The 6am Cut

6am Cut London Posted 2013-03-18 05:19:18 by Kate Mackenzie Asian stocks fell and the euro weakened as investors fretted about an unprecedented levy was announced on all Cyprus bank deposits. The single currency fell fell 1.3% against the dollar and reached a three-week low against the yen. All major Asian benchmarks were lower, with the MSCI Asia Pacific falling 1.6%, with the Hang Seng recording a 2.1% decline and the Nikkei falling 1.9%. The Kospi was 0.5% lower. The dollar lost 0.7% against the yen. Treasury yields fell as did JGBs, Australian and Singaporean government bond yields. (Bloomberg)(Financial Times) Cypriot authorities attempt to revise deposit levy deal: Cyprus' embattled president was on Sunday in talks with Brussels and political rivals to ease the terms of a planned levy on smaller deposit holders as he tried to scrape together a parliamentary majority for a €10bn bailout for the debt-laden island. President Nicos Anastasiades is still intending to raise €5.8bn from Cypriot bank accounts to help fund the bailout, but alternatives are being discussed to the deal struck on Friday, which would levy a 6.75% tax on all accounts under €100,000, and 6.75% on smaller deposits. Officials involved in Sunday night's talks said the levy on larger accounts could rise to as much as 12.5% and the smaller levy could fall to 3.5%. The country's 56-member parliament is scheduled to vote on the measure this afternoon, and success is far from assured. The government controls 28 of 56 seats. Anastasiades made a dramatic address to the nation calling for political backing of the €5.8bn levy and warning that the country faces a painful default without the €10bn tied to the levy. (Financial Times)(Reuters)(Wall Street Journal) Osborne to concede another debt target delay in Budget: "Having originally committed to bring the burden of public debt down by 2015-16 at the latest, the chancellor extended that target by a year in Decemberand is now preparing to concede another delay to 2017-18." (Financial Times) HSBC is gearing up to cut thousands more jobs. The bank is set to outline the next stage in its strategic overhaul at an investor day in two months' time. "There is no fantastical new strategy out there," said one person familiar with the bank's planning. "But there's still huge potential to be more efficient." (Financial Times) Insurers dodge bank-style capital surcharges: "The International Association of Insurance Supervisors will make its decision public when it unveils plans to deal with "systemically important insurers" on Wednesday, three people familiar with the plans told the Financial Times." (Financial Times) European parliament wants to restrict bonuses that exceed salaries for Ucits fund managers. "The parliament's draft negotiating position, seen by the Financial Times, would enforce a maximum 1:1 ratio of bonus to salary and requires up to 60 per cent of the variable element to be deferred and largely paid in units of the fund the manager runs." (Financial Times) Former PBoC chairman to be Chinese securities regulator: "Mr Xiao, who also worked at the central bank for 15 years, has had a lower profile than Mr Guo, raising questions about whether he will be as forceful in trying to bring change to China's markets." Meanwhile PBoC governor Zhou Xiaochuan will remain in his role despite reaching the retirement age of 65. (Financial Times) WSJ China bribery allegations: "The Justice Department last year opened an investigation into allegations that employees at The Wall Street Journal's China news bureau bribed Chinese officials for information for news articles. A search by the Journal's parent company found no evidence to support the claim, according to government and corporate officials familiar with the case." (Wall Street Journal) COMMENT AND CURIOS: - What happened in Brussels on Friday night... (Financial Times) - Analysts' reactions to the Cyprus deal: All over the place. (Wall Street Journal) - Editorial: Europe botches another rescue. (Financial Times) - Wolfgang Munchau: Europe is risking a bank run. (Financial Times) - John Gapper: SAC case could discredit entire hedge fund industry. (Financial Times) - Chinese local government debt default figures spark worries. (Bloomberg) - UK banks rush to thicken capital cushions. (Wall Street Journal) - Analysts expecting Apple to raise dividend 50%. (Bloomberg) - JP Morgan, among others, is tinkering with its risk models. (Reuters) OVERNIGHT MARKETS: DOWN Asian markets Nikkei 225 down -241.08 (-1.92%) at 12,320 Topix down -18.94 (-1.80%) at 1,033 Hang Seng down -478.11 (-2.12%) at 22,055 US markets S&P 500 down -2.53 (-0.16%) at 1,561 DJIA down -25.03 (-0.17%) at 14,514 Nasdaq down -9.86 (-0.30%) at 3,249 European markets Eurofirst 300 down -4.82 (-0.40%) at 1,203 FTSE100 down -39.76 (-0.61%) at 6,490 CAC 40 down -27.55 (-0.71%) at 3,844 Dax down -15.52 (-0.19%) at 8,043 Currencies €/$ 1.29 (1.30) $/¥ 94.73 (94.16) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) down -1.20 at 108.62 Light Crude (Nymex) down -0.89 at 92.56 100 Oz Gold (Comex) up +13.60 at 1,606 Copper (Comex) down -8.80 at 342.00 10-year government bond yields (%) US 1.92% UK 1.94% Germany 1.45% CDS (closing levels) Markit iTraxx SovX Western Europe -0.17bps at 98.42bp Markit iTraxx Europe +0.96bps at 104.96bp Markit iTraxx Xover +1.3bps at 404.15bp Markit CDX IG +0.49bps at 78.74bp Sources: FT, Bloomberg, Markit
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UK Rightmove House Price Index (YoY)

