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viernes, 16 de diciembre de 2011
Spanish debt auction puts bounce in the dead cat
More John J Hardy, yesterday15 December 2011 Non-Independent Investment Research A strong Spanish debt auction today finally put a bid in the EURUSD after the key pair drooped below 1.30 of late. Meanwhile, the SNB disappoints those looking for a rise in the EURCHF floor.
After three days of bloodletting for risk on the re-acceleration of the EU crisis, the markets are trying to take a breather today, driven perhaps by less catastrophic than feared data and a strong Spanish bond auction. The HSBC flash PMI in China improved, though still came in just below 50, and the European flash PMI’s for December were slightly better than November levels, if still a bit depressed. In other words, expectations may have gotten so bad here – particularly for Europe – that only truly catastrophic data has the power to pile on the pessimism.
While the latest political noise out of Europe continues to strip away the last shreds of confidence that any solution will ever be found that keeps the EU together, many of the sovereign- and bank liquidity indicators bounced in today’s early trade after a scary semi-meltdown yesterday. This and the tightening sovereign debt spreads in general today were driven by a very successful auction of Spanish debt – as Spain managed to sell twice as many bonds as anticipated at its auction today. Some of that demand may be due to the anticipated boost in liquidity from the ECB’s most recent measures , which could allow Spanish and other banks to lock in fat spreads on LTRO and other borrowings versus investment in sovereign debt – assuming that what looks well on paper, ends well in reality.
SNBDespite evidence of a cratering Swiss economy and deflationary inflation readings of late, the SNB today dashed market expectations that a new rise in the EURCHF floor and/or other measures would be announced today and CHF was bid, driving EURCHF back below 1.2300. Still, the language on the SNB’s intent was more than clear, as Hildebrand stated that the SNB was ready to act at any time and that its current strength still presents a strong risk to the Swiss economy. The inflation forecast for 2012 was kept at an outright negative -0.3% and the forecast for 2013 was lowered slightly. The Citigroup economic data surprise index for Switzerland is at an astounding -127, the lowest since early 2009. It is clear the SNB will move again, but it seems to want to keep the market guessing on timing, a tactic that may actually enhance the eventual impact of a move.
Where we stand and looking aheadToday we’re finally finding a bit of stabilization in risk appetite after a couple of rather heady days of declines triggered partially by the petulant reaction to the FOMC meeting not producing any QE3 guidance (looks like a rather thin excuse as there should hardly have been any dramatic expectations heading into that meeting – sometimes, these event risks merely “dam up” market action due to those who would simply like to wait for event risks like this to be out of the way before putting on risk.), but also by the aggravated return of EU worries.
With US bond auctions this week showing a more-than-firm bid for US government paper all the way to the longest end of the curve, it appears the market is raising its macro bet on a deflationary trend, the Bernanke Fed notwithstanding. US 30-year rates below 3.0% again are a very strong expression of caution. Commodities are also beginning to look more than a bit frayed around the edges, as the consensus wisdom of printing-money-means-buy-hard-assets is being sorely tested at the moment. Even crude oil finally managed to suffer a severe correction yesterday for the first time in months. Meanwhile, as one would expect in such circumstances, the USD has broken new ground to the upside in recent days. On the other hand, equities have hardly corrected and an equity market rout would be the final straw for markets/risk appetite here – and in the G10 currencies, could finally serve to administer a more definitive knock-out blow to the Aussie. On that front, it is interesting to note that the US S&P500 crossed and closed below the 50-day moving average again before today’s enthusiastic response to the Spanish debt auction.
Ahead of the US equity market open, risk appetite is getting a further boost from the latest figures out of the US to roll in better than expected, with weekly jobless claims registering the lowest reading since pre-Lehman days and the Empire Manufacturing survey showing a solid gain. Watch for the Philly Fed out shortly. Tomorrow’s US November CPI release will be interesting as we look for a possible end to the rising trend in core prices on year-on-year comparisons. The year-on-year core CPI has marched higher for 12 consecutive months in a row and in Oct. sat at a near 3-year high of 2.1%.
Let’s also watch how EURUSD behaves here around the 1.30 level as we are entering the final trading days of the year. If we manage to avoid a dramatic move in underlying fundamentals and liquidity indicators, we could see a chop-fest for the next couple of weeks. But if the Spanish auction merely proves a distraction that is not indicative of improving confidence in the near term liquidity, then the latest directional move in risk could quickly extend.
Stay careful out there.
Economic Data Highlights China Dec. HSBC Flash Manufacturing PMI out at 49.0 vs. 47.7 in Nov. Switzerland Q3 Industrial Production out at -1.4% QoQ and -1.4% YoY vs. -0.9%/0.0% expected, respectively and vs.
