Good morning,
Optimism was lifted overnight as strong debt and headlines now support Obama's plans to reduce the US deficit. As expected, equity markets finally start reacting to the currency markets, where the US$ continues to weaken vs majors. Now with the Euro and Sterling at major technical levels, do they have the momentum to push through resistance levels, or are they setting up to move sideways in the near term?
European markets opened at the lows and trended firmer throughout the session, closing on the highs, however, volumes remained below average.
Spanish bad loans are over the headlines today, mostly on loans and mortgages, equating to 10.7% of total loans or 182.2 billion euros in September.
Overnight we also had a French bond downgrade, loosing the almighty AAA rating, now AA1 by Moody's. Fears will be others are to follow. The downgrade cited 1. worse longer term outlook; 2. uncertainty on economic growth prospects; 3. falling resilience to future euro shocks.
This is mud on the face of Hollande, who was looking for increased spending to boost GDP, and tax revenues to pay for the spending.
FTSE +2.4% avg volume; O/P: tech, financials U/P: health, utilities
CAC +2.9% low volume; O/P: financials, tech U/P: health, telco
DAX +2.5% avg volume; O/P: cons.good, tech U/P: health, utilites
IBEX +2.3% avg volume; O/P: tech, financials U/P: health, industrial
A complete reversal from last weeks defensive move into healthcare. With improving housing markets in the UK, investors brush off the Spanish bad loans data, and European bonds remain relatively unchanged. The Euro is also supporting which rallied nearly 1 big figure overnight, now trading at 1.2780.
European indices are looking rich here with German's DAX trading on 14x earnings, vs the S&P also trading on 14x, however, on book value the DAX is only 1.35, and the S&P is on 2.09.
With such negativity since the US election, equity markets were long overdue a bounce, and with volume remaining around average plus the Euro at major resistance levels, this move has little behind it. The longer term outlook is positive for European equities but with growth set to increase slowly, overnight moves on little data will soon correct.
Data overnight saw Italian industrial production fall -4.0% vs expected -1.0% but this is also impacted by floods in Europe.
Greece current a/c came in at 775m, as exports of services fell from 3965m to 2920m month on month, mostly in travel.
The EU construction output fell -1.4% MoM, due mostly to a large fall in the Czech republic, German and Poland. Spain was actually up 1.4%, whilst Slovenia went from a -19.6% to -0.2% quarter on quarter.
US markets traded similar to that of Europe, opening at the lows and trending firmer throughout the session, closing at day highs. UST's saw yields fall slightly but with the 10year still at 1.61, and AAA rated, there will continue to be demand, especially if we see investors increase cash positions into year end.
S&P +2.0% avg volume; O/P: tech, basic materials U/P; utilities, health
Tech seeing a strong rebound, helped mostly by Apple (AAPL), which rebounded +7.2% last night. Expect this stock to squeeze further given the recent stream of negativity on its growth. I have to agree, the outlook for AAPL is limited due to falling innovation, however, short levels would be nearer $600 again.
With equities finally mirroring currencies, oil and basic materials were both strong last night. The US sectors map highlights Paper +3.7%, industrial materials +.3.1% and mining +1.9%, this sector has more to go as funds move to a more equally weighted position, also expect a short squeeze.
With optimism on the US finding a solution to reduce its deficit whilst spending to encourage growth, investors turn to the financial sector. Credit markets are such, that banks remain nervous on lending, ie tight credit markets, which mean real interest rates remain high and loan growth weak. However, as growth estimates improve and housing markets get support, we should see an increased level of lending. Bad credit ratings will improve but a full blown property market rally is some way off.
Markets.Asian markets already priced in some of this move yesterday, but should have more to go. Expect markets to rally on the open to day highs, and then trade easier as the Euro struggles at resistance levels.
Sectors, still not too late to buy Alu, coal, steel and oil. Top picks, Angang(347), Chalco(2600), Yanzhou(1171) and Petrochina(857), but CNOOC(883) will also benefit from improving crude.
As China property prices increase, banks should also see inflows as will property developers, however, due to government intervention the credit markets will remain tight.
IPP has been a strong sector this year and going into China winter, but is now looking rich. SELL
US building permits/housing starts today... lets see if we get some follow-through on US housing.
