Renault Chairman: not time to discuss Nissan chairmanship -Jiji 

Commerzbank posts 51 percent rise in Q4 net profit 

Credit Agricole's Q4 profits rise more than expected, meets targets a year early 

Credit Suisse sees markets steadying in early 2019 

Swiss elevator maker Schindler posts in-line 2018 profit as demand grows 

France's Schneider Electric sees 2019 growth slowing less than expected 

DSM Q4 core profit rises 3 pct, narrowly beats estimates 

Deutsche Boerse's net profit drops 35 pct in Q4 

AstraZeneca product sales top forecasts with 8 pct rise 

EXCLUSIVE-VW, Ford far apart on investment in Ford autonomous unit -sources 

Italian railways group to start talks with Delta, easyJet on Alitalia 

ANALYSIS-Airbus A380: from European dream to white elephant 

Airbus' Q4 profits rise and beat expectations

Paddy Power Betfair to challenge 55 million euros in tax bills 

Nestle expects sales to grow this year

Renault sales and profits fall on diesel, currency setbacks 

(Josephine Mason)

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BLAST OF EARNINGS: AIRBUS, COMMERZBANK AND RENAULT (0658 GMT)

Aside from the blast of earnings to digest this morning, Airbus is in focus after confirming plans to scrap production of the A380 superjumbo, abandoning its dream to challenge Boeing's legendary 747. That may overshadow stronger-than-expected Q4 results and its forecast higher aircraft deliveries and profits in 2019.

Elsewhere generally solid results from industrial players from chemicals to elevators.

Air Liquide said it was confident in its ability to deliver net profit growth in 2019 at constant exchange rates, Swiss elevator and escalator maker Schindler posted a 14-percent rise in full-year net profits and French electrical equipment producer Schneider Electric expects earnings growth to ease this year but at a pace slower than the market expects.

Dutch speciality chemicals company DSM pledged to buy back 1 billion euros ($1.13 billion) in shares, as its fourth-quarter core profit topped expectations.

More bank earnings - Commerzbank and Credit Agricole both delivered better-than-expected Q4 profits. Commerzbank shares are up more than 5 percent in pre-market trade. Credit Agricole also met its profit goals set for 2019 a year ahead of target.

Deutsche Bank will be in focus after an FT report that major shareholders called for cuts at its struggling investment bank. The bank has rebuffed the report.

German stock exchange operator Deutsche Boerse reported a much worse-than-expected 35 percent fall in net profit in the fourth quarter and said it had become more cautious about this year's outlook.

Nestle said it expected its organic sales to rise this year while Renault's revenue and profits fell in 2018, hit by collapsing diesel sales, exchange-rate setbacks and a withdrawal from the Iranian market.

(Josephine Mason)

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EUROPE STILL IN CHIPPER MOOD (0627 GMT)

Can the STOXX 600 make it a fourth day of gains

It's a mixed bag in the early indicators: IG financial spreadbetters expect London's FTSE to open 13 points lower at 7,178, Frankfurt's DAX to open 21 points higher at 11,189 and Paris' CAC to open 3 points higher at 5,077.

The good news is that noises were generally from Beijing overnight as U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer held meetings in the Chinese capital to ease the trade tensions between the world's two largest economies.

But we'll have to wait til tomorrow to find out if any concrete progress on some of the major sticking points - IP among them - has been made. Whether investors can sustain the chipper mood that has swept the markets this week is not clear.

Chinese trade data released earlier showed exports unexpectedly returned to growth in January after a shock decline the previous month, while imports fell much less than expected, but analysts said it was likely due to seasonal factors and predicted renewed trade weakness ahead.

Closer to home, we'll find out if Germany slipped into recession at the end of last year when Q4 flash GDP is released at 0700 GMT. Seasonally adjusted GDP seen +0.1 pct q/q, +0.7 pct y/y. Unadjusted GDP seen +0.9 pct y/y.

That's followed by closely watched Q4 euro-zone growth data at 0900 GMT - consensus is for 0.2 percent growth, unchanged from Q3.

It's a packed day for earnings too, but more on that later.

(Josephine Mason)

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