Good morning,
Early yesterday evening, a good friend and I were quenching our thirst with some of Japan's finer lager, shooting the breeze, as you do. And surprise surprise, the topic of Hurricane Sandy came up. Mr Gorton was in fact telling me about his sister, and of the life in NY. During this discussion, one thing became very clear, that is, regardless of what you throw at them, "they aint going nowhere". He was telling me, that regardless of the warnings and the risks, his sister wouldnt even think about leaving the city, choosing instead to rough it out regardless.
When you look at unemployment, housing stats, GDP and other economic data, you lose track of a countries "natural resources", its people. I suspect th damage will be considerably high, and will take time to rebuild, but when its done, it will be bigger and better.
With US markets closed, volumes across global indices have fallen considerably. Despite this, European equities saw some relatively strong performances, with markets up an average of 1.2%. This is despite a sharp move in Euro-Yen, after the BoJ announcement. personally, this was a great opportunity to get even shorter Jpy. Bond markets in Europe stayed relatively unchanged, but Spanish and Italian CDS's have been creeping up from the lows over the last week or so.
FTSE +1.0% v.low volume; O/P: oil&gas, basic mats U/P: utilities, cons.goods
CAC +1.5% v.low volume; O/P: health, basic mats U/P: telco, industrials
DAX +1.1% v.low volume; O/P: financials, cons.services U/P: health, utilities
IBEX +1.4% v.low volume; O/P: basic mats, oil&gas U/P: industrials, cons.services
Sector maps are a bit more telling, with basic materials outperforming, investors were looking at growth names. Added to the weaker US$ which should see commodities well supported as companies look to increase inventories and lock in lower rates.
Germany's DAX was supported by strong earnings from Deutsche Bank, pushing the financial sector to the top performer.
Markets.
Asian equity indices look set for a strong bounce. After such an aggressive sell off into the close, Japan looks set to be todays outperformer. I expect markets to trend sideways for most of the session, however, going into month end, watch out for window dressing.
Again, looking at Jiangxi Copper(358) and Chalco(2600). Also, Kobe steel in Japan had some strong earnings yesterday, so will be watching Nippon Steel closely.
With the JPY weakening once more, I still like consumer electronics, including Sharp(6753) and Sony(6758).
Data.
08:00 Australia building approvals/consumer credit
09:30 Japan labor cash earnings
13:00 Japan construction orders/housing starts
15:00 German retail sales
15:30 Thailand trade balance
16:00 Spain housing permits
17:00 HK money supply
17:00 Italy unemployment rate
18:00 EU CPI
18:00 Italy CPI
19:00 US MBA mortgage apps
20:30 US employment cost
21:45 Chicago purchasing power
Events.
16:00 Italian cabinet meet
17:30 UK Taylor testifies to UK banking standards panel
Bonds.
17:50 France 7, 10 and 23 year auction
18:30 German 30 year auction
19:00 India 3 and 12 month auction
Earnings.
Cummins(US), MAstercard(US), Omnicare(US), GM(US), Hess(US), MGM Resorts(US), Eaton(US), Phillips66(US), Visa(US), Metlife(US), First Solar(US), Tesoro(US), WABCO(US), BorgWarner(US), Murphy oil(US), Novo Nordisk(DM), ArcelorMittal(NL), Clariant(GE), Air France(FP), Deutsche Lufthansa(GE), Vossloh(GE), Barclays(UK), Total(FP), Continental(GE), Garmin(US), GlaxoSmithKline(UK), Fiat(IT), BBVA(SP), Toyota Ind(JP), Kawasaki heavy(JP), Denso(JP), Mitsui OSK(JP), Alps Elec(JP), Shiseido(JP), Daiichi Sankyo(JP), Aisin Seike(JP), Hoya(JP), Sumitomo(JP), Makita(JP), Konica Mintola(JP), Nippon sheet glass(JP), Fuji film(JP), Murata Manu(JP), TDK(JP), Toshiba(JP), panasonic(JP), Takeda pharma(JP), Sumitomo elec(JP), Seiko Epson(JP), NTT Data(JP), Mazda(JP), Capcom(JP), Yamaha(JP), Tokyo Elec(JP), Nitto denko(JP), Kyocera(JP), Chubu elec(JP), TEPCO(JP), SJM holdings(HK), Giodano(HK), UMC(TT), S-oil(KR), Shinhan fin(TT), Compal(TT), Astra intl(IJ)
Stoddart
Showing posts with label balance of payments. Show all posts
Showing posts with label balance of payments. Show all posts
Tuesday, 30 October 2012
Sunday, 14 October 2012
Morning note, data, events, bonds and earnings 15th October 2012
Morning,
Volumes in the US on Friday remained strong, trading around the recent average, as markets traded around flat. Again, we see a more defensive stance with tech and consumer goods the top performing sectors, however, utilities and telcoms were among the weaker. This leads us to believe there is still some repositioning going on, as we approach the November 6th US presidential election.
