Good morning,
Gosh, the press is all over the show. I want to get excited about Obama meeting Mitt. The budget is huge issue for the US and despite Obama winning a second term, a joint effort is needed to pass a number of bills, helping America reduce its deficit.
The the next story I read is BP, which is now banned from new US contracts. I know they are British, so my view many will question as slightly bias, however, BP is one of the leaders in its field. Yes, they have made some mistakes, but the development in drilling and exploration techniques would not be were it is today without this industry leader.
My fear is, that the US see growth through protectionism. Looking after your own is all well and good, but going back over history, it tends to make a samll number wealth, reduces R&D and stops much needed foreign investment. As mentioned yesterday, France is going down that route, and it is not advised.
Argentinian debt has also come up recently. What they dont realise is, although defaulting would solve a number of problems, as an investor, I would not touch their debt from here on. Even if yields were 20%, it doesnt matter if I dont see my principle back. Therefore, it makes it terribly difficult to raise funds in the overseas market, setting their growth back at least 10 years. I suggest playing by the rules.
Markets overnight saw Europe weaker throughout the session barr the last hour, where a short rally pushed many of the indices back into positive territory. The Euro sold off sharply but has since bounced making up those loses, now trading at 1.2950. Sectors in Europe look like this:
FTSE +0.1% avg volume; O/P: tech, telco U/P: basic materials, utilities
CAC +0.4% low volume; O/P: utilities, Oil&gas U/P: telco, tech
DAX +0.2% low volume; O/P: basic materials, cons.goods U/P: utilities, financial
IBEX -0.3% v.good volume; O/P: cons.services, tech U/P: utilities, telco
Sectors tell us very little. I like the volume pick up in Spain, where defensive names underperform leading to the idea that inflows are finally coming. Albeit at hugely discounted rates.
In the UK, VOD LN just paid its dividend and yet the telco sector remains strong.
In the US, markets opened on the lows and trended firmer, and on good volume.
S&P +0.8% avg volume; O/P: cons.services, oil & gas U/P: utilities, basic mats
Oil and Gas is finally outperforming over financials and tech, partly due to the Aplle rally running out of steam. In the tech space, I like innovative companies and for me, Apple has lost that. Short it at your peril, but at these levels, Microsoft looks more interesting. The next to fall from grace is Samsung, where the good times are over... whats next for them, they make a 20 inch phone?
Markets.
Asia is rallying on the back of indices closing at day lows and the rebound in currencies such as US$EUR. Expect markets to see some rotation today and over the next fortnight as investors cover shorts and optimism that the US budget will get passed first time, which I think it will.
We should see basic materials and oil&gas run on US$ hedge and growth sentiment improving.
Time to buy Petrochina(857), where I plan to put the Stoddart retirement fund, should I find an odd lot broker that doesnt have a 5% spread.
Data.
15:00 UK nationwide house prices
16:00 Spain housing permits
16:55 German unemployment - major number!
18:00 EU confidence... big number but, nothing says confidence like increasing inventories
21:30 US consumption, jobless claims and GDP, expected 2.8%
Events.
16:00 EU votes on bank oversight
17:00 EU pact with Japan, Canada and Singpaore... island dispute and deals with Japan...risky
18:30 UK BoE financial stability report
20:30 OECD's Gurria speaks, 1st question, why lowering growth tgts?
23:0 US hearing on Basel pt 3
Bonds.
11:35 Japan 3 month auction
18:00 Italy 5 and 10 year auction, yields already sub 5%
02:00 US 7 year auction
Earnings.
Tiffany(US), Dixons(UK), Natl Bk of Greece(GR), Fraser Prop(SP), Choi Tai Fook(HK)
Stoddart
Wednesday, 28 November 2012
Tuesday, 27 November 2012
Morning note, data, events, bonds and earnings 28th November 2012
Good morning,
Hollande is priceless. EU leaders are currently meeting on a continuous basis, discussing austerity including reduced public spending and reducing tax cuts/breaks. Despite this, France's president Hollande, is now looking to nationalise assets of ArcelorMittel.
It been in the press so I wont go through it all, but the basics are, ArcelorMittel wants to sell/close 2 of its furnaces, which upon hearing this, the French president started a witch hunt, threatening to expel it from the country.
Hollande has since toned down these threats, in part due to the 20,000 people ArcelorMittal still employs, and has now decided that nationalisation of the 2 furnaces is an option.
Given his current policy is still heavy on spending, with little indications of how he is going to generate the revenue to cover this, buying a Steel business will certainly upset the rest of Europe.
Hollande's spending is erratic, matched only by US consumers on Black Firday. He continues to believe higher growth will support his spending today, cause a number of downgrades on the countries debt. Should he continue down this path, France will be looking further downgrades causing far worse problems than the current situation.
This man needs to be stopped, before one of the major pillars in the European Union becomes yet another victim of over spending, just to get the popularity vote.
Overnight saw European markets open at the highs, around +50bps on very strong volume early in the session. But they trended easier throughout the day, closing just off the lows around flat on the day.
FTSE +0.2% low volume; O/P: tech, industrial U/P: oil&gas, telco
CAC flat avg volume; O/P: tech, financial U/P: telco, utilities
DAX +0.6% avg volume; O/P: health, financial U/P: telco, cons.services
IBEX -0.1% v.strong volume; O/P: tech, health U/P: oil&gas, telco
Sectors highlight a rebound in the financial sector and a move into defensives once again. Oil and gas continues to remain weak, despite an easing US$ as investors remain nervous on the growth outlook over the next 2 years. My view is that the negativity on GDP is already priced in leaving oil&gas undervalued at these levels. With European policy starting to take effect, we should see bond yields fall, reducing demand for the US$. This should boost US exports, and demand for the commodities.
European bonds continued to firm overnight, with 10yr yields as follows, Spain -10bps at 7.50%, Italy -3bps at 4.71% and Greece -30bps at 15.90%. We should continue to see inflows as investors look to lock in the high yields vs German and France. At these levels, I would be looking to short the French 5yr against both Spain and Italy.
Currencies saw EUR US$ give back some of its early gains, selling down to 1.2940 level currently. The 1.30 level is a major resistance level, which without improving industrial output, its hard to see it breaking in the near term. the US$ JPY continues to see the JPY remain weak at 82.20, which should help support the Nikkei, where the weaker yen aids exportors.
