Good Morning
Mixed feeling in the press this weekend. As expected, after the recent run, investors are now looking for clarity in the data... which will take time. Having been burnt by other stimulus packages, running out of steam, fears are that improved liquidity in the interbank market in Spain and Italy, will not be passed on to consumers. Similar to that of the US back in 2009.
The correction in the currency markets, with the US$ firming, was to be expected and with noise of a possible Spanish ratings cut by Moody's, outflows of European debt are expected once again.
Equity market volumes have remained strong, but are destined to ease given sentiment is now turning negative again, as Spain drag their feet, and others follow suit. After watching "To big to fail" at the weekend, it looks and feels very similar to Dick Fuld's position.
US markets outperforming on Friday, which will continue, until we start seeing some of these plans for growth coming out from the European leaders.
France's new wealth tax will not be well received. With Hollande's appointment over Sarkozy, it was not mentioned how he planned to reduce the deficient... now we know. This will certainly raise concerns that manufacturing, industrial and R&D will either be reduced or move overseas.
Spain's budget is targeting cuts rather than tax hikes. Initial cuts will hit the unemployment data, however, with France making it harder to do business and Germany coming up for an election next year, we could see investment move to the South.
Markets. Lots of holidays this week in Asia. Australia, Korea, HK and China off today.
Japan is easier 80bps and volumes look 22% lighter vs avg volumes at this time. We should equity markets continue to ease inline with currencies. Once again, defensive inflows will pick up but to a lesser extent than back in May.
With the European banks now having access to liquidity, the environment has improved. Budget releases are causing quite a stir, with riots in Madrid, but this will come to pass as the easing debt burden will promote reconstruction plans of Southern Spain after some heavy floods.
With some aggressive moves and volumes easing/expected to ease, I would be looking to pick up some of the distressed names. In particular, basic materials which although the firming US$ will hurt spot prices in the near term, a low rate environment, and China's new infrastructure stimulus talks, should help ease over supply.
Like many stimulus packages, the pressure will be put on the banks. Especially in China, where funding will be needed to pursue these government projects. Credit and liquidity both remain tight. Banks do not want to lend at a risk of raising Non Performing Loans(NPL'S). But given the governments control, and nervousness of the housing market, banks will be encouraged. This does not look good for the sector.
Events.Japan to appoint new finance minister
13:30 Philippines 3,6+12 month auction
17:30 Netherlands 3+9 month auction
21:00 France 3,6+12 month auction
23:30 US 3+6 month auction
Data.12:00 Indonesia inflation, trade balance
12:00 Thai CPI
13:00 India PMI
15:15 Spain PMI
15:45 Italy PMI
15:50 France PMI
15:55 German PMI
16:00 Greece PMI
16:00 Italian unemployment
16:00 EU PMI
16:30 UK PMI, mortgage approvals, consumer credit, money supply
17:00 EU unemployment
22:00 US ISM, construction spending
Earnings.Eurobank Ergasias(GR), Shimamura(JP), Neo Group(SG), Central Euro Dist Corp(US), Razgulay(RU), U10(FR), FFP(FR), Weborama(FR)
Stoddart
Sunday, 30 September 2012
Tuesday, 25 September 2012
Morning note, events, data and earnings 26th September 2012
Morning,
Volumes are starting to fade in Europe, with an average of 25% reduction. Feels like the run is losing steam as investors look to data to see improvements.
European equity markets up between 0.16 and 0.5% despite the Euro falling to 1.29 against the greenback.
This correlation will correct, giving either a boost to the Euro, or equity markets give back some of the recent gains; I suspect the latter.
DAX: Outperformers: Utilities, basic materials and industrials
Underperformers: Telecom, consumer goods and healthcare
CAC: Outperformers: Consumer goods, telecoms and financials
Underperformers: Utilities, basic materials and O&G
IBEX: Outperformers:Consumer services, utilities and financials
Underperformers: Healthcare, industrials and telecoms
UKX: Outperformers: Tech, consumer services and utilities
Underperformers: Basic materials, industrials and financials
European data saw Italian wages grow, 0.1% MoM or 1.6% YoY. Wage growth should be taken as positive, however, its job creation we need to start seeing coming through in southern Europe.... plus if people are working, they have less time to protest.
European bond yields continued to see spreads between Spain/Italy tighten against France/Germany. Yields of the southern European states continue to fall, which against a falling Euro, suggests this is region re-balancing rather than overseas inflows.
10yr yields: Spain 5.69%, Italy 5.08%, France 2.27%, Germany 1.58%, UK 1.82%
US markets saw volumes remain stable, dropping just 3% on the S&P, despite markets falling 1%. The nasdaq underperforming, which given its outperformance over the last quarter, is not surprising. Feels like risk off again.
S&P: Outperformers: Healthcare, utilities and telcoms
Underperformers: Basic materials, technology and financials
Data out in the US saw some strong positive data. Richmond fed increased 4 vs expected -5, however house prices came in slightly lower at +0.2% vs expected +0.6%. Given the purchasing of mortgage debt by the US government, we could see the competition increase in the loan space, encouraging both transactions and prices to increase.
Today. Japan and Korea both weaker on the open. Tension over China and Japan sees the Nikkei off 1.7% whilst Korea down 1%. Despite basic materials underperforming in the UK, Australia is holding up well, down just 0.5%. Utilities and industrials outperforming there.
