The 6am Cut

6am Cut London Posted 2013-03-21 05:47:18 by Kate Mackenzie Asian stocks rose, with the MSCI Asia Pacific index paring the week's drop, as the Federal Reserve maintained stimulus and a survey showed China's manufacturing gained pace. Tokyo shares jumped before a speech by the new Bank of Japan governor. The Nikkei 225 Stock Average was up 1.3% after being shut the previous session for a public holiday, and heading towards the highest level since September 2008. (Bloomberg)(Financial Times) Medvedev calls for EU rethink on Cyprus: The Russian prime minister signalled on Wednesday that Moscow was "prepared to consider various options" for providing aid to Cyprus but said the EU and Cyprus itself must come up with new, workable proposals first. A meeting between the Russian government and the European Commission is scheduled for today and Friday, now likely to be dominated by discussion on Cyprus. Asked about Russian aid in exchange for access to gas reserves, he said that was "not a simple question". Banks will remain closed until Tuesday. (Financial Times) Four possible scenarios. (Financial Times) Russian depositors totally fed up with Cyprus now. (Wall Street Journal) The yen remained weak against most major partners ahead of a speech today by new BoJ governor Haruhiko Kuroda. (Bloomberg) China manufacturing sentiment improves: The preliminary China PMI was 51.7 in March, HSBC and Markit Economics said, compared to 50.4 in February and an expectation of 50.8 for this month. (Bloomberg) Japan's trade balance in deficit again: February imports were down 2.9% from a year earlier, while imports were 11.9% higher, leaving a shortfall of Y7775bn for the month, compared to January's Y1629.4bn. (Bloomberg) Bernanke suggests tenure could end: ""I don't think that I'm the only person in the world who can manage the exit," the Fed governor said when asked at a news conference in Washington if he's discussed his plans with President Barack Obama. His term expires at the end of January." (Bloomberg) He also gave the most explicit indication yet that the Fed was likely to slow the pace of QE3 purchases before bringing them to a halt. (Financial Times) Bouyant Foxtons in talks to go public: BC Partners, which bought Foxtons in 2007 "have held talks with bankers about an IPO of the hard-charging estate agency that became a symbol of the UK property boom before stumbling when house sales dried up." (Financial Times) HP board survives protest vote: Hewlett-Packard, the world's biggest PC maker by unit sales, suffered a shareholder protest vote at its annual meeting on Wednesday, but its chairman and members of the board survived calls for their removal. (Financial Times) COMMENT AND CURIOS: - Martin Wolf: Shrewd politics disguises brutal and problematic economics. (Financial Times) - Editorial: Osborne doubles down on bad fiscal bet. (Bloomberg) - David Pilling: Abe is right to end decades of penalising Japan's young. (Financial Times) - John Gapper: Investors should challenge money-hoarding executives. (Financial Times) - Chinese state media gets critical of foreign-made cars. (Wall Street Journal) - China moves towards abandoning one-child policy. (Bloomberg) OVERNIGHT MARKETS: UP Asian markets Nikkei 225 up +153.28 (+1.23%) at 12,622 Topix up +12.03 (+1.15%) at 1,058 Hang Seng up +15.54 (+0.07%) at 22,272 US markets S&P 500 up +10.37 (+0.67%) at 1,559 DJIA up +55.91 (+0.39%) at 14,512 Nasdaq up +25.09 (+0.78%) at 3,254 European markets Eurofirst 300 up +3.97 (+0.33%) at 1,199 FTSE100 down -8.62 (-0.13%) at 6,433 CAC 40 up +53.81 (+1.43%) at 3,830 Dax up +54.18 (+0.68%) at 8,002 Currencies €/$ 1.29 (1.29) $/¥ 95.69 (95.98) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) down -0.08 at 108.64 Light Crude (Nymex) down -0.23 at 93.27 100 Oz Gold (Comex) unchanged 0.00 at 1,608 Copper (Comex) up +3.30 at 346.85 10-year government bond yields (%) US 1.96% UK 1.89% Germany 1.39% CDS (closing levels) Markit iTraxx SovX Western Europe +0.98bps at 101.9bp Markit iTraxx Europe n/abps at 118.48bp Markit iTraxx Xover n/abps at 477.4bp Markit CDX IG n/abps at 89.43bp Sources: FT, Bloomberg, Markit
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US Fed's Monetary Policy Statement and press conference

Location: United States

Date: 20/03/2013

Time: 18:30 - 19:30

Strength: 2/3

Previous:

Notes: Following the Fed's rate decision, Ben Bernanke gives a press conference regarding monetary policy. His comments may influence the volatility of USD and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the USD, whereas his dovish view is considered as negative, or bearish.

