The 6am Cut

6am Cut London Posted 2013-04-18 05:49:55 by Kate Mackenzie Most Asian stocks fell, led by mining companies amid fears of a weaker outlook for global growth. The MSCI Asia Pacific index was 0.5% lower, the Nikkei and the Kospi fell 0.3% and the ASX was down 0.7%. The Hang Seng and the Shanghai Composite swung between gains and losses. Gold fell as much as 2.8% on outflows from ETFs. (Bloomberg) Japan has posted its narrowest trade deficit for nine months, helped by a big rise in the value of shipments to the US, which has toppled China as Japan's number one export destination. Provisional figures from Japan's finance ministry today showed that overall exports rose 1.1 per cent in March from a year earlier to Y6.3tn ($64bn), while imports – boosted by fuel to replace idled nuclear capacity – were up 5.5 per cent to Y6.6tn. (Financial Times) Apple shares dropped below $400 for the first time since December 2011 after one of its audio-chip suppliers, Cirrus Logic, reported an inventory glut that suggests iPhone sales may fall short of analysts' expectations. The company's shares are down 43% from their record high in September. On Tuesday the company is expected to report its first year-on-year decline in quarterly earnings for almost a decade, and sentiment was also weighed down by news that Apple was ordered by Chinese authorities to remove some content it hosted. (Bloomberg)(Financial Times) Italy's centrist parties said to reach deal on President: "Senior parliamentarians in both parties told the Financial Times that an agreement had been made on the candidacy of Franco Marini, an 80-year-old former Speaker of the senate." President Giorgio Napolitano's term ends in mid-May, and a new head of state will have to try to break the deadlock from the inconclusive February elections. (Financial Times) G20 talks in Washington begin today and central bank easing is expected to be in focus. The merits and risks of low interest rates and unconventional monetary policy were also debated at the IMF spring meetings yesterday. Currency valuations and debt reductions goals are also likely to be topics of debate. (Reuters) Global policymakers will discuss the impact of unprecedented monetary policy easing at meetings in Washington this week along with the softly-softly approach central banks will need to eventually wean the world off super-cheap funds. New BHP chief makes mark: Andrew Mackenzie, the new CEO of BHP Billiton, has moved to stamp his authority on the company with an overhaul of its senior management team that will see the head of petroleum, chief executive of the aluminium and nickel division, and head of ferrous and coal division all depart their roles. A new structure will mean five divisional chiefs all report directly to the CEO. (Financial Times) Euro falls on Bundesbank comments: The German central bank's president Jens Weidmann "signaled that the ECB could reduce interest rates if incoming data suggest it is warranted. But he warned such a move wouldn't turn around the euro bloc's economic fortunes." Weidmann warned Europe's debt crisis could take another decade to overcome. (Wall Street Journal) PBoC says China will press on with widening the Rmb trading band, despite slower than expected growth in Q1. "I think in the near future we are going to increase the floating band even further," PBoC vice governor Yi Gang said in Washington. (Wall Street Journal) Net selling of overseas assets by Japanese institutional investors continued for a fifth week, but the rate of sales was much slower than in the first week of April. The sales have confounded expectations that Japanese investors would rush to buy foreign assets in the wake of the BoJ's new easing measures; but some analysts say it may still be too soon to expect massive outflows. (Wall Street Journal) "Chinese banks must rate their clients' risk of criminal conduct on a scale of 1-5 as part of the central bank's moves to curb money laundering and fraudulent transactions estimated at hundreds of billions of dollars a year." (Reuters) BP accepted responsibility for a critical Deepwater Horizon negative pressure test, as the first phase of the liability trial for damages and penalties over the 2010 disaster ended. However the company said it had strong safety systems and had not put the crew under pressure to finish the Macondo well more too quickly. (Financial Times) COMMENT AND CURIOS: - Reinhart and Rogoff: Robert Pollin and Michael Ash on 'Growth in a Time of Debt'. (Financial Times) - The IMF must quit the Troika to survive. (Financial Times) - Central bankers debate risks of unconventional policies ahead of IMF's spring meeting. (Financial Times) - Jesse Eisenger looks at fears of a Fed-inspired bubble. (NYT/Propublica) - Japanese swaps are already anticipating Kuroda's endgame. (Bloomberg) OVERNIGHT MARKETS: DOWN Asian markets Nikkei 225 down -36.67 (-0.27%) at 13,346 Topix down -2.50 (-0.22%) at 1,134 Hang Seng down -10.08 (-0.05%) at 21,560 US markets S&P 500 down -22.56 (-1.43%) at 1,552 DJIA down -138.19 (-0.94%) at 14,619 Nasdaq down -59.96 (-1.84%) at 3,205 European markets Eurofirst 300 down -18.10 (-1.55%) at 1,148 FTSE100 down -60.37 (-0.96%) at 6,244 CAC 40 down -86.56 (-2.35%) at 3,599 Dax down -179.55 (-2.34%) at 7,503 Currencies €/$ 1.31 (1.30) $/¥ 98.25 (98.09) £/$ 1.53 (1.52) Commodities ($) Brent Crude (ICE) down -0.02 at 97.67 Light Crude (Nymex) up +0.11 at 86.79 100 Oz Gold (Comex) down -18.60 at 1,364 Copper (Comex) down -1.80 at 317.00 10-year government bond yields (%) US 1.69% UK 1.67% Germany 1.23% CDS (closing levels) Markit iTraxx SovX Western Europe -0.18bps at 100.58bp Markit iTraxx Europe +1.84bps at 113.18bp Markit iTraxx Xover +7.72bps at 453.69bp Markit CDX IG +1.99bps at 84.11bp Sources: FT, Bloomberg, Markit
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US Fed's Beige Book

Location: United States

Date: 17/04/2013

Time: 19:00 - 20:00

Strength: 3/3

Previous:

Notes: The Beige Book reports on the current US economic situation. Through interviews with key business contacts, economists, market experts, and other sources are gathered by each of the 12 Federal Reserve Districts. The survey gives a picture of the overall US economic growth. An optimistic view of those authorities is considered as positive, or bullish for the USD, whereas a pessimistic view is considered as negative, or bearish for the Dollar.