I expect HK to come off sharply after the recent strength in the HSI. Old support levels remain at 20400 and 20100 for the HSI, 9650 and 9550 for the HSCEI.
I continue to like some of the short squeeze names as investors reduce risk and take cash off the table.
BUY DF(489), Hengdeli(3389), Maanshan(323), Angang(347), Chalco(2600)
SHORTS SHK(16), China Banks
In Japan, with the re-balances due, I am looking to BUY Japan Airlines(9201 JT) at these levels... I've been called mental, given the current dispute over the islands and China's new anti-Japan uprising. I am not falling in love with an airline, just pure short term play.
Events.17:00 China 20 year auction
17:35, German 10 year auction
17:00 Indonesian 5 year auction
EU's Van Rompuy speaks to the UN general assembly
Data.14:45 France consumer confidence
16:00 Italian retail sales
19:00 US MBA mortgage apps
20:00 German CPI
22:00 US New home sales
00:00 France Jobs
Earnings:
Providence Res(ID), Esprit(330), Nitori(JP), New World Dev(HK), Boshiwa(HK), Polo Res(UK), CD Projekt red(PW), Echo Inv(PW)
Volumes are starting to fade in Europe, with an average of 25% reduction. Feels like the run is losing steam as investors look to data to see improvements.
European equity markets up between 0.16 and 0.5% despite the Euro falling to 1.29 against the greenback.
This correlation will correct, giving either a boost to the Euro, or equity markets give back some of the recent gains; I suspect the latter.
DAX: Outperformers: Utilities, basic materials and industrials
Underperformers: Telecom, consumer goods and healthcare
CAC: Outperformers: Consumer goods, telecoms and financials
Underperformers: Utilities, basic materials and O&G
IBEX: Outperformers:Consumer services, utilities and financials
Underperformers: Healthcare, industrials and telecoms
UKX: Outperformers: Tech, consumer services and utilities
Underperformers: Basic materials, industrials and financials
European data saw Italian wages grow, 0.1% MoM or 1.6% YoY. Wage growth should be taken as positive, however, its job creation we need to start seeing coming through in southern Europe.... plus if people are working, they have less time to protest.
European bond yields continued to see spreads between Spain/Italy tighten against France/Germany. Yields of the southern European states continue to fall, which against a falling Euro, suggests this is region re-balancing rather than overseas inflows.
10yr yields: Spain 5.69%, Italy 5.08%, France 2.27%, Germany 1.58%, UK 1.82%
US markets saw volumes remain stable, dropping just 3% on the S&P, despite markets falling 1%. The nasdaq underperforming, which given its outperformance over the last quarter, is not surprising. Feels like risk off again.
S&P: Outperformers: Healthcare, utilities and telcoms
Underperformers: Basic materials, technology and financials
Data out in the US saw some strong positive data. Richmond fed increased 4 vs expected -5, however house prices came in slightly lower at +0.2% vs expected +0.6%. Given the purchasing of mortgage debt by the US government, we could see the competition increase in the loan space, encouraging both transactions and prices to increase.
Today. Japan and Korea both weaker on the open. Tension over China and Japan sees the Nikkei off 1.7% whilst Korea down 1%. Despite basic materials underperforming in the UK, Australia is holding up well, down just 0.5%. Utilities and industrials outperforming there.
I expect HK to come off sharply after the recent strength in the HSI. Old support levels remain at 20400 and 20100 for the HSI, 9650 and 9550 for the HSCEI.
I continue to like some of the short squeeze names as investors reduce risk and take cash off the table.
BUY DF(489), Hengdeli(3389), Maanshan(323), Angang(347), Chalco(2600)
SHORTS SHK(16), China Banks
In Japan, with the re-balances due, I am looking to BUY Japan Airlines(9201 JT) at these levels... I've been called mental, given the current dispute over the islands and China's new anti-Japan uprising. I am not falling in love with an airline, just pure short term play.
Events.17:00 China 20 year auction
17:35, German 10 year auction
17:00 Indonesian 5 year auction
EU's Van Rompuy speaks to the UN general assembly
Data.14:45 France consumer confidence
16:00 Italian retail sales
19:00 US MBA mortgage apps
20:00 German CPI
22:00 US New home sales
00:00 France Jobs
Earnings:
Providence Res(ID), Esprit(330), Nitori(JP), New World Dev(HK), Boshiwa(HK), Polo Res(UK), CD Projekt red(PW), Echo Inv(PW)
Sunday, 23 September 2012
Week ahead, data, earnings, events 24-28th September 2012
Good afternoon,
Sorry for the delay.
Please see attached for PDF format.
Highlights:Tuesday: Richmond Fed, Spain budget
Wednesday: German CPI, US new home sales, China 20 year bond auction
Thursday: German employment, Eurzo-confidence, US durable goods
Friday: US Spending, Spain CPI + current a/c, China leading index, WTO rules on
anti-subsidy rules.
Stoddart
WEEK AHEAD PDF DOWNLOAD
Sorry for the delay.
Please see attached for PDF format.