Data out of Europe saw German import price index fall -0.6% vs expected -0.3%.
In the UK, government spending came in slightly higher in the 3rd quarter at +0.6% vs estimates +0.4%, and there was a strong pick up in exports at +1.7% vs estimates 1.1%.
In Spain, there was the budget announcement, which saw October come in at -43.37b Euro, vs August -46.11b..... this should reduce some of the pressure on Spain from EU members German and France.
In the US, equity markets traded sideways for most of the session, before selling off in the last 2hours closing at day lows. Volumes remained quite strong despite the firming US$. UST's also firmed 3bps at 1.64% on the 10yr.
S&P -0.5% avg volume; O/P: utilities, cons.goods U/P: oil & gas, financial
The sector map shows further profit taking in financials, which is due to continue given the strong performance over the last 6 months. As Europe seems to be improving policy wise, we should see global funds take a more balanced weighting in this sector.
Consumer goods continue to outperform on the back of Black Friday. I'm not a fan of buying these names after the event but clearly, investors are excited by the sales numbers. I want to see how the consumer data over the next few months, this should tell us if personal credit markets are finally improving.
Data in the US was strong last night, but markets didnt react. Durable goods came in at flat, vs expectations of -0.7% in October. Ex transportation saw it beat estimates by 2%, estimates -0.5% vs actual +1.5%.
The CaseShiller home prices also came in slightly firmer for September at 146.22k vs August 145.87k. This number is struggling, in part due to the lower end of the market failing to find buyers due tight credit markets and consumers also suffering from weaker credit scores.
The Richmond fed manufacturing was also strong, coming in at 9 vs estimates -9. A strong pick up in Shipments, New orders and rising inventory levels, leaves me optimistic that the US will surprise to the upside with its improving GDP.
Markets. Sorry for the delay in this note, most markets are now in fact open. Japan opens at the lows and trends firmer, as the JPY continues to weaken. Australia remains weak, as commodities and oils still are still struggling to see inflows. Despite huge inventories in basic materials, the negativity on the sector is overdone, as is the outlook for GDP growth. Analysts are being way too conservative given the liquidity that is in the system, therefore I continue to think this sector is oversold, and look cheap.
Equity markets should see some degree of profit taking given the recent run. HK and China property look extremely rich at these levels, as are IPP.
I continue to like oil, oil and steel at these levels, as China will continue to support construction spending.
Markets trend easier in the first hour, then see us drift sideways.
Data.10:00 Philippines GDP
15:30 Thailand interest rates
16:00 Spain retail sales
17:00 Eurozone money supply
21:00 German CPI
20:00 US MBA mortgage apps
23:00 US new home sales
China leading index
Events.18:30 EU Almunia unveils rulings on Spanish banks
19:00 EU growth survey
22:00 Italy's Monti meets China's Jia
Bonds.12:00 Malaysia 2,5,7 month auction
18:00 Italy 6 month auction
18:30 German 5 year auction
02:00 US 5 year auction
Earnings.Express(US), ANN(US), American Eagle outfitters(US), Guess(US), Orco(FP), Untied Utilities(GB), Thomas Cook(UK), Alpha bank(GR), Eurobank Ergasias(GR), Skyworth(HK), Far East cons(HK), Yue Yuen(HK), China gas(HK), Luk Fook(HK), Bosideng(HK), Citic(CH), IJM(MK), Ukrnafta Oil(RU)
Stoddart
Hollande is priceless. EU leaders are currently meeting on a continuous basis, discussing austerity including reduced public spending and reducing tax cuts/breaks. Despite this, France's president Hollande, is now looking to nationalise assets of ArcelorMittel.
It been in the press so I wont go through it all, but the basics are, ArcelorMittel wants to sell/close 2 of its furnaces, which upon hearing this, the French president started a witch hunt, threatening to expel it from the country.
Hollande has since toned down these threats, in part due to the 20,000 people ArcelorMittal still employs, and has now decided that nationalisation of the 2 furnaces is an option.
Given his current policy is still heavy on spending, with little indications of how he is going to generate the revenue to cover this, buying a Steel business will certainly upset the rest of Europe.
Hollande's spending is erratic, matched only by US consumers on Black Firday. He continues to believe higher growth will support his spending today, cause a number of downgrades on the countries debt. Should he continue down this path, France will be looking further downgrades causing far worse problems than the current situation.
This man needs to be stopped, before one of the major pillars in the European Union becomes yet another victim of over spending, just to get the popularity vote.
Overnight saw European markets open at the highs, around +50bps on very strong volume early in the session. But they trended easier throughout the day, closing just off the lows around flat on the day.
FTSE +0.2% low volume; O/P: tech, industrial U/P: oil&gas, telco
CAC flat avg volume; O/P: tech, financial U/P: telco, utilities
DAX +0.6% avg volume; O/P: health, financial U/P: telco, cons.services
IBEX -0.1% v.strong volume; O/P: tech, health U/P: oil&gas, telco
Sectors highlight a rebound in the financial sector and a move into defensives once again. Oil and gas continues to remain weak, despite an easing US$ as investors remain nervous on the growth outlook over the next 2 years. My view is that the negativity on GDP is already priced in leaving oil&gas undervalued at these levels. With European policy starting to take effect, we should see bond yields fall, reducing demand for the US$. This should boost US exports, and demand for the commodities.
European bonds continued to firm overnight, with 10yr yields as follows, Spain -10bps at 7.50%, Italy -3bps at 4.71% and Greece -30bps at 15.90%. We should continue to see inflows as investors look to lock in the high yields vs German and France. At these levels, I would be looking to short the French 5yr against both Spain and Italy.
Currencies saw EUR US$ give back some of its early gains, selling down to 1.2940 level currently. The 1.30 level is a major resistance level, which without improving industrial output, its hard to see it breaking in the near term. the US$ JPY continues to see the JPY remain weak at 82.20, which should help support the Nikkei, where the weaker yen aids exportors.
Data out of Europe saw German import price index fall -0.6% vs expected -0.3%.
In the UK, government spending came in slightly higher in the 3rd quarter at +0.6% vs estimates +0.4%, and there was a strong pick up in exports at +1.7% vs estimates 1.1%.
In Spain, there was the budget announcement, which saw October come in at -43.37b Euro, vs August -46.11b..... this should reduce some of the pressure on Spain from EU members German and France.