After three days of bloodletting for risk on the re-acceleration of the EU crisis, the markets are trying to take a breather today, driven perhaps by less catastrophic than feared data and a strong Spanish bond auction. The HSBC flash PMI in China improved, though still came in just below 50, and the European flash PMI’s for December were slightly better than November levels, if still a bit depressed. In other words, expectations may have gotten so bad here – particularly for Europe – that only truly catastrophic data has the power to pile on the pessimism.
While the latest political noise out of Europe continues to strip away the last shreds of confidence that any solution will ever be found that keeps the EU together, many of the sovereign- and bank liquidity indicators bounced in today’s early trade after a scary semi-meltdown yesterday. This and the tightening sovereign debt spreads in general today were driven by a very successful auction of Spanish debt – as Spain managed to sell twice as many bonds as anticipated at its auction today. Some of that demand may be due to the anticipated boost in liquidity from the ECB’s most recent measures , which could allow Spanish and other banks to lock in fat spreads on LTRO and other borrowings versus investment in sovereign debt – assuming that what looks well on paper, ends well in reality.
SNBDespite evidence of a cratering Swiss economy and deflationary inflation readings of late, the SNB today dashed market expectations that a new rise in the EURCHF floor and/or other measures would be announced today and CHF was bid, driving EURCHF back below 1.2300. Still, the language on the SNB’s intent was more than clear, as Hildebrand stated that the SNB was ready to act at any time and that its current strength still presents a strong risk to the Swiss economy. The inflation forecast for 2012 was kept at an outright negative -0.3% and the forecast for 2013 was lowered slightly. The Citigroup economic data surprise index for Switzerland is at an astounding -127, the lowest since early 2009. It is clear the SNB will move again, but it seems to want to keep the market guessing on timing, a tactic that may actually enhance the eventual impact of a move.
Where we stand and looking aheadToday we’re finally finding a bit of stabilization in risk appetite after a couple of rather heady days of declines triggered partially by the petulant reaction to the FOMC meeting not producing any QE3 guidance (looks like a rather thin excuse as there should hardly have been any dramatic expectations heading into that meeting – sometimes, these event risks merely “dam up” market action due to those who would simply like to wait for event risks like this to be out of the way before putting on risk.), but also by the aggravated return of EU worries.
With US bond auctions this week showing a more-than-firm bid for US government paper all the way to the longest end of the curve, it appears the market is raising its macro bet on a deflationary trend, the Bernanke Fed notwithstanding. US 30-year rates below 3.0% again are a very strong expression of caution. Commodities are also beginning to look more than a bit frayed around the edges, as the consensus wisdom of printing-money-means-buy-hard-assets is being sorely tested at the moment. Even crude oil finally managed to suffer a severe correction yesterday for the first time in months. Meanwhile, as one would expect in such circumstances, the USD has broken new ground to the upside in recent days. On the other hand, equities have hardly corrected and an equity market rout would be the final straw for markets/risk appetite here – and in the G10 currencies, could finally serve to administer a more definitive knock-out blow to the Aussie. On that front, it is interesting to note that the US S&P500 crossed and closed below the 50-day moving average again before today’s enthusiastic response to the Spanish debt auction.
Ahead of the US equity market open, risk appetite is getting a further boost from the latest figures out of the US to roll in better than expected, with weekly jobless claims registering the lowest reading since pre-Lehman days and the Empire Manufacturing survey showing a solid gain. Watch for the Philly Fed out shortly. Tomorrow’s US November CPI release will be interesting as we look for a possible end to the rising trend in core prices on year-on-year comparisons. The year-on-year core CPI has marched higher for 12 consecutive months in a row and in Oct. sat at a near 3-year high of 2.1%.
Let’s also watch how EURUSD behaves here around the 1.30 level as we are entering the final trading days of the year. If we manage to avoid a dramatic move in underlying fundamentals and liquidity indicators, we could see a chop-fest for the next couple of weeks. But if the Spanish auction merely proves a distraction that is not indicative of improving confidence in the near term liquidity, then the latest directional move in risk could quickly extend.
Stay careful out there.
Economic Data Highlights China Dec. HSBC Flash Manufacturing PMI out at 49.0 vs. 47.7 in Nov. Switzerland Q3 Industrial Production out at -1.4% QoQ and -1.4% YoY vs. -0.9%/0.0% expected, respectively and vs.
David Cameron's stance in Brussels: smart or stubborn?
More Nick Beecroft, 12 hours ago16 December 2011 Non-Independent Investment Research David Cameron’s refusal to vote for EU Treaty changes at last week’s summit has since been the subject of many column-metres of comment in the press - well, here’s my input.