With headlines over the weekend, again, questioning growth, sentiment is still relatively weak. Europe has seen a rebound in the Euro, but Spain and Italy continue to drag their feet, causing the Euro rally to grind very quickly to a halt. This is also reflected in the bond market where Spanish and Italian yields have steadily started to rise. We need the EFSF to quickly agree terms with states needing aid.
Another major headline is the individuals claiming against libor manipulation. Many thought this could be a possiblity but now, its reality. This will be a major case for the banks and could see banks ha ve to increase provisions. A large number of banks have been fined, which technically speaking implies they are guilty of malpractice. Should a single homeowner be able to claim damages, this would open the window to nearly everyone with a mortgage. Although total loses would be hard to calculate, and would take considerable time to calculate rates without the fictitious prices in place, mortgages owners will have been impacted by higher interbank rates. This could have the similar repercussion as the mini-bond lawsuit.
Markets.
Australia currently trading flat, with consumer goods and financials outperforming. With global growth concerns increasing, basic materials is the worst performing sector. At these levels, the knock on effect of a slow down will hit the banking sector, especially with house prices still relatively high, leaving the possibility of 1. further rate cuts, 2. increased bad loan provisions, 3. lower credit growth. On this basis, time to short the Australian banks.
With the issues involving Libor, Standard Chart and HSBC will both come under pressure today, holding the HSI index lower. I expect markets to open up near the day highs and trend easier as investors reduce risk going into the US elections. Defensive names will continue to outperform.
Events.
09:20 Japan BOJ deputy governor speach
15:00 Portugal cabinet meeting
15:30 EU foreign ministers meeting
17:00 Bank of Italy public finance release
Asian and European finance ministers meet in BKK
Portugal budget announcement
Bonds.
09:30 Korea 3,6 month and 10 year auction
13:30 Philippines 3, 6 and 12 month auction
17:30 Dutch 3, 6 month auction
21:00 French 3, 6 and 12 month auction
23:30 US 3 and 6 month auction
Earnings
Gannett(US), Charles Schwab(US), Citi(US), Packaging corp of America(US), Blyth(US), Kuehne + nagel(GE), KREIT(SP), M1(SP), Yuanta(TW)
Stoddart
Volumes in the US on Friday remained strong, trading around the recent average, as markets traded around flat. Again, we see a more defensive stance with tech and consumer goods the top performing sectors, however, utilities and telcoms were among the weaker. This leads us to believe there is still some repositioning going on, as we approach the November 6th US presidential election.
With headlines over the weekend, again, questioning growth, sentiment is still relatively weak. Europe has seen a rebound in the Euro, but Spain and Italy continue to drag their feet, causing the Euro rally to grind very quickly to a halt. This is also reflected in the bond market where Spanish and Italian yields have steadily started to rise. We need the EFSF to quickly agree terms with states needing aid.
Another major headline is the individuals claiming against libor manipulation. Many thought this could be a possiblity but now, its reality. This will be a major case for the banks and could see banks ha ve to increase provisions. A large number of banks have been fined, which technically speaking implies they are guilty of malpractice. Should a single homeowner be able to claim damages, this would open the window to nearly everyone with a mortgage. Although total loses would be hard to calculate, and would take considerable time to calculate rates without the fictitious prices in place, mortgages owners will have been impacted by higher interbank rates. This could have the similar repercussion as the mini-bond lawsuit.
Markets.
Australia currently trading flat, with consumer goods and financials outperforming. With global growth concerns increasing, basic materials is the worst performing sector. At these levels, the knock on effect of a slow down will hit the banking sector, especially with house prices still relatively high, leaving the possibility of 1. further rate cuts, 2. increased bad loan provisions, 3. lower credit growth. On this basis, time to short the Australian banks.