In the US, equity markets traded sideways for most of the session, before selling off in the last 2hours closing at day lows. Volumes remained quite strong despite the firming US$. UST's also firmed 3bps at 1.64% on the 10yr.
S&P -0.5% avg volume; O/P: utilities, cons.goods U/P: oil & gas, financial
The sector map shows further profit taking in financials, which is due to continue given the strong performance over the last 6 months. As Europe seems to be improving policy wise, we should see global funds take a more balanced weighting in this sector.
Consumer goods continue to outperform on the back of Black Friday. I'm not a fan of buying these names after the event but clearly, investors are excited by the sales numbers. I want to see how the consumer data over the next few months, this should tell us if personal credit markets are finally improving.
Data in the US was strong last night, but markets didnt react. Durable goods came in at flat, vs expectations of -0.7% in October. Ex transportation saw it beat estimates by 2%, estimates -0.5% vs actual +1.5%.
The CaseShiller home prices also came in slightly firmer for September at 146.22k vs August 145.87k. This number is struggling, in part due to the lower end of the market failing to find buyers due tight credit markets and consumers also suffering from weaker credit scores.
The Richmond fed manufacturing was also strong, coming in at 9 vs estimates -9. A strong pick up in Shipments, New orders and rising inventory levels, leaves me optimistic that the US will surprise to the upside with its improving GDP.
Markets. Sorry for the delay in this note, most markets are now in fact open. Japan opens at the lows and trends firmer, as the JPY continues to weaken. Australia remains weak, as commodities and oils still are still struggling to see inflows. Despite huge inventories in basic materials, the negativity on the sector is overdone, as is the outlook for GDP growth. Analysts are being way too conservative given the liquidity that is in the system, therefore I continue to think this sector is oversold, and look cheap.
Equity markets should see some degree of profit taking given the recent run. HK and China property look extremely rich at these levels, as are IPP.
I continue to like oil, oil and steel at these levels, as China will continue to support construction spending.
Markets trend easier in the first hour, then see us drift sideways.
Data.10:00 Philippines GDP
15:30 Thailand interest rates
16:00 Spain retail sales
17:00 Eurozone money supply
21:00 German CPI
20:00 US MBA mortgage apps
23:00 US new home sales
China leading index
Events.18:30 EU Almunia unveils rulings on Spanish banks
19:00 EU growth survey
22:00 Italy's Monti meets China's Jia
Bonds.12:00 Malaysia 2,5,7 month auction
18:00 Italy 6 month auction
18:30 German 5 year auction
02:00 US 5 year auction
Earnings.Express(US), ANN(US), American Eagle outfitters(US), Guess(US), Orco(FP), Untied Utilities(GB), Thomas Cook(UK), Alpha bank(GR), Eurobank Ergasias(GR), Skyworth(HK), Far East cons(HK), Yue Yuen(HK), China gas(HK), Luk Fook(HK), Bosideng(HK), Citic(CH), IJM(MK), Ukrnafta Oil(RU)
Stoddart
Monday, 26 November 2012
Morning note, data, events, bonds and earnings 27th November 2012
Good morning,
Despite offering my services, the Bank of England has chosen a Canadian, Mark Carney as the Governor. I can only assume there was a mix up of the surnames.
The BoE was rumored some time ago to be looking at an "outsider" to take the top spot, just like that of the England football team, many years before.
The Canadian was one of the options commentators had penciled for the position. Currently serving as Chairman on the G20 stability board, and having worked at Goldman, Canadian department of finance and Bank of Canada, he has been credited with protecting Canada against much of the 2008 crisis.
With a strong understanding of global finance and crisis management, this should be taken in a positive light by global markets, and his education at Oxford should also mean he has a number of allies on the benches within the house of Parliament. There will be some questioning about ties with Goldman, similar of that of Hank Paulson, how came under scrutiny in the financial crisis, that saw financial institutions get a number of favors, not shown to other industries.
Other stories overnight include Europe and its aim to assist Greece. There are talks of the ECB fund, which currently holds Greek debt, giving back profits made from holding its bonds. It certainly feel's like the Christmas spirit is starting to shine. Of course, the ECB declined to comment on possible plans. Finance ministers meet today to discuss Greece's funding issues, for the third time.
Preparation is underway in the US to start designing a budget, where investors are nervous that the Republican's could potential stonewall cuts in a number of their "friendly" sectors.
Markets overnight saw currencies remain stable, with the Euro still trading around 1.2970, and Jpy firming slightly at 82.10. Sterling remained unchanged on the BoE announcement, trading at 1.6025 and holding on to its strong rally last friday.
In the bond market, Spanish and Italian yields continue to fall, with 10yr yields at 5.58 and 4.74% respectively.
Equity markets, which finally feel like they have caught up with currency markets, started to flap a little over night, with volumes falling and markets trending easier.
FTSE -0.6% low volume; O/P: cons. goods, tech U/P: financial, health
CAC -0.8% v.low volume; O/P: health, basic material U/P: financial, industrial
DAX -0.2% v.low volume; O/P: cons.service, cons.good U/P: industrial, utilities
IBEX -0.4% low volume; O/P: cons.services, industrial U/P: tech, basic mat
Sectors here highlight some rotation, which after such a strong performance of financial's over the last 3 months, was expected. Its good to see investors looking at basic materials (finally), which should benefit from improved optimism on growth and reflect the weaker US$. Dont get me wrong, inventories are still high, but so were the sugar mountains in the UK/Europe many years ago. Basic materials still look oversold at these levels.
In the US, the hype over Black Friday is starting to feel like 8pm on boxing day, its done. Sales increased but partly due to increased stores from the major names like Walmart, however, it could show credit easing at a consumer level as credit card usage hits the roof in favor of new TV's, DVD players and other types of must have gadgets.
SPX -0.2% avg volume; O/P: utilities, tech U/P: telco, oil & gas
Sector performance looks quite defensive. A rebound in Apple helping support the tech sector, but telco's seeing outflows as investors look to move to a more neutral stance into year end. Like Christmas decorations, this seems to be happening earlier and earlier these days.
Data overnight saw both the Chicago fed and Dallas fed come in weaker than expected. Chicago activity came in at -0.56, whilst the Dallas manufacturing came in at -2.8, vs expected 2.5. New orders were actually strong MoM, with an increase of 0.4, and there was also an increase in inventories of +4.1. This however, was weighed down by a large fall in production and capacity utilisation.