Highlights:Tuesday: Richmond Fed, Spain budget
Wednesday: German CPI, US new home sales, China 20 year bond auction
Thursday: German employment, Eurzo-confidence, US durable goods
Friday: US Spending, Spain CPI + current a/c, China leading index, WTO rules on
anti-subsidy rules.
Stoddart
WEEK AHEAD PDF DOWNLOAD
Morning Note, events and data 24th September 2012
Morning,
Weekend press is skewed to the negative this weekend. The FT highlights Greece needing more time raising fears that the austerity measures imposed will need be met.
Its not just Greece that gives cause for concern. Now the terms of a bailout are being questioned by Spain, and to a lesser degree, Italy. This will only increase tension with voters in German.
The outcome of the EFSF and German court announcement clearly gave the markets the much needed support, triggering a fresh round of short covering and inflows to Europe. The data, however, remains weak and investors now want to see the impact of this "unlimited" European program. The proof is in the pudding.
Markets this week are poised to give back some of the recent gains. With such a strong run in basic materials, industrials and the Euro, fast money or sort term traders will lock in recent gains.
With GDP estimates yet to factor in the German court results and the US announcing rates on hold til 2015, I expect analysts to come out with an improved outlook for GDP recovery. We might even start hearing talks of possible hyper-inflation given the aggression of recent plans. As mentioned before, with the main aim being growth and inflation, US long term debt will see some heavy shorting.... a possible increase of operation Twist, is highly likely.
Markets today.Volumes have been extremely strong across equities. I would expect this to start to slow. As mentioned, all eyes on the data, with Chicago FED tonight and the US durable goods on the 27th.
Inflows back into defensives, such as, telcos and utilities. We should also see some rotation in the basic materials space, with coals getting sold down whilst Alu and Steel see inflows. On a technical analysis level, 323, 347 and 2600 both have broken the downward channel, confirmed support and look set to start moving higher. Borrow rates still cheap but short sellers have limited upside at these levels.
China banks have ran hard lately. With talks of Europe and the US pushing for growth, talks are the China might not need additional rate cuts to support its economy, leaving investors positive banks. This is a poor excuse to buy the sector. Margins are irrelevant, if the loans are bad. With China's property sales still struggling, as the government aims to fix prices, credit and ABS have the potential to be miss priced, adding to NPL's.
Data.15:30 Netherlands GDP
16:00 German IFO
16:30 HK Balance of payments
19:30 Turkey industrial confidence, capacity utilization
20:30 US Chicago Fed
22:30 US Dallas Fed
Events.15:30 Italy's Monti talks about competition
16:30 UK's BoE financial polity statement
20:00 German hearing on German-Swiss tax
21:00 EU hearing on Libor
Earnings.Prada(HK), Lennar(US), Norilsk Nickel
Weekend press is skewed to the negative this weekend. The FT highlights Greece needing more time raising fears that the austerity measures imposed will need be met.
Its not just Greece that gives cause for concern. Now the terms of a bailout are being questioned by Spain, and to a lesser degree, Italy. This will only increase tension with voters in German.
The outcome of the EFSF and German court announcement clearly gave the markets the much needed support, triggering a fresh round of short covering and inflows to Europe. The data, however, remains weak and investors now want to see the impact of this "unlimited" European program. The proof is in the pudding.
Markets this week are poised to give back some of the recent gains. With such a strong run in basic materials, industrials and the Euro, fast money or sort term traders will lock in recent gains.
With GDP estimates yet to factor in the German court results and the US announcing rates on hold til 2015, I expect analysts to come out with an improved outlook for GDP recovery. We might even start hearing talks of possible hyper-inflation given the aggression of recent plans. As mentioned before, with the main aim being growth and inflation, US long term debt will see some heavy shorting.... a possible increase of operation Twist, is highly likely.
Markets today.Volumes have been extremely strong across equities. I would expect this to start to slow. As mentioned, all eyes on the data, with Chicago FED tonight and the US durable goods on the 27th.
Inflows back into defensives, such as, telcos and utilities. We should also see some rotation in the basic materials space, with coals getting sold down whilst Alu and Steel see inflows. On a technical analysis level, 323, 347 and 2600 both have broken the downward channel, confirmed support and look set to start moving higher. Borrow rates still cheap but short sellers have limited upside at these levels.
China banks have ran hard lately. With talks of Europe and the US pushing for growth, talks are the China might not need additional rate cuts to support its economy, leaving investors positive banks. This is a poor excuse to buy the sector. Margins are irrelevant, if the loans are bad. With China's property sales still struggling, as the government aims to fix prices, credit and ABS have the potential to be miss priced, adding to NPL's.
Data.15:30 Netherlands GDP
16:00 German IFO
16:30 HK Balance of payments
19:30 Turkey industrial confidence, capacity utilization
20:30 US Chicago Fed
22:30 US Dallas Fed
Events.15:30 Italy's Monti talks about competition
16:30 UK's BoE financial polity statement
20:00 German hearing on German-Swiss tax
21:00 EU hearing on Libor
Earnings.Prada(HK), Lennar(US), Norilsk Nickel
Sunday, 16 September 2012
The weak ahead, data, events, bonds and earnings
Please see attached for PDF print out.
Highlights: Data is a lot lighter this week.
Tuesday China property prices (although discount without total sales data), US NAHB index also.
Wednesday BOJ rates, BoE minutes and US housing data.