With the issues involving Libor, Standard Chart and HSBC will both come under pressure today, holding the HSI index lower. I expect markets to open up near the day highs and trend easier as investors reduce risk going into the US elections. Defensive names will continue to outperform.
Events.
09:20 Japan BOJ deputy governor speach
15:00 Portugal cabinet meeting
15:30 EU foreign ministers meeting
17:00 Bank of Italy public finance release
Asian and European finance ministers meet in BKK
Portugal budget announcement
Bonds.
09:30 Korea 3,6 month and 10 year auction
13:30 Philippines 3, 6 and 12 month auction
17:30 Dutch 3, 6 month auction
21:00 French 3, 6 and 12 month auction
23:30 US 3 and 6 month auction
Earnings
Gannett(US), Charles Schwab(US), Citi(US), Packaging corp of America(US), Blyth(US), Kuehne + nagel(GE), KREIT(SP), M1(SP), Yuanta(TW)
Stoddart
Sunday, 7 October 2012
Morning note 7th October 2012
Morning all,
Apols for the delay in getting this out.
I like the fact volumes are holding up in Europe. With leaders, once again dragging their feet, I was really expecting inflows to slow. This was helped on Friday by a strong performance by the financials with BNP and SG both up nearly 4%. With the US elections coming up in November, Spain and Italy questioning bail out terms, and no direct strategy to improve growth, volumes will fall.
Press over the weekend feels like sentiment is falling away. There talks of a number of countries falling into a technical recession in 2013. This is not surprising, given some of the aggressive budget cuts and politicians doing little to ease concerns.
There are continued coverage over Japan and China's dispute over land ownership. This is not helped by the US sending out the new Osprey aircraft to Okinawa. Tensions are also building between Turkey and Syria, whilst Iraq saw the worst month for violence since 2010.
With policies designed to help ease the debt burden, with the US buying bonds and now mortgages, Europe set to become the lender of last resort to both governments and financial institutions, we are still yet to see anything directly related to encouraging growth.
With central banks so fixated on balancing budgets, politicians are looking to increase taxes, rather than cut public spending, or even redirecting public spending. Clearly, politicians such as Merkel and Hollande have great focus on self-preservation and votes. During Hollande's election campaign we was keen to keep votes but not increasing spending cuts.... now we see how he plans to reduct the deficit, through tax. This will only hit growth over the next 10+ years, with lower R&D, investment and onshore capital.
With the macro data showing global markets under continued pressure, fighting sentiment and growth, investors will look to new data for signs of improvement. The key is improved liquidity. Real interest rates still remain high. For example in the UK, where BoE rates are 0.5%, mortgage rates are currently offered at around 3.5%. Credit markets remain tight and with growth still slow, banks have a limited interest in lending to home buyers.... once bitten, twice shy.
What to look for? Governments are already trying to free up credit markets. The recent announcement to buy mortgages was something they were desperate not to do back in 2008. Products are too complicated; pricing is made difficult due credit/risk and mark-to-market of the property. Still, 4 years on and the banks are now reluctant to lend, leaving the government to step up and try to defrost the credit markets.
With the recent announcements, we should see credit improving. The buying of mortgage securities by the Government, should encourage competition to increase in the mortgage markets. It should also improve corporate credit facilities, so we should see an increase in inventories.
The US wholesale inventory number is one I will be watching closely, as will US earnings. With improving credit, we should see lower interest rate payments, so earnings data and consumer spending should also we watched closely. Earnings should improve before the unemployment rate.
Where from here? Markets should give back some of the recent gains. The current inflows into the equity markets will now be replaced with rotation, as under-weight positions are covered.
Talks of a technical recession will continue, but the outcome of a market having to quarters of negative growth, will be discounted due to the EFSF and US stimulus packages. Defensives will remain in favor, but with data set to improve in 1H2013, I would be looking at a more aggressive growth strategy.
In currencies, we should continue to see the Euro rally. With bond yields in Italy and Spain still trading above 5%, despite being able to borrow from the EFSF, investors will be looking to take advantage of the improving credit.
With capital inflows into Europe, and the current level of the Euro encouraging exports, Gold, silver and to a lesser degree oil, should also see in flows, as investors hedge against a weakening Euro. The AU$ should see some support here, despite easing rates, however, with such large inventories, its hard to see the AU$ getting back up to 1.08 level.