Data.10:00 China FDI
12:30 Japan industrial activity
15:00 German PPI
16:30 Netherlands consumer confidence (important due to noise on the Euro)
21:30 US housing starts, building permits
BoJ target rate
Events.02:00 EU Van Rompuy meets ministers on budget talks
07:00 Monti in UAE
08:30 Australia reserve minutes
17:00 EU general affairs minister prep budget summit
22:00 US Fed's Lacker speaks on monetary policy
Bonds.09:30 China 1,3,5,7,10 year auction
11:30 Thailand 1,3/12 month auction
12:30 Taiwan 30 year auction
17:30 Spain 1,2 year auction
18:30 UK 5 year auction
19:00 EFSF 6 month auction
00:30 US 1 month auction
Earnings.Campbell soup(US), HJ Heinz(US), HP(US), Medtronic(US), Best Buy(US), British Land(UK), OPAP(GR), easyjet(UK), Digital China(HK), Lee & Man(HK), Guinness Anchor(MK), SK Chem(SK)
Stoddart
Showing posts with label industrial. Show all posts
Showing posts with label industrial. Show all posts
Monday, 19 November 2012
Monday, 29 October 2012
Morning note, data, events, bonds and earnings 30th October 2012
Good morning,
With US markets closed, and disruptions across the east coast, equity volumes fall globally. In Europe, average volumes fell by around 40% greater than that of Asia which fell around 25%
FTSE -0.7% v.low volume: O/P; tech, industrials U/P; O&G, basic materials
CAC -0.8% v.low volume: O/P; cons.goods, financials U/P; utilities, telco
DAX -0.4% v.low volume: O/P; tech, basic mat U/P; cons.services, financials
IBEX -0.6% v.low volume: O/P; health, tech U/P; telo, financials
Mixed signals from the sector maps, however, it does feel like there is a more prominent defensive theme. Italy saw the biggest fall in the region, with its main index off 1.5%, after Berlusconi threatens to bring down Monti, due to a recent court case that could see him do 2 years in prison. Once again, we see that instinct of self-survival threaten the Euro, which could cause some heavy setbacks.
With the progress made so far, including a banking union due in January, Monti has held his own against major powers. After tough budget cuts, clamping down on tax evasion and trying to reduce corruption, Monti has also managed to protect many of the state assets, which were long expected to be put up for sale to help with their debt burden.
Where does this leave us? Well, once again, Berlusconi will no doubt be given a "get out of jail free card", which he shall use immediately, unless of course the Italian prisons have "bunga-bunga Tuesdays", Dom Perignon and unlimited conjugal visits.
Under pressure from other European states, Monti will be forced into this position, which should then allow European leaders to concentrate on bailout terms and ways to stimulate growth.
Another major story overnight, was the arrest of a Greek Journalist who published a list of tax evaders. This in itself is a relatively minor event, however, 1. the documents obtained by this reporter, had infact passed the hands of Christine Lagarde and Greek finance minister; 2. Give the upset caused by austerity, the pressure is set to increase.
What is the impact? Despite freedom of the press, this could be dealt with quickly, unlike that of wikileaks. More than likely, is this could be the push needed, with public backing, to take on tax evaders. Lagarde should see this as an opportunity; support the clamp down on tax evasion.
This could, however, trigger a witch hunt, putting further pressure to restrict the use of offshore bank accounts. Already we are seeing headline of Chinese banks moving to Luxembourg to avoid UK regulation. This kind of disruption, could only further alienate EU members.
The answer is, for now, lets deal with the problem at hand. Like a banker with a new telephone, no one likes sudden change.
Markets.
With the US off today, expect volumes to continue to miss recent averages. I am also expecting some negativity which will see indices fall once more.
Honda was a big miss yesterday, Paypal job cuts highlight weak consumer spending whilst Apple management shift, shows just how sales dependent even a great giant can be.
Further noise on Libor could hit HSBC, which has been an extremely strong performer of late, as has the sector globally.