He had little choice
The first point to understand is that Cameron probably had little choice from a political perspective-had he rolled over and signed up for what is essentially the start of a United States of Europe, then it is highly possible that he would have faced a rebellion of such magnitude from his own MP’s that it might well have culminated in a refendum on the UK’s continued EU membership, which stood every chance of leading to the UK’s withdrawal. This would have been a disaster for Britain. It is also definitely the case that the majority of British voters would have supported Cameron’s stance; why on earth would the man in the street want to jump aboard a bus which seems to be heading for a very dangerous stretch of road?
The big picture
From an economic perspective, the important consideration is not so much the narrow point of freedom for the City of London’s financial empires from excessive regulation and taxation, it is the big picture that the UK currently enjoys safe-haven status, as a major, politically stable economy, which has vigorously embraced fiscal probity and which has the marvellous luxury of a flexible exchange rate to act as a shock absorber for economic troubles; automatically preserving her international competitive position, if necessary. Why would she ever voluntarily give up either of these advantages? Much better to keep a dignified distance.
Commercial sense will prevail
I also find it difficult to imagine the Prime Minister’s stance will have a long-term negative effect for British trade; we live in a global market, where the quality of goods or services and their relative prices determine the success or failure of trading businesses - not votes around a table in Brussels. Once the dust has settled, Britain's continued membership of the EU will in all probability not be in question, as the loss of Europe's third-largest economy would be as large a blow for the EU as the economic consequences would be for Britain-so commercial sense will prevail.
This was a high stakes gamble, but may yet turn out to be a very savvy political and economic move. Tags: EURUSD, GBPUSD, EURGBP, GBPJPY, Balance of Trade, Gross Domestic Product, Gross National Debt 93 Views 1 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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He had little choice
The first point to understand is that Cameron probably had little choice from a political perspective-had he rolled over and signed up for what is essentially the start of a United States of Europe, then it is highly possible that he would have faced a rebellion of such magnitude from his own MP’s that it might well have culminated in a refendum on the UK’s continued EU membership, which stood every chance of leading to the UK’s withdrawal. This would have been a disaster for Britain. It is also definitely the case that the majority of British voters would have supported Cameron’s stance; why on earth would the man in the street want to jump aboard a bus which seems to be heading for a very dangerous stretch of road?
The big picture
From an economic perspective, the important consideration is not so much the narrow point of freedom for the City of London’s financial empires from excessive regulation and taxation, it is the big picture that the UK currently enjoys safe-haven status, as a major, politically stable economy, which has vigorously embraced fiscal probity and which has the marvellous luxury of a flexible exchange rate to act as a shock absorber for economic troubles; automatically preserving her international competitive position, if necessary. Why would she ever voluntarily give up either of these advantages? Much better to keep a dignified distance.
Commercial sense will prevail
I also find it difficult to imagine the Prime Minister’s stance will have a long-term negative effect for British trade; we live in a global market, where the quality of goods or services and their relative prices determine the success or failure of trading businesses - not votes around a table in Brussels. Once the dust has settled, Britain's continued membership of the EU will in all probability not be in question, as the loss of Europe's third-largest economy would be as large a blow for the EU as the economic consequences would be for Britain-so commercial sense will prevail.
This was a high stakes gamble, but may yet turn out to be a very savvy political and economic move. Tags: EURUSD, GBPUSD, EURGBP, GBPJPY, Balance of Trade, Gross Domestic Product, Gross National Debt 93 Views 1 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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Outrageous Prediction: Sweden and Norway become new Switzerland
More Steen Jakobsen, 10 hours ago16 December 2011 Non-Independent Investment Research Sweden and Norway are at risk of replacing Switzerland as the new safe havens – “risk” because, as we saw with Switzerland, becoming a safe haven in a world of devaluing central banks presents a number of risks to a country’s economy. The capital markets of both countries are far smaller than Switzerland, (the combined FX volume in Sweden and Norway being a mere fraction of Switzerland’s), but the Swiss are aggressively devaluing their currency and money managers are looking for new safe havens for capital. At the same time, Germany and its balance sheet are embroiled in the EU debt debacle and the classic safe haven appeal of 10-year Bunds is fading fast. Sweden and Norway sport excellent current account fundamentals, prudent social policies and skilled and flexible labour forces. Flows into the two countries’ government bonds on safe haven appeal becomes popular enough to drive 10-year rates there to more than 100 basis points below the classic safe haven German Bunds.
About Outrageous Predictions
In its Outrageous Predictions, Saxo Bank focuses on events that are unlikely to happen, but at the same time are far more likely than the market appreciates. The predictions are not meant as forecasts, but it is important for investors to consider events with under-recognised probabilities. Should any of them come to pass, they would have a significant impact on the markets. Read all of Saxo Bank's Outrageous Predictions for 2012 here. Downlaod a PDF document containing the Outrageous Predictions here. View a compilation of short videos about them here.