Markets.Expect Asia to open relatively flat to slightly easier. Yesterdays sell down, which saw HK trend easier throughout the session, closing just off day lows, means much of the move overnight should be priced in. With currencies trading unchanged, this should see equity markets trend firmer through the session.
Would look to be buying coal, oil and steels. Selling banks, HK+CH property names. Auto's like DF(489) also looking toppy, be short with caution, there is a big squeeze going on.
HUGE data day, watch for volatility to increase in the currencies today.
Data.08:00 Australia house affordability
08:30 Australia balance of payments
09:00 Philippines trade balance
09:30 China industrial profits
11:00 Japan small business confidence
15:00 German import pirces
15:45 France consumer confidence
16:30 HK trade balance
17:00 Italy wages
17:30 UK government spending, trade balance, index of sevices
18:00 EU OECD economic outlook
21:30 US durable goods, cap goods
22:00 US Case-shiller
23:00 US Richmond Fed, consumer confidence
23:00 US house price index
Spain budget, Thailand trade balance
Events.16:00 US Fed's Fisher speaks in Germany
16:30 Italy Grilli, Ghizzoni, Cucchiani Speak in Milan
16:30 EU court ruling on ESM validity
18:00 OECD publishes economic outlook
19:30 US Fed's Lockhart speaks on financial stability
EU Ashton at EU-central Asia meeting
Bonds.11:00 Thailand 1,3,6 month auction
11:45 Japan 2yr auction
17:00 Netherlands 3yr auction
17:30 Spain 2.5,6 month auction
18:00 Italy 2,5,14 year auction
00:30 US 4 week auction
02:00 US 2yr auction
Earnings.ADT(US), PVH(US), Remy Cointreau(FP), Severn Trent(UK), Vienna Ins(AV), Britvic(UK), Raiffenisen Bank(AV), Skyworth(HK), Far East Cons(HK), Yue Yuen(HK), China Gas(HK), Luk Fook(HK), Bosideng(HK), Dynam Japan(JP), ITC (HK), Vitasoy(HK), Quam(HK), Focus Media(HK), Kernel(PW), Liberty Bank(RU)
Stoddart
Despite offering my services, the Bank of England has chosen a Canadian, Mark Carney as the Governor. I can only assume there was a mix up of the surnames.
The BoE was rumored some time ago to be looking at an "outsider" to take the top spot, just like that of the England football team, many years before.
The Canadian was one of the options commentators had penciled for the position. Currently serving as Chairman on the G20 stability board, and having worked at Goldman, Canadian department of finance and Bank of Canada, he has been credited with protecting Canada against much of the 2008 crisis.
With a strong understanding of global finance and crisis management, this should be taken in a positive light by global markets, and his education at Oxford should also mean he has a number of allies on the benches within the house of Parliament. There will be some questioning about ties with Goldman, similar of that of Hank Paulson, how came under scrutiny in the financial crisis, that saw financial institutions get a number of favors, not shown to other industries.
Other stories overnight include Europe and its aim to assist Greece. There are talks of the ECB fund, which currently holds Greek debt, giving back profits made from holding its bonds. It certainly feel's like the Christmas spirit is starting to shine. Of course, the ECB declined to comment on possible plans. Finance ministers meet today to discuss Greece's funding issues, for the third time.
Preparation is underway in the US to start designing a budget, where investors are nervous that the Republican's could potential stonewall cuts in a number of their "friendly" sectors.
Markets overnight saw currencies remain stable, with the Euro still trading around 1.2970, and Jpy firming slightly at 82.10. Sterling remained unchanged on the BoE announcement, trading at 1.6025 and holding on to its strong rally last friday.
In the bond market, Spanish and Italian yields continue to fall, with 10yr yields at 5.58 and 4.74% respectively.
Equity markets, which finally feel like they have caught up with currency markets, started to flap a little over night, with volumes falling and markets trending easier.
FTSE -0.6% low volume; O/P: cons. goods, tech U/P: financial, health
CAC -0.8% v.low volume; O/P: health, basic material U/P: financial, industrial
DAX -0.2% v.low volume; O/P: cons.service, cons.good U/P: industrial, utilities
IBEX -0.4% low volume; O/P: cons.services, industrial U/P: tech, basic mat
Sectors here highlight some rotation, which after such a strong performance of financial's over the last 3 months, was expected. Its good to see investors looking at basic materials (finally), which should benefit from improved optimism on growth and reflect the weaker US$. Dont get me wrong, inventories are still high, but so were the sugar mountains in the UK/Europe many years ago. Basic materials still look oversold at these levels.
In the US, the hype over Black Friday is starting to feel like 8pm on boxing day, its done. Sales increased but partly due to increased stores from the major names like Walmart, however, it could show credit easing at a consumer level as credit card usage hits the roof in favor of new TV's, DVD players and other types of must have gadgets.
SPX -0.2% avg volume; O/P: utilities, tech U/P: telco, oil & gas
Sector performance looks quite defensive. A rebound in Apple helping support the tech sector, but telco's seeing outflows as investors look to move to a more neutral stance into year end. Like Christmas decorations, this seems to be happening earlier and earlier these days.
Data overnight saw both the Chicago fed and Dallas fed come in weaker than expected. Chicago activity came in at -0.56, whilst the Dallas manufacturing came in at -2.8, vs expected 2.5. New orders were actually strong MoM, with an increase of 0.4, and there was also an increase in inventories of +4.1. This however, was weighed down by a large fall in production and capacity utilisation.
Markets.Expect Asia to open relatively flat to slightly easier. Yesterdays sell down, which saw HK trend easier throughout the session, closing just off day lows, means much of the move overnight should be priced in. With currencies trading unchanged, this should see equity markets trend firmer through the session.
Would look to be buying coal, oil and steels. Selling banks, HK+CH property names. Auto's like DF(489) also looking toppy, be short with caution, there is a big squeeze going on.
HUGE data day, watch for volatility to increase in the currencies today.