Thursday US jobs data, and on Friday we have Spanish Housing and trade balance.
Bond auctions this week look light. Worth watching Spain and Greek short dated
auctions for possible weakness. Also the EFSF 6m auction on Tuesday.
Stoddart
Stoddart's Week Ahead 17th-21st September
Highlights: Data is a lot lighter this week.
Tuesday China property prices (although discount without total sales data), US NAHB index also.
Wednesday BOJ rates, BoE minutes and US housing data.
Thursday US jobs data, and on Friday we have Spanish Housing and trade balance.
Bond auctions this week look light. Worth watching Spain and Greek short dated
auctions for possible weakness. Also the EFSF 6m auction on Tuesday.
Stoddart
Stoddart's Week Ahead 17th-21st September
Morning note, events and data 17th September 2012
Morning,
After a strong performance in Europe on Friday and US markets adding to the recent gains, I expected a bit more optimism in the press over the week.
With Europe and the Euro clearly dominating the headlines, along side the US QE3 program, I was expecting a more upbeat sentiment, like talks of improving growth targets, increased liquidity supporting lower rates and talks of "now we can concentrate on jobs". We didnt get it.
Headlines in the FT and Economist, highlight, Spain's reluctance to apply for the bailout. Rajoy's stalling, they blame, is due to the Spanish elections due on 21st October. This has part to play, but the main reason comes from the lack of clarity regarding the terms attached to the bailout. Current procedure is, you ask for support, then you get the cash and terms.
Rajoy's fears are justified. With his Government desperately trying to cut is deficit, currently 8.9% of GDP, conditions under the bailout could put additional austerity measures, further hurting employment. A major concern, when Spanish unemployment is at 24.7%, and protests for independence are increasing in size.
This is sounding more and more like Greece's predicament. Once again, fears are creeping in that delays could hamper job creation and in turn, the growth outlook.
Now moving to the US. Headlines in the FT highlight mortgage processing delays slowing US growth. In reality, regards of QE3, real interest rates across the globe have not reflected central bank rates. For example, with FED rates at 0.25%, mortgages rates are still at 3.50%. Now that is for a 30 year fixed rate, however, it has not changed over the last 6 months, despite 30 year treasuries getting as low as 2.5%.
Banks are still extremely nervous of NPL's. Given the pressure they face from new regulation, capital adequacy requirements and constraints on selling packaged debt products, it is not surprising that they reluctant to lend.
In addition to this, mortgage brokers and alternative lending sources have been squeezed out of the space, reducing competition. Prices have been impacted and with barriers to entry, now higher than ever, I suspect its a long time before we see this environment changing. A more relaxed stance on capital requirement and lighter regulation, would certainly support the market. But with the presidential election due, and lack of regulation being blamed for the recession, a policy of less regulation could be political suicide.
Its a good job people quick to forget the bad.
Markets.Given the recent rally in everything from basic materials to industrials, I expect to see some outflows today. Ok, we have QE3, but QE1 and QE2 outcomes have been shorted lived. Investors now want to see the data improving.
This should encourage profit taking, especially in gold miners, which looking at the junior gold miner ETF, GDXJ US, has rallied over 30% since July.
I agree with many, that the Euro squeeze has more to go, given how heavily underweight the market is, but the sudden movement will soon run out of steam as the data is slow to react. For example, Spanish unemployment is highly unlikely to come in below 18% before 1Q 2013.
With the weakness in the US$ supporting basic materials, coal, iron and copper should continue to run, but with inventories so high, physical prices have a very heavy ceiling as firms look to maintain revenue through increased sales. Oversupply will continue for some time to come.
China banks.
Have seen some strength, mostly on the back of short covering. Time to look at shorting again. With Reserve Rate Requirements(RRR) and interest rate cuts due, margins will decline whilst NPL's increase. Not a pleasant position to be in.
HK Property.
Very strong performance last week as the US signal low rates til 2Q 2015. With the HK$ peg, HK property is seen as a strong US$ hedge and investors are looking for a strong pick up in demand. My issue here, HK property prices have hardly corrected. Property developers for years have controlled supply, supporting prices and the mark to market of its inventory. My fear is, the HK government have already shown concerns of a property bubble, which will need to be addressed. Looking to short the sector into strength.
China utilities and telecoms. Looking to buy on weakness. Recent strength has seen yields fall, but with a strong pull back as investors increase risk, should leave these names look attractive. Not a buyer at these levels, but are on the radar.
China railway.
Huge short covering on the back of the rail minister pushing of increased roll out of projects. Near term earnings look dramatically improved, however, the outlook passed 2015/16 is limited. Increasing competition for maintenance contracts has reduced margins, and unless exporting products and services increase, new projects will once again start to slow. Short into strength
China oils.
Very strong rally helped by pump price increases, weaker US$ pushing crude higher and to a less degree, improving growth outlook. Time to take profits in the sector. PTR(857) up HK$1 in a week, now trading at $10. We can look at buying again on the pull back.
Markets today, open at the highs and trade sideways early session, then in the afternoon as Europe come in, we should see them trend easier.
