The 6am Cut

6am Cut London Posted 2013-03-20 05:47:32 by Kate Mackenzie "Asian stocks swung between gains and losses as a rally in Chinese shares offset declines fueled by concern that Cyprus's rejection of a bailout plan shows Europe will struggle to contain its debt crisis." The MSCI Asia Pacific was 0.1% higher. Japanese markets were closed for a holiday. (Bloomberg) Cyprus seeks Russian assistance after rejecting bail-out vote: Cyprus's finance minister arrived in Moscow on Tuesday night to try to wrest assistance from the Kremlin as his country's parliament rejected a €10bn EU-led bailout that requires €5.8bn to be seized from Cypriot bank accounts. The 11th-hour attempt to tap funds from Russia as an alternative to the deposit levy stunned leaders in Brussels, who said they were taken aback by the resistance of Cypriot lawmakers to shifting the tax's burden to large deposits, many of which are held by wealthy Russians. What happens next is not clear. "The ball is now really in Cyprus's court," eurogroup president Jeroen Dijsselbloem said on Dutch television. The Cyprus government is working with European officials on measures to contain a possibly crippling deposit outflow when banks reopen, including imposing limits on daily withdrawals and capping the amount of money that can be taken out of the country. (Financial Times)(Wall Street Journal) Osborne orders £2.5bn in Budget cuts: "George Osborne ordered ministers to come up with £2.5bn of extra spending cuts, as he scrambled for money in what was expected to be one of the bleakest British Budgets in years. The chancellor was expected to spend about £1bn to hit the coalition's target of raising the personal tax allowance to £10,000 in 2014, a year ahead of schedule, and to defer a planned rise in fuel duty." (Financial Times) Visa may have to buy Visa Europe: "The European banks that own Visa Europe may soon decide to sell the card-payments organization to U.S.-based Visa Inc. and set up a rival system in Europe, people familiar with the matter said." The sources said a decision won't be made until a Visa Europe board meeting, schedule for April. (Wall Street Journal) "MF Global has reached an agreement with JPMorgan Chase that will result in more than $500m being returned to the bankrupt brokerage's former customers. The deal will bring to a close one protracted chapter in MF Global's complex and often contentious cross-border bankruptcy proceedings."(Financial Times) JP Morgan downgraded in confidential regulator scorecard: The bank's rating from the Office of the Comptroller of the Currency "fell one notch last July to a level that signifies oversight "needs improvement," following the revelation of what are known as the "London whale" trading losses, said people familiar with the regulatory assessment." (Wall Street Journal) Liberty media in $2.6bn cable bet: Confirms plans to buy a 27.3% stake in the 4th-largest US cable operator, Charter Communications. (Financial Times) Sweeping ECB powers to regulate all EU banks agreed: "A deal was struck after EU member states agreed to give greater powers than the commission previously envisaged to the European Parliament over the appointment of top officials at the new single supervisor." (Financial Times) FCC plans to offload €2bn of assets: The Spanish construction group will today announce a plan to sell more than €2bn of assets as it girds itself for a further three to four years of contraction in Spain's crisis-hit building sector. (Financial Times) Volkswagen recalled almost 400,000 vehicles in China to replace defective gearboxes that may result in loss of power, a move that may cost the company more than $600m. "While Volkswagen was unable to immediately comment on the costs, research firm LMC Automotive estimates replacements will cost between 3,000 yuan ($483) to 10,000 yuan per vehicle." (Bloomberg) UBS said it would leave the panel that sets the benchmark Euribor rate, following exits by follows exits by Dutch lender Rabobank, Austria's Raiffeisen Bank International, and Germany's Bayerische Landesbank. (Wall Street Journal) Freddie Mac sues over Libor losses: More than a dozen banks and the British Bankers Association targeted in lawsuit alleging "substantial losses" as a result of Libor manipulation. The government-controlled mortgage company has already joined class action lawsuits against banks over Libor losses. (Financial Times) COMMENT AND CURIOS: - Martin Wolf: Cyprus shows how banking is dangerous everywhere, and threatens the eurozone's survival. (Financial Times) - Editorial: Nicosia should let losses come through restructuring. (Financial Times) - Cyprus' high stakes ECB gamble. (Wall Street Journal) - Analysis: Traders fear the ghosts of 1994 with return of the rate rise. (Financial Times) - Do recent bank bailout surprises mean the capital structure is being subverted? (Financial Times) - South Korea wrestles with housing-binge-induced slump. (Bloomberg) - Gold sales booming in Argentina. (FT Beyondbrics) OVERNIGHT MARKETS: MIXED Asian markets Hang Seng up +142.91 (+0.65%) at 22,185 US markets S&P 500 down -3.76 (-0.24%) at 1,548 DJIA up +3.76 (+0.03%) at 14,456 Nasdaq down -8.49 (-0.26%) at 3,229 European markets Eurofirst 300 down -4.83 (-0.40%) at 1,195 FTSE100 down -16.60 (-0.26%) at 6,441 CAC 40 down -49.72 (-1.30%) at 3,776 Dax down -62.91 (-0.79%) at 7,948 Currencies €/$ 1.29 (1.29) $/¥ 95.05 (95.13) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) up +0.45 at 107.90 Light Crude (Nymex) up +0.29 at 92.45 100 Oz Gold (Comex) down -1.30 at 1,610 Copper (Comex) down -0.90 at 338.65 10-year government bond yields (%) US 1.90% UK 1.86% CDS (closing levels) Markit iTraxx SovX Western Europe +2.5bps at 100.92bp Markit iTraxx Europe +3.45bps at 108.41bp Markit iTraxx Xover +9.22bps at 413.37bp Markit CDX IG +1.67bps at 81.92bp Sources: FT, Bloomberg, Markit
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DE Producer Price Index (YoY)