Data.08:00 Australia house affordability
08:30 Australia balance of payments
09:00 Philippines trade balance
09:30 China industrial profits
11:00 Japan small business confidence
15:00 German import pirces
15:45 France consumer confidence
16:30 HK trade balance
17:00 Italy wages
17:30 UK government spending, trade balance, index of sevices
18:00 EU OECD economic outlook
21:30 US durable goods, cap goods
22:00 US Case-shiller
23:00 US Richmond Fed, consumer confidence
23:00 US house price index
Spain budget, Thailand trade balance
Events.16:00 US Fed's Fisher speaks in Germany
16:30 Italy Grilli, Ghizzoni, Cucchiani Speak in Milan
16:30 EU court ruling on ESM validity
18:00 OECD publishes economic outlook
19:30 US Fed's Lockhart speaks on financial stability
EU Ashton at EU-central Asia meeting
Bonds.11:00 Thailand 1,3,6 month auction
11:45 Japan 2yr auction
17:00 Netherlands 3yr auction
17:30 Spain 2.5,6 month auction
18:00 Italy 2,5,14 year auction
00:30 US 4 week auction
02:00 US 2yr auction
Earnings.ADT(US), PVH(US), Remy Cointreau(FP), Severn Trent(UK), Vienna Ins(AV), Britvic(UK), Raiffenisen Bank(AV), Skyworth(HK), Far East Cons(HK), Yue Yuen(HK), China Gas(HK), Luk Fook(HK), Bosideng(HK), Dynam Japan(JP), ITC (HK), Vitasoy(HK), Quam(HK), Focus Media(HK), Kernel(PW), Liberty Bank(RU)
Stoddart
Sunday, 25 November 2012
Morning note, data, events, bonds, earnings 26th November 2012
Good morning,
The weekend press was highly concentrated towards the EU budget, and the failure to 1. agree to Van Rompuy's proposal 2. agree to an adjusted version.
Listening to the responses, it seems France's Hollande is unhappy with the size of the spending cuts. Not long in power, he is already under pressure due to a monetary policy which required higher levels of growth to boost employment and support public spending. The recent downgrade from Moody's highlights their lack of optimism, that this is achievable.
Germany's Merkel has also come under pressure, but it appears the German's have a greater willing than the French, to reduce the widening deficit. With their strong ties with France, it is now hoped that an agreement can be reached between the UK and France, where Germany can help broker the deal.
Sticky issues include; high public spending, retirement age and state pension demands, and the Common Agricultural Policy (CAP).
The last one, is what seems to be getting a lot of attention. The CAP, was bought in after the second world war to encourage food production and subsides existing infrastructure. In my youth, it was designed to support prices, which were dramatically falling due to over production. Butter and Sugar mountains were created as the CAP purchased the over production from farmers, helping keep them in business.
Ow how things have changed. The mountains have long since gone, with rising demand and a shift of labor from the countryside to the cities in the early-mid 2000's, has now seen the globe struggle to increase supply.
The UK's argument, that a free market should determine supply and demand, thus reducing the cost of CAP on the budget, its understandable, but mental. Risking the supply chain of food stuffs could have a huge impact on inflation, especially after seeing the recent impact of adverse weather on production.
Both sides need to give a little, but to abandon or dramatically reduced funding to the CAP, is not the answer.
Markets.As the cost of hurricane Sandy come in, the US are instead choosing to look at the cap ex, that will now take place cross the eastern coast. Initial strong black friday sales also seem to have the market positive with names like Walmart and Target all strong on Friday.
As the Euro continues to strengthen, equity markets look set to remain strong. Inflows should consumer electronics and industrials run, both of which have been huge laggers over the last 12 months. This should also see further support to the container ships.
However, Europe is yet to resolve its budget issues. Greece has secured its next bailout payment, but markets will now start looking at Spain and Italy. With the creation of the Banking Union due in January, its banks still have some rather ugly bad loans and property on the books.
Until the European budget is in place, or there are signs that an agreement is close, its hard to see the Euro breaking the 1.30 level.
Today, equity markets open and trade slightly firmer, hitting day highs in the first hour, before we see them drift easier as we see a string of profit taking and trimming in names like Samsung.
Data.11:30 Thailand trade balance
13:00 Singapore industrial production
16:00 Spanish mortgages
17:00 Italy consumer confidence
19:00 Ireland property prices
20:30 Turkey industrial confidence, capacity utilization
23:30 US Dallas Fed Manf
UK nationwide house prices
Events.09:00 Japan BoJ governor speaks in Nagoya
11:30 India RBI governor speaks at conference
17:30 Italy PM speaks at a conference
19:30 EU finance ministers talk on Greek debt
EU's Hedegaard visits Prague
Bonds.10:30 S.Korea 20yr auction
12:00 Singapore 3,6 month auction
12:00 Malaysia 3,6,9 month auction
13:30 Philippines 3,6,12 month auction
18:30 German 12 month auction
22:00 France 3,6,12 month auction
00:30 US 3,6 month auction
Earnings.Berry plastics(US), Bazaarvoice(US), Aberdeen(UK), Seadrill(NO), Cafe de Coral(HK), Emperor ent(HK), Goldin(HK), Tysan(HK), Mongolia Energy(HK), Dore(HK)
Stoddart
The weekend press was highly concentrated towards the EU budget, and the failure to 1. agree to Van Rompuy's proposal 2. agree to an adjusted version.
Listening to the responses, it seems France's Hollande is unhappy with the size of the spending cuts. Not long in power, he is already under pressure due to a monetary policy which required higher levels of growth to boost employment and support public spending. The recent downgrade from Moody's highlights their lack of optimism, that this is achievable.
Germany's Merkel has also come under pressure, but it appears the German's have a greater willing than the French, to reduce the widening deficit. With their strong ties with France, it is now hoped that an agreement can be reached between the UK and France, where Germany can help broker the deal.
Sticky issues include; high public spending, retirement age and state pension demands, and the Common Agricultural Policy (CAP).
The last one, is what seems to be getting a lot of attention. The CAP, was bought in after the second world war to encourage food production and subsides existing infrastructure. In my youth, it was designed to support prices, which were dramatically falling due to over production. Butter and Sugar mountains were created as the CAP purchased the over production from farmers, helping keep them in business.
Ow how things have changed. The mountains have long since gone, with rising demand and a shift of labor from the countryside to the cities in the early-mid 2000's, has now seen the globe struggle to increase supply.