Events.Merkel Q&A with Journalists in Berlin, Romney speaks in LA
Data.13:30 Indian repo rate
15:00 Turkey unemployment rate
16:00 Eurozone current account
16:00 Italian trade balance
17:00 EU labour costs and trade balance
20:30 US empire manufacturing
Also due is China FDI, Russian industrial production
Stoddart
After a strong performance in Europe on Friday and US markets adding to the recent gains, I expected a bit more optimism in the press over the week.
With Europe and the Euro clearly dominating the headlines, along side the US QE3 program, I was expecting a more upbeat sentiment, like talks of improving growth targets, increased liquidity supporting lower rates and talks of "now we can concentrate on jobs". We didnt get it.
Headlines in the FT and Economist, highlight, Spain's reluctance to apply for the bailout. Rajoy's stalling, they blame, is due to the Spanish elections due on 21st October. This has part to play, but the main reason comes from the lack of clarity regarding the terms attached to the bailout. Current procedure is, you ask for support, then you get the cash and terms.
Rajoy's fears are justified. With his Government desperately trying to cut is deficit, currently 8.9% of GDP, conditions under the bailout could put additional austerity measures, further hurting employment. A major concern, when Spanish unemployment is at 24.7%, and protests for independence are increasing in size.
This is sounding more and more like Greece's predicament. Once again, fears are creeping in that delays could hamper job creation and in turn, the growth outlook.
Now moving to the US. Headlines in the FT highlight mortgage processing delays slowing US growth. In reality, regards of QE3, real interest rates across the globe have not reflected central bank rates. For example, with FED rates at 0.25%, mortgages rates are still at 3.50%. Now that is for a 30 year fixed rate, however, it has not changed over the last 6 months, despite 30 year treasuries getting as low as 2.5%.
Banks are still extremely nervous of NPL's. Given the pressure they face from new regulation, capital adequacy requirements and constraints on selling packaged debt products, it is not surprising that they reluctant to lend.
In addition to this, mortgage brokers and alternative lending sources have been squeezed out of the space, reducing competition. Prices have been impacted and with barriers to entry, now higher than ever, I suspect its a long time before we see this environment changing. A more relaxed stance on capital requirement and lighter regulation, would certainly support the market. But with the presidential election due, and lack of regulation being blamed for the recession, a policy of less regulation could be political suicide.
Its a good job people quick to forget the bad.
Markets.Given the recent rally in everything from basic materials to industrials, I expect to see some outflows today. Ok, we have QE3, but QE1 and QE2 outcomes have been shorted lived. Investors now want to see the data improving.
This should encourage profit taking, especially in gold miners, which looking at the junior gold miner ETF, GDXJ US, has rallied over 30% since July.
I agree with many, that the Euro squeeze has more to go, given how heavily underweight the market is, but the sudden movement will soon run out of steam as the data is slow to react. For example, Spanish unemployment is highly unlikely to come in below 18% before 1Q 2013.
With the weakness in the US$ supporting basic materials, coal, iron and copper should continue to run, but with inventories so high, physical prices have a very heavy ceiling as firms look to maintain revenue through increased sales. Oversupply will continue for some time to come.
China banks.
Have seen some strength, mostly on the back of short covering. Time to look at shorting again. With Reserve Rate Requirements(RRR) and interest rate cuts due, margins will decline whilst NPL's increase. Not a pleasant position to be in.
HK Property.
Very strong performance last week as the US signal low rates til 2Q 2015. With the HK$ peg, HK property is seen as a strong US$ hedge and investors are looking for a strong pick up in demand. My issue here, HK property prices have hardly corrected. Property developers for years have controlled supply, supporting prices and the mark to market of its inventory. My fear is, the HK government have already shown concerns of a property bubble, which will need to be addressed. Looking to short the sector into strength.
China utilities and telecoms. Looking to buy on weakness. Recent strength has seen yields fall, but with a strong pull back as investors increase risk, should leave these names look attractive. Not a buyer at these levels, but are on the radar.
China railway.
Huge short covering on the back of the rail minister pushing of increased roll out of projects. Near term earnings look dramatically improved, however, the outlook passed 2015/16 is limited. Increasing competition for maintenance contracts has reduced margins, and unless exporting products and services increase, new projects will once again start to slow. Short into strength
China oils.
Very strong rally helped by pump price increases, weaker US$ pushing crude higher and to a less degree, improving growth outlook. Time to take profits in the sector. PTR(857) up HK$1 in a week, now trading at $10. We can look at buying again on the pull back.
Markets today, open at the highs and trade sideways early session, then in the afternoon as Europe come in, we should see them trend easier.
Events.Merkel Q&A with Journalists in Berlin, Romney speaks in LA
Data.13:30 Indian repo rate
15:00 Turkey unemployment rate
16:00 Eurozone current account
16:00 Italian trade balance
17:00 EU labour costs and trade balance
20:30 US empire manufacturing
Also due is China FDI, Russian industrial production
Stoddart
Thursday, 13 September 2012
Morning note, events and data 14th September 2012
Good morning,
Wont ramble on too much about the FOMC, you've read the headlines and that tells the story. My 3 main thoughts:
1. Buying housing or Asset Backed Securities (ABS) does not increase jobs, it just reduces the burden on banks
2. The US will make an absolute fortune in 2014 - 2017 when they "job these out"
3. Get ready to short the hell out of US 10yrs in 2013/14
This whole exercise was about making nice happy numbers and headlines. The FOMC wanted to highlight that stimulus is unlimited, and it will stop at nothing to encourage growth, in this case, using near zero interest rates till mid 2015.