Location: Germany

Date: 20/03/2013

Time: 7:00 - 8:00

Strength: 3/3

Previous: 1.7% / Consensus: 1.5%

Notes: The Producer Price Index released by the Statistisches Bundesamt Deutschland measures the average changes in prices in the German primary markets. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).

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DE Producer Price Index (MoM)

Location: Germany

Date: 20/03/2013

Time: 7:00 - 8:00

Strength: 2/3

Previous: 0.8% / Consensus: 0.2%

Notes: The Producer Price Index released by the Statistisches Bundesamt Deutschland measures the average changes in prices in the German primary markets. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).

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US Housing Starts (MoM)

Location: United States

Date: 19/03/2013

Time: 12:30 - 13:30

Strength: 2/3

Previous: 0.890M / Consensus: 0.918M

Notes: The Housing Starts released by the US Census Bureau, at the Department of Commerce is an indicator that tracks how many new single-family homes or buildings were constructed. For the survey each house and each single apartment are counted as one housing start. The figures include all private and publicly owned units. It indicates movements of the US housing market. Generally, a high reading anticipates positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).

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US Building Permits (MoM)

Location: United States

Date: 19/03/2013

Time: 12:30 - 13:30

Strength: 2/3

Previous: 0.925M / Consensus: 0.930M

Notes: The Building Permits released by the US Census Bureau, the Department of Commerce shows the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Normally, the more growing number of permits, the more positive (or bullish) for the USD.

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UK BOE Inflation Letter

Location: United Kingdom

Date: 19/03/2013

Time: 10:30 - 11:30

Strength: 3/3

Previous:

Notes: BOE inflation letter is issued if the earlier-released CPI y/y is above 3.0% or below 1.0%. If CPI is not above 3.0% or below 1.0% this event will be removed from the calendar immediately following the CPI release. Otherwise the Tentative mark will be discarded when the exact timing of the letter is known.

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DE ZEW Survey - Economic Sentiment

Location: Germany

Date: 19/03/2013

Time: 10:00 - 11:00

Strength: 2/3

Previous: 48.2 / Consensus: 47.5

Notes: The Economic Sentiment published by the Zentrum f�r Europ�ische Wirtschaftsforschung measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic. Generally speaking, an optimistic view is considered as positive (or bullish) for the EUR, whereas a pessimistic view is considered as negative (or bearish).Review Alex Nekritin's Article - Trading the Euro with Germany ZEW Survey

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DE ZEW Survey - Current Situation

Location: Germany

Date: 19/03/2013

Time: 10:00 - 11:00

Strength: 2/3

Previous: 5.2 / Consensus: 7.0

Notes: The Economic Sentiment published by the Zentrum f�r Europ�ische Wirtschaftsforschung measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic. Generally speaking, an optimistic view is considered as positive (or bullish) for the EUR, whereas a pessimistic view is considered as negative (or bearish).Review Alex Nekritin's Article - Trading the Euro with Germany ZEW Survey

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UK Consumer Price Index (YoY)

Location: United Kingdom

Date: 19/03/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous: 2.7% / Consensus: 2.8%

Notes: The Consumer Price Index released by the National 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 GBP is dragged down by inflation. The 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 GBP, while a low reading is seen as negative (or Bearish).

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UK Core Consumer Price Index (YoY)

Location: United Kingdom

Date: 19/03/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous: 2.3%

Notes: The Core Consumer Price Index released by the National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. "Core excludes seasonally volatile products such as food and energy in order to capture an accurate calculation. The 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 GBP, while a low reading is seen as negative (or Bearish).

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UK Retail Price Index (YoY)

Location: United Kingdom

Date: 19/03/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 3.3% / Consensus: 3.4%

Notes: Retail Price Index released by the National Statistics is a statistical measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is widely considered as a key measure of inflation that indicates an accurate reflection of the cost of living. Normally, a high reading is seen as positive (or bullish) for the GBP, whereas a low reading is seen as negative (or bearish).

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UK Producer Price Index - Output (YoY) n.s.a

Location: United Kingdom

Date: 19/03/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 2.0% / Consensus: 1.8%

Notes: The Producer Price Index released by the National Statistics is a monthly measurement of the price changes of goods produced by UK manufacturers. Generally speaking, a price hike generates higher retail prices for consumers. Thus, a high reading is positive (or bullish) for the GBP, while a low reading is seen as negative (or bearish).