Basic materials look set to fall, again, on growth concerns. Jiangxi Copper(358) saw net income miss estimates by -13%, which given the fall in copper prices was not a surprising as that figure suggests. With the sector having a very lack luster bounce, any sell off does leave stocks looking cheap, which given governments efforts to support growth, I see as a buying opportunity. Spreads between Copper and Jiangxi Coppers share price are now at the lows, leaving the company looking cheap. Yes inventories are high, yes demand and outlook currently look weak, BUT, conditions are improving.
Oil should also see outflows, as crude oil falls. This looks like a short term move in the physical, due to Hurricane Sandy. There are still many drivers that could see oil increase back to the 95 level. BUY
Data.
07:30 Japan jobless rate
12:00 Japan vehicle production
12:30 India cash rate
16:00 Spain CPI/GDP
21:00 US Case Shiller home prices
Spain budget balance
Events.
13:30 India RBI meeting
16:00 Monti speaks at World economic forum
19:00 Portugal reports retail sales//industrial production
Japan BOJ policy meeting
Bonds.
11:00 Thai 1,3, 6 and 12 month auction
11:30 HK 1, 3 and 6 month auction
18:00 Italian 5, 10 year auction
Earnings.
Archer Daniels Midland(US), Johnson controls(US), Ford(US), DaVita(US), Avis(US), Dreamworks(US), Onyx Pharma(US), Ashland(US), US Steel(US), Valero Energy(US), Deutsche Bank(GE), Hugo Boss(GE), UBS(SF), Geberit(SF), Danske Bank(NO), Erste Bank(VI), Bayer(GE), ENI(IT), MAN(SW), BP(UK), Imperial Tobaco(UK), Ferrovial(SP), Tom Tom(NL), Fiat(IT), Seagate tech(UK), Mitsubishi motor(JP, Kobe steel(JP), Tokyo gas(JP, West Japan rail(JP), Hitachi(JP), Komatsu(JP), Japan tobaco(JP), Asahi group(JP), Ricoh(JP), Fuji heavy(JP), SIA Eng(SG), Lai Sun dev(HK), Samsung SDI(KR), KEPCO(KR), Hyundai Marine and fire(KR), Sichuan ecpress(HK), Metallurgical corp(HK), Ping An(China), China rail construction(CH), Mega fin(TT), BoCom(CH), SAIC (CH), C.Minsheng(CH), CSCL(CH), China Rail(CH), COSCO(CH), CCCC(CH), Air China(CH), Guangzhou Auto(CH), C.Shipping development(CH), Huadian power(CH), Dalian port(CH), China Eastern(CH), Quanta comp(TT), Zoomlion(CH), Tsingtao(CH), ICBC(CH), Compal(TT), petrochina(CH), CITIC sec(CH), Asustek(TT), Hon Hai(TT), Foxconn tech(HK), Shanghai Elec(CH), Chalco(CH), Taiwan cement(TT), satyam(IN), Dr Ready's (IN)
Stoddart
With US markets closed, and disruptions across the east coast, equity volumes fall globally. In Europe, average volumes fell by around 40% greater than that of Asia which fell around 25%
FTSE -0.7% v.low volume: O/P; tech, industrials U/P; O&G, basic materials
CAC -0.8% v.low volume: O/P; cons.goods, financials U/P; utilities, telco
DAX -0.4% v.low volume: O/P; tech, basic mat U/P; cons.services, financials
IBEX -0.6% v.low volume: O/P; health, tech U/P; telo, financials
Mixed signals from the sector maps, however, it does feel like there is a more prominent defensive theme. Italy saw the biggest fall in the region, with its main index off 1.5%, after Berlusconi threatens to bring down Monti, due to a recent court case that could see him do 2 years in prison. Once again, we see that instinct of self-survival threaten the Euro, which could cause some heavy setbacks.
With the progress made so far, including a banking union due in January, Monti has held his own against major powers. After tough budget cuts, clamping down on tax evasion and trying to reduce corruption, Monti has also managed to protect many of the state assets, which were long expected to be put up for sale to help with their debt burden.
Where does this leave us? Well, once again, Berlusconi will no doubt be given a "get out of jail free card", which he shall use immediately, unless of course the Italian prisons have "bunga-bunga Tuesdays", Dom Perignon and unlimited conjugal visits.