How did the markets react?
Europe closed before the announcement, with equity markets mixed.
CAC -1.2%, DAX -0.45%, IBEX -0.7%, UKX +0.7% all on roughly average volumes.
Sector performance saw defensives stronger and profit taking in materials and financial, not surprising after such a strong run.
Markets have rallied on the headlines and now, as reality sets in and Greece unemployment higher, fears start to creep back in. However, the market is hugely short the European region, inflows will continue as investors take a more neutral weighting. There is also more short squeeze to come, when the markets take the next leg up. Technicals out early next week will show this.
Greece unemployment came in at 23.6% vs last quarter 22.6%
US markets rallied aggressively on the FOMC meeting, with the S+P up 1.6% and market volumes up 20-70% across all indices. The weaker jobs data, with initial claims of 382k vs expected 370k was explained by the recent tropical storm - I think is just another excuse used to justify a weaker number.
Sector performance highlights aggressive inflows to growth names, out of defensive.
Outerperformers: Basic materials, financials and oil & gas
Underperformers: Health, industrials and telecoms
The NASDAQ also underperformed the S+P and industrials for the first time in quite a while.
Expect further inflows to growth. The market has rather large positions weighted in government debt and defensive equities. Outflows will now be looking at improving growth and corporate credit/high yield.
Markets today:
Going gang busters for the laggeds. With the US$ weakening, physical metal prices have stabilised, some have even started to rebound. This looks like it has more to go but please note, inventories are huge and we have yet to see a pick up in demand... this will run out of steam. Oil, now 98.75 WTI, finally seeing inflows, which although the US$ had moved, up until last night, oil hadnt reacted and was trading around the $95 level. This has more to go and is an alternative hedge to gold, with the kicker of improving growth.
Trading.
I am looking for a pull back in the defensives. This throws up huge opportunities to pick up quality assets, on improving yields. It might take a month to get to these levels, but they are now being watched closely.
Basic materials are all at breakout levels, which I will highlight in next weeks technicals. They still have room to run, but I would not be paying up just yet, we will see fast money outflows next week as the hype dies down and everyone goes back to looking at the data.
We could see China over the weekend, following in the footsteps of the US giving the markets a "triple macro boost". Some plans have already been realised but am watching for support on the industrial side. We already have infrastructure in road and rail projects.
Events:
SEC meeting on price stability, G27 finance ministers meeting and announcement of Greek stimulus measures.
Data: In Singapore time (GMT +7 hours)
12.30 Japan industrial production and capacity utilisation.
14:30 India whole sale prices
15:00 Spain labor costs and house prices - some negativity expected
15:30 Thai foreign reserves
17:00 Eurozone CPI and employment
17:00 Italian current accounts
20:30 US CPI and retail sales
21:15 US industrial production and capacity utilisation
21:55 U. of Michigan confidence
22:00 US business inventories - watch for follow through from the wholesale inventories strong number earlier this week.
Earnings - top securities
Suntor(US), Nexus(AU), Kagara(AU), Norilsk Nickel(RU), JD weatherspoon(GB), Swisher Hygiene(US), Virco Manu(US), Marcus(US)
Have a great weekend.... expect some heavy news papers over the weekend, with all the data this past week.
Stoddart
Wont ramble on too much about the FOMC, you've read the headlines and that tells the story. My 3 main thoughts:
1. Buying housing or Asset Backed Securities (ABS) does not increase jobs, it just reduces the burden on banks
2. The US will make an absolute fortune in 2014 - 2017 when they "job these out"
3. Get ready to short the hell out of US 10yrs in 2013/14
This whole exercise was about making nice happy numbers and headlines. The FOMC wanted to highlight that stimulus is unlimited, and it will stop at nothing to encourage growth, in this case, using near zero interest rates till mid 2015.
How did the markets react?
Europe closed before the announcement, with equity markets mixed.
CAC -1.2%, DAX -0.45%, IBEX -0.7%, UKX +0.7% all on roughly average volumes.
Sector performance saw defensives stronger and profit taking in materials and financial, not surprising after such a strong run.
Markets have rallied on the headlines and now, as reality sets in and Greece unemployment higher, fears start to creep back in. However, the market is hugely short the European region, inflows will continue as investors take a more neutral weighting. There is also more short squeeze to come, when the markets take the next leg up. Technicals out early next week will show this.
Greece unemployment came in at 23.6% vs last quarter 22.6%
US markets rallied aggressively on the FOMC meeting, with the S+P up 1.6% and market volumes up 20-70% across all indices. The weaker jobs data, with initial claims of 382k vs expected 370k was explained by the recent tropical storm - I think is just another excuse used to justify a weaker number.
Sector performance highlights aggressive inflows to growth names, out of defensive.
Outerperformers: Basic materials, financials and oil & gas
Underperformers: Health, industrials and telecoms
The NASDAQ also underperformed the S+P and industrials for the first time in quite a while.
Expect further inflows to growth. The market has rather large positions weighted in government debt and defensive equities. Outflows will now be looking at improving growth and corporate credit/high yield.