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US Fed Interest Rate Decision

Location: United States

Date: 20/03/2013

Time: 18:00 - 19:00

Strength: 3/3

Previous: 0.25% / Consensus: 0.25%

Notes: The Board of Governors of the Federal Reserve announces an interest rate. This interest rate affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers. It also tends to affect the exchange rate. Generally speaking, if the Fed is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the USD.Review Alex Nekritin's Article -Suggested Strategies to trade the US dollar with this economic release.

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US FOMC Economic Projections

Location: United States

Date: 20/03/2013

Time: 18:00 - 19:00

Strength: 2/3

Previous:

Notes: This report, released by Federal Reserve, includes the FOMC's projection for inflation and economic growth over the next 2 years and, more importantly, a breakdown of individual FOMC member's interest rate forecasts.

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EMU Consumer Confidence

Location: European Monetary Union

Date: 20/03/2013

Time: 15:00 - 16:00

Strength: 2/3

Previous: -23.6 / Consensus: -23.3

Notes: The Consumer Confidence released by the European Commission is a leading index that measures the level of consumer confidence in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn. A high reading is seen as positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

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DE 10-y Bond Auction

Location: Germany

Date: 20/03/2013

Time: 9:40 - 10:40

Strength: 2/3

Previous: 1.66%

Notes: Displayed in the calendar is the average yield on the Federal Bonds auctioned by Deutsche Bundesbank. German Federal Bonds have maturities of above then ten years. The yield on the bonos represents the return an investor will receive by holding the bond until maturity. Investors monitor the yield volatility and compare the average rate at auction to the rate at previous auctions of the same security as an indicator of the government debt situation.

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UK Average Earnings including Bonus (3Mo/Yr)

Location: United Kingdom

Date: 20/03/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 1.4% / Consensus: 1.5%

Notes: The Average Earing Including Bonus released by the National Statistics is a key short-term indicator of how levels of pay are changing within the U.K. economy. Generally speaking, the positive earnings growth anticipates "Bullish for the GBP, whereas a low reading is seen

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UK Claimant Count Rate

Location: United Kingdom

Date: 20/03/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 4.7% / Consensus: 4.7%

Notes: The Claimant Count Rate released by the National Statistics is a monthly measure of unemployment in the UK It indicates the health of the UK labor market. If the rate is up, it indicates a lack of expansion within the UK labor market, while it indicates economic expansion and could spark inflationary pressures if the rate is down. Generally, a decrease of the figure is seen as positive (or bullish) for the GBP, while an increase is seen as negative.

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UK Claimant Count Change

Location: United Kingdom

Date: 20/03/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous: -12.5K / Consensus: -5.0K

Notes: The Claimant Count Change released by the National Statistics presents the number of unemployment people in the UK. There is a tendency to influence the GBP volatility. Generally speaking, a rise in this indicator has negative implications for consumer spending which discourage economic growth. Generally, a high reading is seen as negative (or bearish) for the GBP, while a low reading is seen as positive (or bullish).

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UK ILO Unemployment Rate (3M)

Location: United Kingdom

Date: 20/03/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 7.8% / Consensus: 7.8%

Notes: The ILO Unemployment Rate released by the National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate is up, it indicates a lack of expansion within the U.K. labor market. As a result, a rise leads to weaken the U.K. economy. Generally, a decrease of the figure is positive (or bullish) for the GBP, while an increase is negative.

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UK Bank of England Minutes

Location: United Kingdom

Date: 20/03/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous:

Notes: The minutes of the BoE MPC meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the BoE is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the GBP.

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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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