Under pressure from other European states, Monti will be forced into this position, which should then allow European leaders to concentrate on bailout terms and ways to stimulate growth.
Another major story overnight, was the arrest of a Greek Journalist who published a list of tax evaders. This in itself is a relatively minor event, however, 1. the documents obtained by this reporter, had infact passed the hands of Christine Lagarde and Greek finance minister; 2. Give the upset caused by austerity, the pressure is set to increase.
What is the impact? Despite freedom of the press, this could be dealt with quickly, unlike that of wikileaks. More than likely, is this could be the push needed, with public backing, to take on tax evaders. Lagarde should see this as an opportunity; support the clamp down on tax evasion.
This could, however, trigger a witch hunt, putting further pressure to restrict the use of offshore bank accounts. Already we are seeing headline of Chinese banks moving to Luxembourg to avoid UK regulation. This kind of disruption, could only further alienate EU members.
The answer is, for now, lets deal with the problem at hand. Like a banker with a new telephone, no one likes sudden change.
Markets.
With the US off today, expect volumes to continue to miss recent averages. I am also expecting some negativity which will see indices fall once more.
Honda was a big miss yesterday, Paypal job cuts highlight weak consumer spending whilst Apple management shift, shows just how sales dependent even a great giant can be.
Further noise on Libor could hit HSBC, which has been an extremely strong performer of late, as has the sector globally.
Basic materials look set to fall, again, on growth concerns. Jiangxi Copper(358) saw net income miss estimates by -13%, which given the fall in copper prices was not a surprising as that figure suggests. With the sector having a very lack luster bounce, any sell off does leave stocks looking cheap, which given governments efforts to support growth, I see as a buying opportunity. Spreads between Copper and Jiangxi Coppers share price are now at the lows, leaving the company looking cheap. Yes inventories are high, yes demand and outlook currently look weak, BUT, conditions are improving.
Oil should also see outflows, as crude oil falls. This looks like a short term move in the physical, due to Hurricane Sandy. There are still many drivers that could see oil increase back to the 95 level. BUY
Data.
07:30 Japan jobless rate
12:00 Japan vehicle production
12:30 India cash rate
16:00 Spain CPI/GDP
21:00 US Case Shiller home prices
Spain budget balance
Events.
13:30 India RBI meeting
16:00 Monti speaks at World economic forum
19:00 Portugal reports retail sales//industrial production
Japan BOJ policy meeting
Bonds.
11:00 Thai 1,3, 6 and 12 month auction
11:30 HK 1, 3 and 6 month auction
18:00 Italian 5, 10 year auction
Earnings.
Archer Daniels Midland(US), Johnson controls(US), Ford(US), DaVita(US), Avis(US), Dreamworks(US), Onyx Pharma(US), Ashland(US), US Steel(US), Valero Energy(US), Deutsche Bank(GE), Hugo Boss(GE), UBS(SF), Geberit(SF), Danske Bank(NO), Erste Bank(VI), Bayer(GE), ENI(IT), MAN(SW), BP(UK), Imperial Tobaco(UK), Ferrovial(SP), Tom Tom(NL), Fiat(IT), Seagate tech(UK), Mitsubishi motor(JP, Kobe steel(JP), Tokyo gas(JP, West Japan rail(JP), Hitachi(JP), Komatsu(JP), Japan tobaco(JP), Asahi group(JP), Ricoh(JP), Fuji heavy(JP), SIA Eng(SG), Lai Sun dev(HK), Samsung SDI(KR), KEPCO(KR), Hyundai Marine and fire(KR), Sichuan ecpress(HK), Metallurgical corp(HK), Ping An(China), China rail construction(CH), Mega fin(TT), BoCom(CH), SAIC (CH), C.Minsheng(CH), CSCL(CH), China Rail(CH), COSCO(CH), CCCC(CH), Air China(CH), Guangzhou Auto(CH), C.Shipping development(CH), Huadian power(CH), Dalian port(CH), China Eastern(CH), Quanta comp(TT), Zoomlion(CH), Tsingtao(CH), ICBC(CH), Compal(TT), petrochina(CH), CITIC sec(CH), Asustek(TT), Hon Hai(TT), Foxconn tech(HK), Shanghai Elec(CH), Chalco(CH), Taiwan cement(TT), satyam(IN), Dr Ready's (IN)
Stoddart
Thursday, 18 October 2012
Morning note, data, events, bonds and earnings 19th October 2012
Good morning,
After such a strong bounce on Wednesday, equity markets traded flat to down overnight, however, all put through good volumes.