The UK's argument, that a free market should determine supply and demand, thus reducing the cost of CAP on the budget, its understandable, but mental. Risking the supply chain of food stuffs could have a huge impact on inflation, especially after seeing the recent impact of adverse weather on production.
Both sides need to give a little, but to abandon or dramatically reduced funding to the CAP, is not the answer.
Markets.As the cost of hurricane Sandy come in, the US are instead choosing to look at the cap ex, that will now take place cross the eastern coast. Initial strong black friday sales also seem to have the market positive with names like Walmart and Target all strong on Friday.
As the Euro continues to strengthen, equity markets look set to remain strong. Inflows should consumer electronics and industrials run, both of which have been huge laggers over the last 12 months. This should also see further support to the container ships.
However, Europe is yet to resolve its budget issues. Greece has secured its next bailout payment, but markets will now start looking at Spain and Italy. With the creation of the Banking Union due in January, its banks still have some rather ugly bad loans and property on the books.
Until the European budget is in place, or there are signs that an agreement is close, its hard to see the Euro breaking the 1.30 level.
Today, equity markets open and trade slightly firmer, hitting day highs in the first hour, before we see them drift easier as we see a string of profit taking and trimming in names like Samsung.
Data.11:30 Thailand trade balance
13:00 Singapore industrial production
16:00 Spanish mortgages
17:00 Italy consumer confidence
19:00 Ireland property prices
20:30 Turkey industrial confidence, capacity utilization
23:30 US Dallas Fed Manf
UK nationwide house prices
Events.09:00 Japan BoJ governor speaks in Nagoya
11:30 India RBI governor speaks at conference
17:30 Italy PM speaks at a conference
19:30 EU finance ministers talk on Greek debt
EU's Hedegaard visits Prague
Bonds.10:30 S.Korea 20yr auction
12:00 Singapore 3,6 month auction
12:00 Malaysia 3,6,9 month auction
13:30 Philippines 3,6,12 month auction
18:30 German 12 month auction
22:00 France 3,6,12 month auction
00:30 US 3,6 month auction
Earnings.Berry plastics(US), Bazaarvoice(US), Aberdeen(UK), Seadrill(NO), Cafe de Coral(HK), Emperor ent(HK), Goldin(HK), Tysan(HK), Mongolia Energy(HK), Dore(HK)
Stoddart
Thursday, 22 November 2012
Morning note, data, events, bonds and earnings 23rd November 2012
Good morning,
With the US out last night, European markets saw volumes fall by an average of 25%. The continued run in the Euro and JPY weakness helped push basic material prices high and lifting European equity markets. The were also boosted by the China HSBC PMI, which came in at 50.4, indicating growth.
In the bond market, Greece 10yr yields firmed 37bps to 16.06%, whilst strong demand in the Spanish auction, saw 10yr yields fall a further 7bps to 5.62%. Italy's debt also continued to firm, now trading comfortably below 5%, at 4.77%
FTSE +0.7% v.low volume; O/P: cons.goods, cons.services U/P: telco, Oil&gas,
CAC +0.6% v.low volume; O/P: tech, utilities U/P: telco, oil&gas
DAX +0.8% v.low volume; O/P: cons.services, financial U/P: utilities, cons.goods
IBEX +0.9% v.low volume; O/P: cons.services, oil&gas U/P: tech, utilities
Sector charts mixed overnight, however, all markets finally saw basic materials at the upper end. The financial sector also remain strong, despite a very good performance over the last 6 months.
I was expecting more inflows to Oil & Gas, this I still believe to be the next level of rotation, however, it does require some patience.
Data over night saw French PMI manufacturing come in at 44.7 vs expected 44.00, services came in 46.1 vs expected 45.0.
German PMI manu was 46.8 vs expected 46.0, services 48.0 vs expected 48.3.
Both countries help support the European numbers, where manufacturing was 46.2, vs estimates 45.6, and services 45.7, vs expected 46.0.
Eurozone consumer services came in weaker at -26.9, vs the survey -25.9.
Markets.With the US and Japan closed, equity volumes will mirror Europe's reduced levels. With the sectors gearing towards more defensive sectors like consumer goods, Asia will continue to see these names trending firmer.
The recent run in China property is starting to look overdone, its time to reduce.
Whilst oils lack luster performance, despite crude trending higher, should see rotation into the sector. Petrochina(857) looks attractive here. This should also help boost the chemicals industry as well, as stronger than expected PMI in China should see sentiment improve.
Markets open firmer, then trend sideways throughout the session as the Eur continues to hold the 1.29 level. There seems little to push the Euro through resistance levels at present, but should the EU budget talks provide some positive light, we should see flows start moving out of UST's into the higher yielding European debt.
Data. 13:00 Singapore CPI
15:00 German GDP, import/exports, govt spending, consumption
15:45 France production outlook
16:00 Spain producer prices
17:00 Italy retail sales
17:00 German IFO
Thailand customs exports/trade balance
Events.17:30 India Chairman of PM's to discuss direct taxes
21:00 Portugal Bank of Portugal monthly budget
EU leaders summit on 7yr budget
Bonds.19:00 UK 1,3,6 month auction
Earnings.Net dragon(HK), Parkson(HK), Genting Plantations(MK), Genting(MK), Telekom Malaysia(MK), Aeon Malay(MK), Sime darby(MK), Philip morris(CZ)
Stoddart
With the US out last night, European markets saw volumes fall by an average of 25%. The continued run in the Euro and JPY weakness helped push basic material prices high and lifting European equity markets. The were also boosted by the China HSBC PMI, which came in at 50.4, indicating growth.
In the bond market, Greece 10yr yields firmed 37bps to 16.06%, whilst strong demand in the Spanish auction, saw 10yr yields fall a further 7bps to 5.62%. Italy's debt also continued to firm, now trading comfortably below 5%, at 4.77%
FTSE +0.7% v.low volume; O/P: cons.goods, cons.services U/P: telco, Oil&gas,
CAC +0.6% v.low volume; O/P: tech, utilities U/P: telco, oil&gas
DAX +0.8% v.low volume; O/P: cons.services, financial U/P: utilities, cons.goods
IBEX +0.9% v.low volume; O/P: cons.services, oil&gas U/P: tech, utilities
Sector charts mixed overnight, however, all markets finally saw basic materials at the upper end. The financial sector also remain strong, despite a very good performance over the last 6 months.
I was expecting more inflows to Oil & Gas, this I still believe to be the next level of rotation, however, it does require some patience.