Markets today:
Going gang busters for the laggeds. With the US$ weakening, physical metal prices have stabilised, some have even started to rebound. This looks like it has more to go but please note, inventories are huge and we have yet to see a pick up in demand... this will run out of steam. Oil, now 98.75 WTI, finally seeing inflows, which although the US$ had moved, up until last night, oil hadnt reacted and was trading around the $95 level. This has more to go and is an alternative hedge to gold, with the kicker of improving growth.
Trading.
I am looking for a pull back in the defensives. This throws up huge opportunities to pick up quality assets, on improving yields. It might take a month to get to these levels, but they are now being watched closely.
Basic materials are all at breakout levels, which I will highlight in next weeks technicals. They still have room to run, but I would not be paying up just yet, we will see fast money outflows next week as the hype dies down and everyone goes back to looking at the data.
We could see China over the weekend, following in the footsteps of the US giving the markets a "triple macro boost". Some plans have already been realised but am watching for support on the industrial side. We already have infrastructure in road and rail projects.
Events:
SEC meeting on price stability, G27 finance ministers meeting and announcement of Greek stimulus measures.
Data: In Singapore time (GMT +7 hours)
12.30 Japan industrial production and capacity utilisation.
14:30 India whole sale prices
15:00 Spain labor costs and house prices - some negativity expected
15:30 Thai foreign reserves
17:00 Eurozone CPI and employment
17:00 Italian current accounts
20:30 US CPI and retail sales
21:15 US industrial production and capacity utilisation
21:55 U. of Michigan confidence
22:00 US business inventories - watch for follow through from the wholesale inventories strong number earlier this week.
Earnings - top securities
Suntor(US), Nexus(AU), Kagara(AU), Norilsk Nickel(RU), JD weatherspoon(GB), Swisher Hygiene(US), Virco Manu(US), Marcus(US)
Have a great weekend.... expect some heavy news papers over the weekend, with all the data this past week.
Stoddart
Stoddart's ETF model portfolio
Stoddart's ETF model portfolio, as of 13th September 2012
Performance is taken from the inception date of 2nd July 2012
Performance is taken from the inception date of 2nd July 2012
| ASSET CLASS | TICKER | WEIGHTING | PERFOMANCE % |
| EQUITY | RWL US | 0.05 | 5.87 |
| SPY US | 0.05 | 5.77 | |
| FXI US | 0.02 | 0.40 | |
| EWY US | 0.02 | 6.80 | |
| EEM US | 0.07 | 4.23 | |
| BRIC LN | 0.03 | 3.65 | |
| VGK US | 0.07 | 9.55 | |
| SX7EEX GY | 0.03 | 20.90 | |
| EWP US | 0.01 | 15.06 | |
| EWI US | 0.01 | 13.94 | |
| EWG US | 0.01 | 9.55 | |
| EWQ US | 0.01 | 8.15 | |
| GDXJ US | 0.02 | 20.70 | |
| DEBT | EBMMEX GY | 0.05 | 1.85 |
| IBGS LN | 0.05 | 3.50 | |
| IBGX LN | 0.15 | 4.47 | |
| EMB US | 0.15 | 5.04 | |
| HYG US | 0.15 | 2.66 | |
| LQD US | 0.05 | 1.66 | |
| PERCENT | 6.086 | ||
| BENCHMARK | 6.185 | ||
| PERFORMANCE | -0.099 |
Wednesday, 12 September 2012
Morning note, events and data 13th September 2012
Jo san
Not sure about you guys, but it looks and feels like Apple is running out of ideas. Quote of the day "It looks like the Galaxy!".
Southern European bonds saw huge inflows, pushing yields to March lows with 10yr trading at: Spain at 5.55%, Italy at 5.00%, Portugal 7.79% and Greece 20.16%.
With German and French yields trading higher, it would appear we are finally getting unwinding of spread trades as CDS's sell down dramatically after the German court ruling yesterday. Expect this to continue.
The benefits of Germany pulling its finger out, can already be seen. The debt burden is already easing, with noise that, due to falling interest rates, Spain may not need the bailout after all. The main thing is that countries that are struggling to grow, or maintain already low levels of growth, can concentrate on trying to encourage or stimulate it.
Spain is already talking about a transaction levy on its equity markets. Job creation is the main push. With the average unemployment rate of around 15% in Europe, increasing both domestic demand and exports are the main push. In previous notes, I have also mentioned about other drivers that will help the EU get out of this messy, these include lowering barriers to entry to other EU members.
We are not out of the woods, but at least we have the map the right way round now. After recent events, expect macro economists at the major banks to start moving GDP estimates forward by about 3-6 months. The outlook for Europe has certainly improved, however, without a detailed plan on how to increase growth, it is hard to see how they plan to inflate their way out of debt.
Markets overnight continued to show strength, and on good volume. European volumes were between 18 and 120% higher, whilst the US was 12% higher than average.
Looking at the sectors, the theme was moving back to defensives. Tech, telco and healthcare all stronger. We are also seeing good inflows supporting the financial stocks, which given the Spanish and Italian debt held by the banks, and the recent firming yields, will continue to outperform.
In the US, the sector performances send a rather mixed signal. Telco, financials and tech outperform whilst consumer goods, utilities and basic materials weaker. The recent rotation into higher risk has seen a number of sectors like basic materials outperform, now equity markets are seeing this rebalancing pressure ease.