Japan is desperate for the Yen to fall. With imports making up a large part of its GDP, companies are being forced to increase overseas production or in some cases, close operations. A weaker Yen would help support domestic jobs and increased exports. Unfortunately it is doubtful we get back to the 2006 levels, purely due to huge overseas loans in that period, but within the next 6 months the JPY should be trading nearer the 83.00 level.
Key data this week:
Monday: Watch out for German Industrial production
Tuesday: UK trade balance
Wednesday: IT, FR industrial prod, US wholesale inventories, beige book
Thursday: US jobs and trade balance
Friday: US PPI
Stoddart
Apols for the delay in getting this out.
I like the fact volumes are holding up in Europe. With leaders, once again dragging their feet, I was really expecting inflows to slow. This was helped on Friday by a strong performance by the financials with BNP and SG both up nearly 4%. With the US elections coming up in November, Spain and Italy questioning bail out terms, and no direct strategy to improve growth, volumes will fall.
Press over the weekend feels like sentiment is falling away. There talks of a number of countries falling into a technical recession in 2013. This is not surprising, given some of the aggressive budget cuts and politicians doing little to ease concerns.
There are continued coverage over Japan and China's dispute over land ownership. This is not helped by the US sending out the new Osprey aircraft to Okinawa. Tensions are also building between Turkey and Syria, whilst Iraq saw the worst month for violence since 2010.
With policies designed to help ease the debt burden, with the US buying bonds and now mortgages, Europe set to become the lender of last resort to both governments and financial institutions, we are still yet to see anything directly related to encouraging growth.
With central banks so fixated on balancing budgets, politicians are looking to increase taxes, rather than cut public spending, or even redirecting public spending. Clearly, politicians such as Merkel and Hollande have great focus on self-preservation and votes. During Hollande's election campaign we was keen to keep votes but not increasing spending cuts.... now we see how he plans to reduct the deficit, through tax. This will only hit growth over the next 10+ years, with lower R&D, investment and onshore capital.
With the macro data showing global markets under continued pressure, fighting sentiment and growth, investors will look to new data for signs of improvement. The key is improved liquidity. Real interest rates still remain high. For example in the UK, where BoE rates are 0.5%, mortgage rates are currently offered at around 3.5%. Credit markets remain tight and with growth still slow, banks have a limited interest in lending to home buyers.... once bitten, twice shy.
What to look for? Governments are already trying to free up credit markets. The recent announcement to buy mortgages was something they were desperate not to do back in 2008. Products are too complicated; pricing is made difficult due credit/risk and mark-to-market of the property. Still, 4 years on and the banks are now reluctant to lend, leaving the government to step up and try to defrost the credit markets.
With the recent announcements, we should see credit improving. The buying of mortgage securities by the Government, should encourage competition to increase in the mortgage markets. It should also improve corporate credit facilities, so we should see an increase in inventories.
The US wholesale inventory number is one I will be watching closely, as will US earnings. With improving credit, we should see lower interest rate payments, so earnings data and consumer spending should also we watched closely. Earnings should improve before the unemployment rate.
Where from here? Markets should give back some of the recent gains. The current inflows into the equity markets will now be replaced with rotation, as under-weight positions are covered.
Talks of a technical recession will continue, but the outcome of a market having to quarters of negative growth, will be discounted due to the EFSF and US stimulus packages. Defensives will remain in favor, but with data set to improve in 1H2013, I would be looking at a more aggressive growth strategy.
In currencies, we should continue to see the Euro rally. With bond yields in Italy and Spain still trading above 5%, despite being able to borrow from the EFSF, investors will be looking to take advantage of the improving credit.
With capital inflows into Europe, and the current level of the Euro encouraging exports, Gold, silver and to a lesser degree oil, should also see in flows, as investors hedge against a weakening Euro. The AU$ should see some support here, despite easing rates, however, with such large inventories, its hard to see the AU$ getting back up to 1.08 level.
Japan is desperate for the Yen to fall. With imports making up a large part of its GDP, companies are being forced to increase overseas production or in some cases, close operations. A weaker Yen would help support domestic jobs and increased exports. Unfortunately it is doubtful we get back to the 2006 levels, purely due to huge overseas loans in that period, but within the next 6 months the JPY should be trading nearer the 83.00 level.
Key data this week:
Monday: Watch out for German Industrial production
Tuesday: UK trade balance
Wednesday: IT, FR industrial prod, US wholesale inventories, beige book
Thursday: US jobs and trade balance
Friday: US PPI
Stoddart
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
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