Location: United Kingdom

Date: 18/03/2013

Time: 0:01 - 1:01

Strength: 2/3

Previous: 1.1%

Notes: The Rightmove House Price Index provides a sample of residential property prices in the UK. It shows the strength of the UK housing market, which can be considered as the economy as a whole due to property prices' sensitivity to changes in the business cycle. Generally speaking, a high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative, or bearish.

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US Reuters/Michigan Consumer Sentiment Index

Location: United States

Date: 15/03/2013

Time: 13:55 - 14:55

Strength: 2/3

Previous: 77.6 / Consensus: 78.2

Notes: The Reuters/Michigan Consumer Sentiment Index released by the Reuters/University of Michigan is a survey of personal consumer confidence in economic activity. It shows a picture of whether or not consumers are willing to spend money. Generally speaking, a high reading anticipates positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).

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US Industrial Production (MoM)

Location: United States

Date: 15/03/2013

Time: 13:15 - 14:15

Strength: 2/3

Previous: -0.1% / Consensus: 0.2%

Notes: The Industrial Production released by the Board of Governors of the Federal Reserve shows the volume of production of US industries such as factories and manufacturing. Up trend is regarded as inflationary which may anticipate interest rates to rise. If High industrial production growth comes out, this may generate a positive sentiment (or bullish) for the USD.

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US Net Long-Term TIC Flows

Location: United States

Date: 15/03/2013

Time: 13:00 - 14:00

Strength: 2/3

Previous: $64.2B

Notes: The Net Long-Term TIC Flows is released by the US Department of Treasury. TIC stands for Treasury International Capital. It shows in and out flows of financial resources in the United States. The TIC flows is one of the major events in the market, as it is seen by most participants as the Government resource for offsetting the current Trade Deficit. Generally speaking, a high reading is positive (or bullish) for the USD, while a low reading is negative (or bearish).

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US Consumer Price Index Core s.a

Location: United States

Date: 15/03/2013

Time: 12:30 - 13:30

Strength: 2/3

Previous: 232.11

Notes: The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

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US Consumer Price Index Ex Food & Energy (MoM)

Location: United States

Date: 15/03/2013

Time: 12:30 - 13:30

Strength: 2/3

Previous: 0.3% / Consensus: 0.2%

Notes: The Consumer Price Index (CPI) Ex Food & Energy released by the US Department of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. Those volatile products such as food and energy are excluded in order to capture an accurate calculation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

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US Consumer Price Index (YoY)

Location: United States

Date: 15/03/2013

Time: 12:30 - 13:30

Strength: 3/3

Previous: 1.6% / Consensus: 1.9%

Notes: The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

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US Consumer Price Index (MoM)

Location: United States

Date: 15/03/2013

Time: 12:30 - 13:30

Strength: 2/3

Previous: 0.0% / Consensus: 0.5%

Notes: The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

#END

US Consumer Price Index Ex Food & Energy (YoY)