Data over night saw French PMI manufacturing come in at 44.7 vs expected 44.00, services came in 46.1 vs expected 45.0.
German PMI manu was 46.8 vs expected 46.0, services 48.0 vs expected 48.3.
Both countries help support the European numbers, where manufacturing was 46.2, vs estimates 45.6, and services 45.7, vs expected 46.0.
Eurozone consumer services came in weaker at -26.9, vs the survey -25.9.
Markets.With the US and Japan closed, equity volumes will mirror Europe's reduced levels. With the sectors gearing towards more defensive sectors like consumer goods, Asia will continue to see these names trending firmer.
The recent run in China property is starting to look overdone, its time to reduce.
Whilst oils lack luster performance, despite crude trending higher, should see rotation into the sector. Petrochina(857) looks attractive here. This should also help boost the chemicals industry as well, as stronger than expected PMI in China should see sentiment improve.
Markets open firmer, then trend sideways throughout the session as the Eur continues to hold the 1.29 level. There seems little to push the Euro through resistance levels at present, but should the EU budget talks provide some positive light, we should see flows start moving out of UST's into the higher yielding European debt.
Data. 13:00 Singapore CPI
15:00 German GDP, import/exports, govt spending, consumption
15:45 France production outlook
16:00 Spain producer prices
17:00 Italy retail sales
17:00 German IFO
Thailand customs exports/trade balance
Events.17:30 India Chairman of PM's to discuss direct taxes
21:00 Portugal Bank of Portugal monthly budget
EU leaders summit on 7yr budget
Bonds.19:00 UK 1,3,6 month auction
Earnings.Net dragon(HK), Parkson(HK), Genting Plantations(MK), Genting(MK), Telekom Malaysia(MK), Aeon Malay(MK), Sime darby(MK), Philip morris(CZ)
Stoddart
Wednesday, 21 November 2012
Morning note, data, events, bonds and earnings 22nd November 2012
Good morning,
Protection.
A major part of investing. Many a time have I said to our sales guys, "I'll protect at .50". With such large positions/expose to equities, and sentiment swinging like a Cathay pilot living in Discovery Bay, fund managers like to be able to use options to "protect" for both the downside and upside.
And this is the problem. With protection, such as options, trading cheap, additional risk can be cover quickly at relatively low rates. The current environment, however, is miss priced and wrongly represented.
Many market commentators use the VIX as a bench mark for volatility. Now, despite being a major gauge, I have searched high and low for options that trades close to the VIX. For example, the VIX is currently priced at 15, however, ICBC, currently valued at 218b US$, and trades over 140m US$ a day, has its options priced with implied vol at 24.
It gets worse, look at companies like China Mobile, one of the worlds largest mobile telco providers, currently with implied vol of 32, and Yanzhou coal's implied vol at 43, it certainly put me off from buying derivatives to 1. get exposure and 2. hedge my current existing long futures position.
Despite being a complete loner, in this case I'm not alone. Speaking to a number of funds that have used warrants and options in the past, they too share my predicament. The problem is, cash currently trades at a premium. Tight credit markets dont just hit 35yr old, middle income Mr Jones looking for a $400k mortgage, it also hits every single aspect of everyday life, including derivatives.
"Then if its too rich Stoddart, sell it" I was told by a good friend last night (after a few glasses of the demon, Rum). "No" I retorted. With credit markets looking tight for the near future, implied vol could quite easily rally another 20-30% from here, making not just outright directional views pointless and hedging like having to buy a condom for $500. Any value you have in the options, will be hit by an adjustment of the implied vol.
This is impacting volumes globally. Last night saw European and US volumes down 30% vs daily averages. Given the strong run this week in equities, I was expecting some degree of pull back, but markets continue to remain strong.
Big bond auction today in Spain..."Show me the moneyyyyy"
FTSE +0.1% v.low volume; O/P: tech, utilities U/P: telco, basic materials
CAC +0.4% v.low volume; O/P: telco, utilities U/P: health, basic mateials
DAX +0.2% v.low volume; O/P: tech, telco U/P: industrials, cons.services
IBEX +0.3% v.low volume; O/P: oil & gas, financial U/P: health, cons.services
Despite a strong performance from European equity markets, volumes were shockingly low. Equity indices opened and the lows, trending firmer throughout the session, and closing at day highs. We also saw the Euro rally against the US$, now trading at 1.2858 but this run done nothing to support crude oil, which saw the WTI trade $2 easier at $87. Sentiment clearly looking for strong CF/NI, highlighting limited interest in near/medium term growth.
US markets traded relatively flat over the session last night, which given its thanks giving today, is not surprising. Interest is clearly focused on "how to make the best gravy" and what the spread is going to be on the Skin's vs Cowboy's. Happy thanks giving.
S&P +0.2% v.low volume; O/P: oil & gas, telco U/P: utilities, health
Despite crude easing, oil and gas was the top performing sector...finally. Rotation into laggers will increase into year end as shorts are covered and fund managers move to a more neutral based portfolio. My optimism remains high for GDP to pick up the pace in 3Q 2013, not 2015 as quoted by one of the Tier 1's (based in Switzerland, and gave a 50b US$ book to a 25yr son of a diplomat), which means oil & gas is the sector you want to be long. Its priced in US$ and demand is directly correlated to growth.
Financial's remain toppy here.
Markets.Expect equity markets to open relatively strong today. China retested the 2000 level again and guess what? it then rallied sharply from there. More and more investors are coming to the thinking that the JPY rally is now in a reversal, which is great for exporters, but they need it back at 100y before they start ordering the 1982 petrus.
Expect a strong run in recent laggards. Shipping, commodities and oil should all see increased volume. Exporters should also remain hot. Selling should occur in banks and China property, which have been huge outperformers over the last 3 months.
Spain auction today, bond have been firming recently, now at 5.68, but with talks of a Greek fail, we could see some negativity once again. However, the French finance minister played this down...ish.
Data. 09:45 China HSBC flash manufacturing
16:00 PMI manufacturing/services
16:30 German PMI/services
16:30 HK CPI
17:00 EU PMI
19:00 UK CBI
23:00 EU consumer confidence
Events.15:00 German finance ministry monthly report
17:00 Italy possible pass of budget law
EU's Barnier visits Barcelona, EU Xstrata ruling
Bonds.11:00 Thailand 3yr auction
17:30 Spain 3,5,9 year auction
Earnings.Daily mail(UK), SABMiller(UK), Sparkle roll(HK), Ascendas Hos Trust(SP), Lafarge Malayan(MK), Genting Malaysia(MK)
Stoddart
Protection.