Tags: forex, macro 64 Views 0 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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About Outrageous Predictions
In its Outrageous Predictions, Saxo Bank focuses on events that are unlikely to happen, but at the same time are far more likely than the market appreciates. The predictions are not meant as forecasts, but it is important for investors to consider events with under-recognised probabilities. Should any of them come to pass, they would have a significant impact on the markets. Read all of Saxo Bank's Outrageous Predictions for 2012 here. Downlaod a PDF document containing the Outrageous Predictions here. View a compilation of short videos about them here.
Tags: forex, macro 64 Views 0 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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Outrageous Prediction: Australia goes into recession
More Mads Koefoed, 10 hours ago16 December 2011 Non-Independent Investment Research The Chinese locomotive has been losing steam throughout 2011 as investment and real estate led growth becomes harder and harder to come by due to diminishing marginal returns. The effects of the slowing of the up-and-coming Asian giant ripple through Asia Pacific and push other countries into recession. If there ever was a country dependent on the well-being of China it is Australia with its heavy dependence on mining and natural resources. And as China’s demand for these goods weakens Australia is pushed into a recession, which is then exacerbated as the housing sector finally experiences its long overdue crash – a half decade after the rest of the developed world.
About Outrageous Predictions
In its Outrageous Predictions, Saxo Bank focuses on events that are unlikely to happen, but at the same time are far more likely than the market appreciates. The predictions are not meant as forecasts, but it is important for investors to consider events with under-recognised probabilities. Should any of them come to pass, they would have a significant impact on the markets. Read all of Saxo Bank's Outrageous Predictions for 2012 here. Downlaod a PDF document containing the Outrageous Predictions here. View a compilation of short videos about them here.
Tags: macro, Gross Domestic Product 41 Views 0 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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About Outrageous Predictions
In its Outrageous Predictions, Saxo Bank focuses on events that are unlikely to happen, but at the same time are far more likely than the market appreciates. The predictions are not meant as forecasts, but it is important for investors to consider events with under-recognised probabilities. Should any of them come to pass, they would have a significant impact on the markets. Read all of Saxo Bank's Outrageous Predictions for 2012 here. Downlaod a PDF document containing the Outrageous Predictions here. View a compilation of short videos about them here.
Tags: macro, Gross Domestic Product 41 Views 0 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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Outrageous Prediction: An unannounced candidate takes White House
More John J Hardy, 9 hours ago16 December 2011 Non-Independent Investment Research In 1992, a savvy, yet highly erratic Texas billionaire named Ross Perot managed to take advantage of a recessionary economy and popular disgust with US politics and reap 18.9 percent of the popular vote. Step forward to 2008, and Obama promises “real change” from eight years of Republican rule as the economy is nose-diving. Now, three years of Obama has brought too little change and only additional widespread disillusionment with the entire US political system. Going into the election in 2012, the incumbent Democrats are in ideological disarray and will get the blame for continued economic malaise and the favour-the-rich Republicans will never win the popular vote with the US rich/poor gap at a record width and social tension rising. In short, conditions for a third party candidate have never been riper. Someone smart enough to sense this and with a strong programme for real change throws his hat in the ring early in 2012 and snatches the presidency in November in one of the most pivotal elections in US history, taking 38 percent of the popular vote. A new political order is born.
About Outrageous Predictions
In its Outrageous Predictions, Saxo Bank focuses on events that are unlikely to happen, but at the same time are far more likely than the market appreciates. The predictions are not meant as forecasts, but it is important for investors to consider events with under-recognised probabilities. Should any of them come to pass, they would have a significant impact on the markets. Read all of Saxo Bank's Outrageous Predictions for 2012 here. Downlaod a PDF document containing the Outrageous Predictions here. View a compilation of short videos about them here.
Tags: forex, EURUSD, macro 52 Views 0 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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About Outrageous Predictions
In its Outrageous Predictions, Saxo Bank focuses on events that are unlikely to happen, but at the same time are far more likely than the market appreciates. The predictions are not meant as forecasts, but it is important for investors to consider events with under-recognised probabilities. Should any of them come to pass, they would have a significant impact on the markets. Read all of Saxo Bank's Outrageous Predictions for 2012 here. Downlaod a PDF document containing the Outrageous Predictions here. View a compilation of short videos about them here.
Tags: forex, EURUSD, macro 52 Views 0 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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US CPI inflation resilient
More Mads Koefoed, 9 hours ago16 December 2011 Non-Independent Investment Research After yesterday's massive bout of economic data, which surprised to the upside in almost every report, we ease into the weekend with US CPI the only major release. That is no guarantee, however, that we will not get another rollercoaster day as rumours are already swirling that Standard & Poor's could downgrade EU sovereigns later today.
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