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UK PPI Core Output (YoY) n.s.a

Location: United Kingdom

Date: 19/03/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 1.4% / Consensus: 1.1%

Notes: Producer Prices Index Core Output, released by National Statistics, excludes volatile items such as food and energy. The Core PPI is generally a better measure of inflation because it excludes those items whose short-term price fluctuations can distort inflationary data.

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UK Consumer Price Index (MoM)

Location: United Kingdom

Date: 19/03/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: -0.5% / Consensus: 0.7%

Notes: The Consumer Price Index released by the National 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 GBP is dragged down by inflation. The 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 GBP, while a low reading is seen as negative (or Bearish).

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The 6am Cut

6am Cut London Posted 2013-03-19 05:47:37 by Kate Mackenzie Asian stocks rebounded on Monday as fears abated that Cyprus could plunge Europe back into crisis, but investors remained wary. The Nikkei rose 1.9% after falling 2.7% yesterday. Hong Kong's Hang Seng index rose 0.4% and the Shanghai Composite index added 0.3%. (Bloomberg)(Financial Times) Cypriot authorities rushed to renegotiate the terms of a €10bn bailout by moving to scrap its controversial levy on small account holders and instead seizing more from larger depositors and businesses. The parliamentary vote on the rescue deal was postponed a second day running and is now scheduled to take place today. In an attempt to win over the handful of votes needed, President Nicos Anastasiades suggested lowering the rate on smaller depositors to 3%, while those with over €500,000 would lose 15% and those in between would get a 10% cut. A eurogroup statement said there would be "more progressivity" introduced to the original scheme. (Financial Times)(FT Alphaville)(Wall Street Journal) Japan's crippled Fukushima Daiichi nuclear station suffered a power failure on Monday night, and some systems, including cooling mechanisms for several pools storing radioactive fuel rods, remained offline on Tuesday morning. The pools are cooled to well below safe temperature thresholds but if power is not restored, temperatures inside one pool could rise to levels deemed unsafe in a little over four days. (Financial Times) Citi to pay $730m in subprime class action deal: Settles claims the bank misled investors in its bonds and preferred stock between 2006 and 2008 over its exposure to subprime mortgages, in the second-biggest class action payout related to the financial crisis. (Financial Times) Blackstone considering Dell bid: "Blackstone Group is weighing a bid for Dell, the computer maker seeking offers to rival the proposed $24.4 billion buyout by its founder and Silver Lake Management, said people with knowledge of the matter." (Bloomberg) Brussels green light for Italy debt sale: "Italy is considering a substantial increase in sales of government debt to boost its recession-hit private sector after striking a deal with the European Commission that allows a relaxation of Rome's fiscal targets." (Financial Times) Argentina charges HSBC with money laundering: Argentina's government said it filed criminal charges against the local subsidiary of HSBC for allegedly helping businesses evade taxes and launder a total of 616m pesos ($121m). (Wall Street Journal) China's foreign direct investment rose for the first time in nine months in February, a sign confidence in the world's second-biggest economy is improving amid optimism growth will keep rebounding. Inbound FDI was 6.3% higher than in February 2012, the Ministry of Commerce said. (Bloomberg) COMMETN AND CURIOS: - Cyprus shows how Germany's position is hardening. (Financial Times) ECB role in bailout comes under scrutiny. (Financial Times) - Shale gas hasn't dramatically changed the game for US manufacturers. (Wall Street Journal) - Activist investors are back. (Wall Street Journal) - Richard Koo: Monetary easing alone won't fix Japan. (Financial Times) Asian markets Nikkei 225 up +230.11 (+1.88%) at 12,451 Topix up +16.95 (+1.65%) at 1,045 Hang Seng up +91.55 (+0.41%) at 22,175 US markets S&P 500 down -8.60 (-0.55%) at 1,552 DJIA down -62.05 (-0.43%) at 14,452 Nasdaq down -11.48 (-0.35%) at 3,238 European markets Eurofirst 300 down -3.27 (-0.27%) at 1,200 FTSE100 down -31.73 (-0.49%) at 6,458 CAC 40 down -18.56 (-0.48%) at 3,825 Dax down -32.15 (-0.40%) at 8,011 Currencies €/$ 1.30 (1.30) $/¥ 95.57 (95.17) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) down -0.11 at 109.40 Light Crude (Nymex) up +0.05 at 93.79 100 Oz Gold (Comex) unchanged 0.00 at 1,605 Copper (Comex) up +0.50 at 342.20 10-year government bond yields (%) US 1.97% UK 1.91% Germany 1.40% CDS (closing levels) Markit iTraxx SovX Western Europe +2.5bps at 100.92bp Markit iTraxx Europe +3.45bps at 108.41bp Markit iTraxx Xover +9.22bps at 413.37bp Markit CDX IG +1.51bps at 80.25bp Sources: FT, Bloomberg, Markit
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