Location: United States

Date: 15/03/2013

Time: 12:30 - 13:30

Strength: 3/3

Previous: 1.9% / Consensus: 2.0%

Notes: The Consumer Price Index (CPI) Ex Food & Energy released by the US Department of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. Those volatile products such as food and energy are excluded in order to capture an accurate calculation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

#END

The 6am Cut

6am Cut London Posted 2013-03-15 05:14:24 by Kate Mackenzie Asian shares rose after the approval of the new BoJ governors in Japan's upper house, and better than expected US jobless claim numbers. The yen weakened slightly to ¥96.01 to the dollar and the Nikkei rose 1.3%. The Hang Seng rose 0.8% and the Shanghai Composite jumped 1.7%. (Bloomberg)(Wall Street Journal) Bank of Japan nominees approved: Japan's upper house of parliament waved through the appointments of Haruhiko Kuroda as governor, and Kikuo Iwata and Hiroshi Nakaso as his deputies, following approval by the lower house on Thursday. (Financial Times) King speaks out to halt sterling's fall: "In an abrupt change of tone, Sir Mervyn said sterling was now "properly valued", reflecting fears that the rapid fall in the pound this year will raise inflation and squeeze household budgets further." (Financial Times) Big day for JP Morgan: Senator John McCain, senior Republican on the bipartisan panel investigating the 'London whale' episode, said the bank "misled investors" before "lying to investigators" about its $6bn trading losses. At a hearing today, the panel will attempt to force JPMorgan into admitting the trades that soured were designed to increase profits, rather than to hedge various exposures. (Financial Times)(300+page Senate panel report)(Highlights at FT Alphaville) UK prop trading ban unnecessary, says commission: "The Banking Commission does not feel it appropriate to recommend the immediate prohibition of proprietary trading," said Andrew Tyrie, chairman of the PCBS. (Reuters) JP Morgan and Goldman got the go-ahead for payouts, but were ordered to improve their capital planning in the Fed's CCAR results. (Financial Times)(FT Alphaville) EU leaders to fight unemployment, kind of: European leaders pledged in Brussels to make the fight against unemployment a top priority, but did not clarify whether they would agree to soften the push for budget austerity, or what practical steps they intended to take to reduce joblessness. However the summit's statement made a reference to "balancing productive public investment needs with fiscal discipline objectives", which France and Italy viewed as a win for more leeway for public investment. (Wall Street Journal) EU strikes down harsh Spanish foreclosure law: "Campaigners in Spain hailed a rare legal victory over the country's banks and government when Europe's highest court struck down a draconian foreclosure law that had come to symbolise the brutal fallout from the eurozone's debt crisis." The decision will give courts new powers to delay or freeze evictions. (Financial Times) Shell has to provide more information before resuming Arctic drilling: Company "will need to provide more detailed plans before it can make another attempt to drill off the coast of Alaska, the US Department of the Interior said following a review of the company's troubled 2012 effort." (Wall Street Journal) The Troika delayed the disbursement of a Greek bailout tranche after a dispute over the sacking of senior civil servants. The troika mission will return to Greece in April. (Financial Times) Le Keqiang was today appointed China's premier, the first with a doctorate in economics. (Bloomberg) Carbon prices spike briefly on EU vote: Carbon prices shot up as much as 20% after a European Parliament vote that narrowly supported measures to help prop up the market. Prices for EU carbon allowances reached €4.23 before sinking back below €3.80 as as it became evident Thursday's vote did not guarantee the success of a more important vote due in April to 'backload' or delay the release of credits to tighten supply. (Financial Times) COMMENT AND CURIOS: - Gillian Tett: Watch the maturity transformation in latest rush for junk. (Financial Times) - Retail investors pouring money into junk bond funds. (Financial Times) - Esoteric ABS getting ever more exotic in the search for yield. (Financial Times) - Germany's infrastructure deficit: spending less than US. (Wall Street Journal) - Germany's foreign minister on why the EU needs austerity. (Financial Times) - Toyota's Prius could be winner in China, not Buffett-backed local BYD. (Bloomberg) - UK Budget analysis: No plan B. (Financial Times) - BRICs locals get out of stocks and into government bonds. (Bloomberg) - Large US employers very upset about extra $63 per employee in new healthcare regime. (Wall Street Journal) - Financial advisers don't like Fidelity's new ETF fee structure. (Wall Street Journal) OVERNIGHT MARKETS: UP Asian markets Nikkei 225 up +166.55 (+1.35%) at 12,548 Topix up +12.31 (+1.19%) at 1,050 Hang Seng up +170.96 (+0.76%) at 22,790 US markets S&P 500 up +8.71 (+0.56%) at 1,563 DJIA up +83.86 (+0.58%) at 14,539 Nasdaq up +13.81 (+0.43%) at 3,259 European markets Eurofirst 300 up +13.72 (+1.15%) at 1,208 FTSE100 up +47.91 (+0.74%) at 6,529 CAC 40 up +35.54 (+0.93%) at 3,872 Dax up +87.46 (+1.10%) at 8,058 Currencies €/$ 1.30 (1.30) $/¥ 96.17 (96.06) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) up +0.52 at 109.48 Light Crude (Nymex) up +0.26 at 93.29 100 Oz Gold (Comex) unchanged 0.00 at 1,591 Copper (Comex) unchanged 0.00 at 352.35 10-year government bond yields (%) US 2.03% UK 1.99% Germany 1.48% CDS (closing levels) Markit iTraxx SovX Western Europe +0.64bps at 98.59bp Markit iTraxx Europe -2.28bps at 104bp Markit iTraxx Xover -7.29bps at 402.85bp Markit CDX IG -0.76bps at 78.25bp Sources: FT, Bloomberg, Markit
#END