Data.
Last night saw UK jobs and earnings inline. Claimant count was 4.8% vs expected 4.9%. Earnings 1.5% vs expected 1.6%
Eurozone industrial production fell -0.6%, slightly negative vs the expected +0.1%. Given the political climate and recent results from the German court, I expect this number to pick up.
US had some very positive data. MBA mortgage apps came in at 11.1% for the week vs last weeks -2.5%.
Import prices slightly easier at 0.7% vs expected +1.5%, however, this was overshadowed by the wholesale inventory numbers, which increased 0.7% vs expected 0.3%. I like this number and shows an increasing optimism of future sales. Now we need to see it continue at this pace.
Markets today.
Equity markets today trading flat as the US$ finds support. Strong run in basic materials and industrials, whilst defensive names are underperforming. The move in iron ore certainly helping the mining companies in Australia. This sector will continue to short squeeze.
HK futures sold off sharply into the close yesterday. I expect them to bounce on the open but after the first hour, we will drift easier as volumes start to ease ahead of the FOMC tonight.
Events: BOE mintues, ECB monthly report, G20 meeting in Mexico and the World Bank releases its global report.
Data: (Singapore times, BST+8hrs)
09.00 Australian inflation expectations
16.00 Italian CPI
16.30 HK industrial production + PPI
16.30 Italian government debt
20.30 US PPI and jobless claims
02.00 FOMC rate decision
Also due is Greek unemployment.
Stoddart
Not sure about you guys, but it looks and feels like Apple is running out of ideas. Quote of the day "It looks like the Galaxy!".
Southern European bonds saw huge inflows, pushing yields to March lows with 10yr trading at: Spain at 5.55%, Italy at 5.00%, Portugal 7.79% and Greece 20.16%.
With German and French yields trading higher, it would appear we are finally getting unwinding of spread trades as CDS's sell down dramatically after the German court ruling yesterday. Expect this to continue.
The benefits of Germany pulling its finger out, can already be seen. The debt burden is already easing, with noise that, due to falling interest rates, Spain may not need the bailout after all. The main thing is that countries that are struggling to grow, or maintain already low levels of growth, can concentrate on trying to encourage or stimulate it.
Spain is already talking about a transaction levy on its equity markets. Job creation is the main push. With the average unemployment rate of around 15% in Europe, increasing both domestic demand and exports are the main push. In previous notes, I have also mentioned about other drivers that will help the EU get out of this messy, these include lowering barriers to entry to other EU members.
We are not out of the woods, but at least we have the map the right way round now. After recent events, expect macro economists at the major banks to start moving GDP estimates forward by about 3-6 months. The outlook for Europe has certainly improved, however, without a detailed plan on how to increase growth, it is hard to see how they plan to inflate their way out of debt.
Markets overnight continued to show strength, and on good volume. European volumes were between 18 and 120% higher, whilst the US was 12% higher than average.
Looking at the sectors, the theme was moving back to defensives. Tech, telco and healthcare all stronger. We are also seeing good inflows supporting the financial stocks, which given the Spanish and Italian debt held by the banks, and the recent firming yields, will continue to outperform.
In the US, the sector performances send a rather mixed signal. Telco, financials and tech outperform whilst consumer goods, utilities and basic materials weaker. The recent rotation into higher risk has seen a number of sectors like basic materials outperform, now equity markets are seeing this rebalancing pressure ease.
Data.
Last night saw UK jobs and earnings inline. Claimant count was 4.8% vs expected 4.9%. Earnings 1.5% vs expected 1.6%
Eurozone industrial production fell -0.6%, slightly negative vs the expected +0.1%. Given the political climate and recent results from the German court, I expect this number to pick up.
US had some very positive data. MBA mortgage apps came in at 11.1% for the week vs last weeks -2.5%.
Import prices slightly easier at 0.7% vs expected +1.5%, however, this was overshadowed by the wholesale inventory numbers, which increased 0.7% vs expected 0.3%. I like this number and shows an increasing optimism of future sales. Now we need to see it continue at this pace.
Markets today.
Equity markets today trading flat as the US$ finds support. Strong run in basic materials and industrials, whilst defensive names are underperforming. The move in iron ore certainly helping the mining companies in Australia. This sector will continue to short squeeze.
HK futures sold off sharply into the close yesterday. I expect them to bounce on the open but after the first hour, we will drift easier as volumes start to ease ahead of the FOMC tonight.
Events: BOE mintues, ECB monthly report, G20 meeting in Mexico and the World Bank releases its global report.
Data: (Singapore times, BST+8hrs)
09.00 Australian inflation expectations
16.00 Italian CPI
16.30 HK industrial production + PPI
16.30 Italian government debt
20.30 US PPI and jobless claims
02.00 FOMC rate decision
Also due is Greek unemployment.
Stoddart
Stoddart's Weekly G&T
This issue of Stoddart's Weekly G&T was first published on 28 May 2012, following a week that saw little relief for global markets:Debt
Corporate or emerging markets - Corzine vs Kim Jong?
Currencies
Show me the money - if I want to sell my IDRs
Commodities
Keep digging and you'll end up in Australia
Copper ' load of that
Equities
"Got my Roley on my arm and I'm pouring Chandon"
Read the full report for more in-depth insights
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