A major part of investing. Many a time have I said to our sales guys, "I'll protect at .50". With such large positions/expose to equities, and sentiment swinging like a Cathay pilot living in Discovery Bay, fund managers like to be able to use options to "protect" for both the downside and upside.
And this is the problem. With protection, such as options, trading cheap, additional risk can be cover quickly at relatively low rates. The current environment, however, is miss priced and wrongly represented.
Many market commentators use the VIX as a bench mark for volatility. Now, despite being a major gauge, I have searched high and low for options that trades close to the VIX. For example, the VIX is currently priced at 15, however, ICBC, currently valued at 218b US$, and trades over 140m US$ a day, has its options priced with implied vol at 24.
It gets worse, look at companies like China Mobile, one of the worlds largest mobile telco providers, currently with implied vol of 32, and Yanzhou coal's implied vol at 43, it certainly put me off from buying derivatives to 1. get exposure and 2. hedge my current existing long futures position.
Despite being a complete loner, in this case I'm not alone. Speaking to a number of funds that have used warrants and options in the past, they too share my predicament. The problem is, cash currently trades at a premium. Tight credit markets dont just hit 35yr old, middle income Mr Jones looking for a $400k mortgage, it also hits every single aspect of everyday life, including derivatives.
"Then if its too rich Stoddart, sell it" I was told by a good friend last night (after a few glasses of the demon, Rum). "No" I retorted. With credit markets looking tight for the near future, implied vol could quite easily rally another 20-30% from here, making not just outright directional views pointless and hedging like having to buy a condom for $500. Any value you have in the options, will be hit by an adjustment of the implied vol.
This is impacting volumes globally. Last night saw European and US volumes down 30% vs daily averages. Given the strong run this week in equities, I was expecting some degree of pull back, but markets continue to remain strong.
Big bond auction today in Spain..."Show me the moneyyyyy"
FTSE +0.1% v.low volume; O/P: tech, utilities U/P: telco, basic materials
CAC +0.4% v.low volume; O/P: telco, utilities U/P: health, basic mateials
DAX +0.2% v.low volume; O/P: tech, telco U/P: industrials, cons.services
IBEX +0.3% v.low volume; O/P: oil & gas, financial U/P: health, cons.services
Despite a strong performance from European equity markets, volumes were shockingly low. Equity indices opened and the lows, trending firmer throughout the session, and closing at day highs. We also saw the Euro rally against the US$, now trading at 1.2858 but this run done nothing to support crude oil, which saw the WTI trade $2 easier at $87. Sentiment clearly looking for strong CF/NI, highlighting limited interest in near/medium term growth.
US markets traded relatively flat over the session last night, which given its thanks giving today, is not surprising. Interest is clearly focused on "how to make the best gravy" and what the spread is going to be on the Skin's vs Cowboy's. Happy thanks giving.
S&P +0.2% v.low volume; O/P: oil & gas, telco U/P: utilities, health
Despite crude easing, oil and gas was the top performing sector...finally. Rotation into laggers will increase into year end as shorts are covered and fund managers move to a more neutral based portfolio. My optimism remains high for GDP to pick up the pace in 3Q 2013, not 2015 as quoted by one of the Tier 1's (based in Switzerland, and gave a 50b US$ book to a 25yr son of a diplomat), which means oil & gas is the sector you want to be long. Its priced in US$ and demand is directly correlated to growth.
Financial's remain toppy here.
Markets.Expect equity markets to open relatively strong today. China retested the 2000 level again and guess what? it then rallied sharply from there. More and more investors are coming to the thinking that the JPY rally is now in a reversal, which is great for exporters, but they need it back at 100y before they start ordering the 1982 petrus.
Expect a strong run in recent laggards. Shipping, commodities and oil should all see increased volume. Exporters should also remain hot. Selling should occur in banks and China property, which have been huge outperformers over the last 3 months.
Spain auction today, bond have been firming recently, now at 5.68, but with talks of a Greek fail, we could see some negativity once again. However, the French finance minister played this down...ish.
Data. 09:45 China HSBC flash manufacturing
16:00 PMI manufacturing/services
16:30 German PMI/services
16:30 HK CPI
17:00 EU PMI
19:00 UK CBI
23:00 EU consumer confidence
Events.15:00 German finance ministry monthly report
17:00 Italy possible pass of budget law
EU's Barnier visits Barcelona, EU Xstrata ruling
Bonds.11:00 Thailand 3yr auction
17:30 Spain 3,5,9 year auction
Earnings.Daily mail(UK), SABMiller(UK), Sparkle roll(HK), Ascendas Hos Trust(SP), Lafarge Malayan(MK), Genting Malaysia(MK)
Stoddart
Stoddart's ETF model portfolio 21st November 2012
Fund performance is based on inception, which was 2nd July 2012.
| ASSET CLASS | TICKER | WEIGHTING | PERFORMANCE % |
| EQUITY | RWL US | 0.05 | 3.05 |
| SPY US | 0.05 | 1.96 | |
| FXI US | 0.02 | 7.56 | |
| EWY US | 0.02 | 7.56 | |
| EEM US | 0.07 | 4.88 | |
| BRIC LN | 0.03 | 0.89 | |
| VGK US | 0.07 | 5.43 | |
| SX7EEX GY | 0.03 | 13.60 | |
| EWP US | 0.01 | 10.49 | |
| EWI US | 0.01 | 6.84 | |
| EWG US | 0.01 | 6.88 | |
| EWQ US | 0.01 | 5.84 | |
| GDXJ US | 0.02 | 15.11 | |
| DEBT | EBMMEX GY | 0.05 | -0.02 |
| IBGS LN | 0.05 | 3.19 | |
| IBGX LN | 0.15 | 3.31 | |
| EMB US | 0.15 | 5.70 | |
| HYG US | 0.15 | 1.34 | |
| LQD US | 0.05 | 3.26 | |
| PERCENT | 5.548 | ||
| MSCI WORLD | 3.330 | ||
| PERFORMANCE | 2.218 |
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