The 6am Cut

6am Cut London Posted 2013-03-15 05:14:24 by Kate Mackenzie Asian shares rose after the approval of the new BoJ governors in Japan's upper house, and better than expected US jobless claim numbers. The yen weakened slightly to ¥96.01 to the dollar and the Nikkei rose 1.3%. The Hang Seng rose 0.8% and the Shanghai Composite jumped 1.7%. (Bloomberg)(Wall Street Journal) Bank of Japan nominees approved: Japan's upper house of parliament waved through the appointments of Haruhiko Kuroda as governor, and Kikuo Iwata and Hiroshi Nakaso as his deputies, following approval by the lower house on Thursday. (Financial Times) King speaks out to halt sterling's fall: "In an abrupt change of tone, Sir Mervyn said sterling was now "properly valued", reflecting fears that the rapid fall in the pound this year will raise inflation and squeeze household budgets further." (Financial Times) Big day for JP Morgan: Senator John McCain, senior Republican on the bipartisan panel investigating the 'London whale' episode, said the bank "misled investors" before "lying to investigators" about its $6bn trading losses. At a hearing today, the panel will attempt to force JPMorgan into admitting the trades that soured were designed to increase profits, rather than to hedge various exposures. (Financial Times)(300+page Senate panel report)(Highlights at FT Alphaville) UK prop trading ban unnecessary, says commission: "The Banking Commission does not feel it appropriate to recommend the immediate prohibition of proprietary trading," said Andrew Tyrie, chairman of the PCBS. (Reuters) JP Morgan and Goldman got the go-ahead for payouts, but were ordered to improve their capital planning in the Fed's CCAR results. (Financial Times)(FT Alphaville) EU leaders to fight unemployment, kind of: European leaders pledged in Brussels to make the fight against unemployment a top priority, but did not clarify whether they would agree to soften the push for budget austerity, or what practical steps they intended to take to reduce joblessness. However the summit's statement made a reference to "balancing productive public investment needs with fiscal discipline objectives", which France and Italy viewed as a win for more leeway for public investment. (Wall Street Journal) EU strikes down harsh Spanish foreclosure law: "Campaigners in Spain hailed a rare legal victory over the country's banks and government when Europe's highest court struck down a draconian foreclosure law that had come to symbolise the brutal fallout from the eurozone's debt crisis." The decision will give courts new powers to delay or freeze evictions. (Financial Times) Shell has to provide more information before resuming Arctic drilling: Company "will need to provide more detailed plans before it can make another attempt to drill off the coast of Alaska, the US Department of the Interior said following a review of the company's troubled 2012 effort." (Wall Street Journal) The Troika delayed the disbursement of a Greek bailout tranche after a dispute over the sacking of senior civil servants. The troika mission will return to Greece in April. (Financial Times) Le Keqiang was today appointed China's premier, the first with a doctorate in economics. (Bloomberg) Carbon prices spike briefly on EU vote: Carbon prices shot up as much as 20% after a European Parliament vote that narrowly supported measures to help prop up the market. Prices for EU carbon allowances reached €4.23 before sinking back below €3.80 as as it became evident Thursday's vote did not