Market Outlook - BNP PARIBAS - Investment Services India

Key Data PreviewChart 7: US Consumer ConfidenceSources: Reuters EcoWin ProOct (f) Oct 2H Oct p SepConference Board 46.0 - - 45.4Michigan Sentiment 58.5 59.5 57.5 59.4Key Point:We expect the Conference Board index to reboundslightly and reach 46.0 in October on the back of betterthan-expectedeconomic news in October.BNP Paribas Forecast: DownUS: Consumer Confidence (October)Release Date: Tuesday 25 OctoberIn the beginning of October, the University of Michiganconsumer confidence remained deep in recessionary territoryat 57.5 declining 3.2pp against expectations for a smallincrease. Coming on the heels of a robust retail sales reportfor September, the persistently low readings on confidencethrow cold water on the optimism about the strength of retailsales going into the holiday season. Both the presentsituation and future expectations declined relative to theprevious month. In fact, the future index fell below its recenttrough, reached in August, to levels last seen back in 1980.The Conference Board index is more closely related to thedevelopments in the labour market than the Michiganindicator, and the recent better-than-expected employmentreports will likely prevent consumer optimism from furtherdeterioration. In addition, economic data have been betterthan expected in the last couple of weeks. On the otherhand, stocks continued to be volatile and declines inpersonal income will limit any significant increases inconsumer confidence. As such, we expect the ConferenceBoard index to rebound slightly and reach 46.0 in October.Chart 8: US E&S Investment vs Core Capital Goods BNP Paribas Forecast: ResilienceUS: Durable Goods (September)Release Date: Wednesday 26 OctoberDurable goods orders are expected to fall 0.9% m/m inSeptember. We expect orders ex transportation to increase0.3% in the month, consistent with the small improvement inthe ISM index in September and the resilience ofmanufacturing production in September. We are looking forthe increase in orders ex-transport to be more than offset bya large fall in Boeing aircraft orders in the month. Corecapital goods shipments (ex defense and aircraft) areexpected to post a small positive increase of 0.2% m/m inSeptember, reflecting solid durable goods production.Sources: Reuters EcoWin Pro% m/m Sep (f) Aug Jul JunDurable Goods -0.9 -0.1 4.2 -1.1Ex-Transport 0.3 -0.1 0.8 0.7Key Point:A fall in Boeing orders should more than offset amoderate increase in non-transport orders inSeptember.Market Economics 20 October 2011Market Mover59www.GlobalMarkets.bnpparibas.com