Spain's bond auction saw the nation increase borrowing more than expected. This had the opposite effect and 10yr yields fell to new lows of 5.3%.
European equity markets saw German and France both stay in positive territory, but both lagged on Wednesday and were playing catch up. Strong earnings from Bankinter and Nokia(!) helped boost the market, as did investors increasing risk, with sectors such as basic mterials and industrials outperforming. Financials continued to hold up we with DB closing at day highs, up over 40% since July!!
FTSE +0.2% good volume; O/P: basic materials, telco U/P: cons.goods, tech
CAC +0.2% v.good volume; O/P: tech, health U/P: cons.goods, cons.services
DAX +0.6% v.good volume; O/P: cons.services, industrial U/P: utilities, telco
IBEX -0.3% v.good volume: O/P: tech, basic mat U/P: industrial, financial
Data yesterday saw Spain's trade balance com in higher than expected, -3145.1m vs expected -2500m. With the aim of seeing Spain reduce its debs by increase exports, we wan to see this number improving to a positive.
UK retail ex fuel sales came in strong at +0.6% vs expected +0.3%, lets hope we see this number continue to improve as UK retailers have been struggling for some time as discretionary spending remains low.
In the US as string of strong earnings from Capital One, SanDisc, Verizon, Keycorp, PPG ind and Morgan Stanley help support equity markets. Google missed its estimated earnings by 15% leaving tech stocks down and the Nasdaq -1%. We have been use to seeing tech outperform over teh last 6 months, its now time to rotate out back into other sectors such as industrials.
S&P -0.2% good volume; O/P: telco, utilities U/P: tech, cons.goods
Sector performanc ehere indicates a more risk off approach, however, basic materials was the 3rd best performing sector, highlighting negativity towards growth is starting to ease and investors expect GDP to start improving.
US data overnight saw jobless claims increase at a fast rate than expected to 388k vs prior month 339k. The market was looking for 365k. With the elections coming up, jobs are a major issues and I think Obama could really have done with that coming out better.
But this data was soon overshadowed by the Phily Fed, which came in at 5.7 vs expected 1.0. Whilst the headline looks strong, we did see the employment index and new orders drop, leaving this number looking seasonal. We did, however, see a small increase in inventories and prices paid, but we need to see this increase further and encourage jobs growth.
Markets.
Equity markets today look set to give up some of the recent gains. I still continue to like the consumer electronics names in Japan, with so much negativity on the sector, we should see a short squeeze, added to th e weaker yen supporting overseas sales.
Basic materials should continue to run, although coal will see outflows due to is recent performance, steel and cements seem to be to hot spot for those flows to head into.
I still want to short financials due to the HUGE run they have had. Yes margins are improving as are deal flows but with the overhang of the Libor claims, I want to short HSBC. Australian banks will also struggle with a rather toppy housing market, and minimal previsions.
I expect markets to open flat for the first hour and trend easier to the close.
Data.
12:30 Japan all industry activity
13:00 Japan leading index
14:00 Germn Producer prices
15:30 Thai reserves
16:00 EU current a/c
16:00 Italian industrial orders
16:30 UK public sector net borrowing
22:00 US existing home sales
also due, China FDI
Events.
16:00 EU leaders conclude summit
Portugal's Coelho attends EU council meeting
Bonds.
18:00 UK 1, 3 and 6 month auction
Earnings.
Schlumberger(US), GE(US), Honeywell(US), McDonalds(US), Shaw grp(US), Ziggo(NL), Elisa(FI), Alpha bank(GR), Capitamall(SG), China State construction(CH), Hana fin(TT), LG Dis(KR), Kumho pet(KR), LG Chem(KR), Bursa Malaysia(MK), Powerchip(TT), DiGi(MK), Bk of Moscow(RU), Turkcell(TU), Bank Forum(RU), Philip morris(CZ)
Happy friday
Stoddart
After such a strong bounce on Wednesday, equity markets traded flat to down overnight, however, all put through good volumes.