guarantee the success of a more important vote due in April to 'backload' or delay the release of credits to tighten supply. (Financial Times) COMMENT AND CURIOS: - Gillian Tett: Watch the maturity transformation in latest rush for junk. (Financial Times) - Retail investors pouring money into junk bond funds. (Financial Times) - Esoteric ABS getting ever more exotic in the search for yield. (Financial Times) - Germany's infrastructure deficit: spending less than US. (Wall Street Journal) - Germany's foreign minister on why the EU needs austerity. (Financial Times) - Toyota's Prius could be winner in China, not Buffett-backed local BYD. (Bloomberg) - UK Budget analysis: No plan B. (Financial Times) - BRICs locals get out of stocks and into government bonds. (Bloomberg) - Large US employers very upset about extra $63 per employee in new healthcare regime. (Wall Street Journal) - Financial advisers don't like Fidelity's new ETF fee structure. (Wall Street Journal) OVERNIGHT MARKETS: UP Asian markets Nikkei 225 up +166.55 (+1.35%) at 12,548 Topix up +12.31 (+1.19%) at 1,050 Hang Seng up +170.96 (+0.76%) at 22,790 US markets S&P 500 up +8.71 (+0.56%) at 1,563 DJIA up +83.86 (+0.58%) at 14,539 Nasdaq up +13.81 (+0.43%) at 3,259 European markets Eurofirst 300 up +13.72 (+1.15%) at 1,208 FTSE100 up +47.91 (+0.74%) at 6,529 CAC 40 up +35.54 (+0.93%) at 3,872 Dax up +87.46 (+1.10%) at 8,058 Currencies €/$ 1.30 (1.30) $/¥ 96.17 (96.06) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) up +0.52 at 109.48 Light Crude (Nymex) up +0.26 at 93.29 100 Oz Gold (Comex) unchanged 0.00 at 1,591 Copper (Comex) unchanged 0.00 at 352.35 10-year government bond yields (%) US 2.03% UK 1.99% Germany 1.48% CDS (closing levels) Markit iTraxx SovX Western Europe +0.64bps at 98.59bp Markit iTraxx Europe -2.28bps at 104bp Markit iTraxx Xover -7.29bps at 402.85bp Markit CDX IG -0.76bps at 78.25bp Sources: FT, Bloomberg, Markit
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EMU Consumer Price Index - Core (YoY)

Location: European Monetary Union

Date: 15/03/2013

Time: 10:00 - 11:00

Strength: 3/3

Previous: 1.3%

Notes: The core Consumer Price Index released by Eurostat is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services excluding the volatile components like food, energy, alcohol and tobacco. The core CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive or bullish for the EUR, while a low reading is seen as negative.

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EMU Consumer Price Index (MoM)

Location: European Monetary Union

Date: 15/03/2013

Time: 10:00 - 11:00

Strength: 2/3

Previous: -1.0% / Consensus: 0.4%

Notes: The Euro Zone CPI released by the Eurostat captures the changes in the price of goods and services. The CPI is a significant way to measure changes in purchasing trends and inflation in the Euro Zone. Generally, a high reading anticipates a hawkish attitude which will be positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

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EMU Consumer Price Index (YoY)

Location: European Monetary Union

Date: 15/03/2013

Time: 10:00 - 11:00

Strength: 3/3

Previous: 2.0% / Consensus: 1.8%

Notes: The Euro Zone CPI released by the Eurostat captures the changes in the price of goods and services. The CPI is a significant way to measure changes in purchasing trends and inflation in the Euro Zone. Generally, a high reading anticipates a hawkish attitude which will be positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

#END