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DE 10-y Bond Auction

Location: Germany

Date: 17/04/2013

Time: 11:40 - 12:40

Strength: 2/3

Previous: 1.36%

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 ILO Unemployment Rate (3M)

Location: United Kingdom

Date: 17/04/2013

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 Claimant Count Rate

Location: United Kingdom

Date: 17/04/2013

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 Bank of England Minutes

Location: United Kingdom

Date: 17/04/2013

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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UK Average Earnings including Bonus (3Mo/Yr)

Location: United Kingdom

Date: 17/04/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 1.2% / Consensus: 1.4%

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 Change

Location: United Kingdom

Date: 17/04/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous: -1.5K / Consensus: 0.5K

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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The 6am Cut

6am Cut London Posted 2013-04-17 05:48:59 by Kate Mackenzie Asian stocks rose for the first time in three days as new-home construction in the US beat forecasts and the yen weakened, helping the Nikkei rise 0.9%. The MSCI Asia Pacific index gained 0.5% cent after dropping 1.2% over the past two days. (Bloomberg)(Financial Times) Credit Suisse is facing a shareholder revolt over pay after ISS, the proxy adviser, asked investors to block the bank's plan to issue 27m shares – worth more than SFr700m ($760m) at current market prices - for employee bonuses. (Financial Times) "Intel's gross profit margin fell harder than expected in the opening months of this year as it geared up for a new generation of microprocessors that are seen as vital to the struggling PC industry's hopes for a rebound." (Financial Times) BHP Billiton reaffirmed its full-year production guidance in spite of a lacklustre performance from its iron ore and petroleum assts in the past quarter. (Financial Times) The Chinese government warned the number of H7N9 infections could rise after two more deaths were confirmed, bringing the toll to 16. The two victims were in Shanghai, the site of most of the 77 confirmed cases so far. (Reuters) 787 battery decision expected 'soon': Federal Aviation Administration chief Michael Huerta told a US congressional committee on Tuesday he expects to decide "very soon" whether to approve Boeing's redesigned 787 Dreamliner battery system, potentially ending a three-month ban on flights by the high-tech jet. (Reuters) COMMENT AND CURIOUS: - Martin Wolf: The deflation dog that did not bark. (Financial Times) - The IMF is also completely fed up with this austerity caper. (Wall Street Journal) - Wither Tokyo's bar scene as techies replace traders. (Bloomberg) - Central banks' gold holdings lost $560bn. (Bloomberg) - China's specific type of financial crisis. (Financial Times) - John Kay: Fair value is not the same as market price. (Financial Times) OVERNIGHT MARKETS: MIXED Asian markets Nikkei 225 up +120.11 (+0.91%) at 13,342 Topix up +13.42 (+1.20%) at 1,133 Hang Seng down -10.95 (-0.05%) at 21,661 US markets S&P 500 up +22.21 (+1.43%) at 1,575 DJIA up +157.58 (+1.08%) at 14,757 Nasdaq up +48.14 (+1.50%) at 3,265 European markets Eurofirst 300 down -8.74 (-0.74%) at 1,166 FTSE100 down -39.02 (-0.62%) at 6,305 CAC 40 down -24.69 (-0.67%) at 3,686 Dax down -30.05 (-0.39%) at 7,683 Currencies €/$ 1.32 (1.32) $/¥ 98.12 (97.52) £/$ 1.54 (1.54) Commodities ($) Brent Crude (ICE) up +0.37 at 100.28 Light Crude (Nymex) up +0.01 at 88.73 100 Oz Gold (Comex) down -7.90 at 1,379 Copper (Comex) up +0.35 at 331.00 10-year government bond yields (%) US 1.72% UK 1.75% Germany 1.28% CDS (closing levels) Markit iTraxx SovX Western Europe -0.98bps at 100.76bp Markit iTraxx Europe -0.23bps at 111.34bp Markit iTraxx Xover -1.99bps at 445.97bp Markit CDX IG -3.22bps at 82.12bp Sources: FT, Bloomberg, Markit
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US Consumer Price Index (MoM)

Location: United States

Date: 16/04/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 0.7% / Consensus: 0.1%

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 (YoY)

Location: United States

Date: 16/04/2013

Time: 13:30 - 14:30

Strength: 3/3

Previous: 2.0% / Consensus: 1.7%

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 Building Permits (MoM)

Location: United States

Date: 16/04/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 0.946M / Consensus: 0.943M

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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US Housing Starts (MoM)

Location: United States

Date: 16/04/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 0.917M / Consensus: 0.924M

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 Consumer Price Index Ex Food & Energy (MoM)

Location: United States

Date: 16/04/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 0.2% / 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 Ex Food & Energy (YoY)

Location: United States

Date: 16/04/2013

Time: 13:30 - 14:30

Strength: 3/3

Previous: 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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