Spain's bond auction saw the nation increase borrowing more than expected. This had the opposite effect and 10yr yields fell to new lows of 5.3%.
European equity markets saw German and France both stay in positive territory, but both lagged on Wednesday and were playing catch up. Strong earnings from Bankinter and Nokia(!) helped boost the market, as did investors increasing risk, with sectors such as basic mterials and industrials outperforming. Financials continued to hold up we with DB closing at day highs, up over 40% since July!!
FTSE +0.2% good volume; O/P: basic materials, telco U/P: cons.goods, tech
CAC +0.2% v.good volume; O/P: tech, health U/P: cons.goods, cons.services
DAX +0.6% v.good volume; O/P: cons.services, industrial U/P: utilities, telco
IBEX -0.3% v.good volume: O/P: tech, basic mat U/P: industrial, financial
Data yesterday saw Spain's trade balance com in higher than expected, -3145.1m vs expected -2500m. With the aim of seeing Spain reduce its debs by increase exports, we wan to see this number improving to a positive.
UK retail ex fuel sales came in strong at +0.6% vs expected +0.3%, lets hope we see this number continue to improve as UK retailers have been struggling for some time as discretionary spending remains low.
In the US as string of strong earnings from Capital One, SanDisc, Verizon, Keycorp, PPG ind and Morgan Stanley help support equity markets. Google missed its estimated earnings by 15% leaving tech stocks down and the Nasdaq -1%. We have been use to seeing tech outperform over teh last 6 months, its now time to rotate out back into other sectors such as industrials.
S&P -0.2% good volume; O/P: telco, utilities U/P: tech, cons.goods
Sector performanc ehere indicates a more risk off approach, however, basic materials was the 3rd best performing sector, highlighting negativity towards growth is starting to ease and investors expect GDP to start improving.
US data overnight saw jobless claims increase at a fast rate than expected to 388k vs prior month 339k. The market was looking for 365k. With the elections coming up, jobs are a major issues and I think Obama could really have done with that coming out better.
But this data was soon overshadowed by the Phily Fed, which came in at 5.7 vs expected 1.0. Whilst the headline looks strong, we did see the employment index and new orders drop, leaving this number looking seasonal. We did, however, see a small increase in inventories and prices paid, but we need to see this increase further and encourage jobs growth.
Markets.
Equity markets today look set to give up some of the recent gains. I still continue to like the consumer electronics names in Japan, with so much negativity on the sector, we should see a short squeeze, added to th e weaker yen supporting overseas sales.
Basic materials should continue to run, although coal will see outflows due to is recent performance, steel and cements seem to be to hot spot for those flows to head into.
I still want to short financials due to the HUGE run they have had. Yes margins are improving as are deal flows but with the overhang of the Libor claims, I want to short HSBC. Australian banks will also struggle with a rather toppy housing market, and minimal previsions.
I expect markets to open flat for the first hour and trend easier to the close.
Data.
12:30 Japan all industry activity
13:00 Japan leading index
14:00 Germn Producer prices
15:30 Thai reserves
16:00 EU current a/c
16:00 Italian industrial orders
16:30 UK public sector net borrowing
22:00 US existing home sales
also due, China FDI
Events.
16:00 EU leaders conclude summit
Portugal's Coelho attends EU council meeting
Bonds.
18:00 UK 1, 3 and 6 month auction
Earnings.
Schlumberger(US), GE(US), Honeywell(US), McDonalds(US), Shaw grp(US), Ziggo(NL), Elisa(FI), Alpha bank(GR), Capitamall(SG), China State construction(CH), Hana fin(TT), LG Dis(KR), Kumho pet(KR), LG Chem(KR), Bursa Malaysia(MK), Powerchip(TT), DiGi(MK), Bk of Moscow(RU), Turkcell(TU), Bank Forum(RU), Philip morris(CZ)
Happy friday
Stoddart
Sunday, 23 September 2012
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
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
Subscribe to:
Posts (Atom)