The 6am Cut

6am Cut London Posted 2013-05-14 05:46:45 by Kate Mackenzie Asian shares rose for a second day and the yen strengthened slightly, after better than expected US retail sales. The MSCI Asia Pacific index was 0.2% higher as gains were limited by fears that positive data may lead the Fed to scale back its bond-buying. The Nikkei was 0.13% higher. (Financial Times)(Bloomberg) Regulator queries 1m swaps transactions: The CFTC has issued a "special call" asking Wall Street banks, commodities traders and hedge funds to provide documents that would prove recent derivatives transactions known as "exchanges of futures for swaps" were legal. Lawyers at the CFTC enforcement division are also scrutinising the trades for possible violations. Goldman Sachs, JP Morgan and Citi are among the banks that received requests, which cover EFS executed following the passage of the Dodd-Frank financial reform law in 2010 until this year, people familiar with the inquiry said. EFS are two-step transactions used for commodity deals, often in illiquid markets. (Financial Times) Help to Buy scheme already appears to be boosting UK housing: The scheme, announced in the Budget in March, has helped raise inquiries by new buyers to their highest level since November 2009, according to a Royal Institute of Chartered Surveyors poll. Twenty-five per cent more chartered surveyors recorded an increase in demand for property than a fall in April, up from 13 per cent in March, Rics said on Tuesday. (Financial Times) Big European clothing retailers signed garment factory safety agreement, US peers less keen: H&M, Inditex and Tesco signed the five-year legally bindin accord designed to improve safety conditions in Bangladesh's garment factories after a building collapse last month killed at least 1,127 workers. But major US retailers including Wal-Mart, Sears, and JC Penney have so far demured, while Gap said it wouldn't sign the agreement in its current form. (Wall Street Journal) France is preparing to tax smartphones, tablets and all other internet-linked devices to help fund the production of French art, films and music. (Financial Times) Glass Lewis recommends against Goldman compensation: The investor advisory cited a "disconnect between pay and performance" in its recommendation that shareholders vote against the executive compensation plan and the re-election of James Johnson, head of the board's compensation committee and former chief executive of US mortgage giant Fannie Mae. (Financial Times) Fitch questions Seagram Building bond ratings: Fitch Ratings, which was frozen out of the deal, has criticised a securitisation backed by the Seagram Building located at 375 Park Avenue, home to the Four Seasons restaurant, after digging into the details of the underlying mortgage on the property. The top tranche of the $440m of bonds, marketed by Citi, are rated triple A by Moody's and Kroll Bond Ratings, but Fitch says the tranche should be no higher than single A based on its assessment of future rental income. (Financial Times) COMMENT AND CURIOS: - RBS and Lloyds are slowing Britain's economic recovery. (Wall Street Journal) - Andrew Ross Sorkin (ft. Hank Paulson) makes the case for Jamie Dimon retaining dual role. (NYT Dealbook) - Hedge funds that were once bearish on the euro have turned bullish. (Financial Times) - Saudis welcome US shale as locking in a future for oil. (Financial Times) - Japan, China and South Korea vie to take advantage of melting Arctic ice. (Bloomberg) - 'Zombie-like' Lehman seeks millions from retirement homes, hospitals and colleges. (Bloomberg) - James Mackintosh: Beware the biotechs stock boom. (Financial Times) - Selling the Australian dollar, buying the Mexican peso to trade China slowdown. (Wall Street Journal) - Emerging markets turn sour for global banks. (Financial Times) - Richard Bernstein: Smaller, domestically-focused US companies are outperforming. (Financial Times) OVERNIGHT MARKETS: UP SLIGHTLY Asian markets Nikkei 225 up +19.04 (+0.13%) at 14,801 Topix up +0.79 (+0.06%) at 1,233 Hang Seng down -28.13 (-0.12%) at 22,962 US markets S&P 500 up +0.07 (0.00%) at 1,634 DJIA down -26.81 (-0.18%) at 15,092 Nasdaq up +2.21 (+0.06%) at 3,439 European markets Eurofirst 300 down -2.44 (-0.20%) at 1,231 FTSE100 up +6.78 (+0.10%) at 6,632 CAC 40 down -8.63 (-0.22%) at 3,945 Dax up +0.70 (+0.01%) at 8,279 Currencies €/$ 1.30 (1.30) $/¥ 101.60 (101.77) £/$ 1.53 (1.53) Commodities ($) Brent Crude (ICE) up +0.03 at 102.85 Light Crude (Nymex) up +0.19 at 95.36 100 Oz Gold (Comex) up +4.40 at 1,439 Copper (Comex) down -2.95 at 333.25 10-year government bond yields (%) US 1.91% UK 1.90% Germany 1.36% CDS (closing levels) Markit iTraxx SovX Western Europe -0.3bps at 89.59bp Markit iTraxx Europe +3.96bps at 96.82bp Markit iTraxx Xover +13.5bps at 396.2bp Markit CDX IG +1.46bps at 73.48bp Sources: FT, Bloomberg, Markit
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UK RICS Housing Price Balance

Location: United Kingdom

Date: 13/05/2013

Time: 0:01 - 1:01

Strength: 2/3

Previous: -1% / Consensus: 2%

Notes: The RICS Housing Price Balance survey released by the Royal Institution of Chartered Surveyors presents housing costs in the UK. It shows the strength of the UK housing market, which can be considered as the economy as a whole, as the housing market is sensitive to the business cycle. 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 Retail Sales ex Autos (MoM)

Location: United States

Date: 13/05/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: -0.4% / Consensus: -0.1%

Notes: The Retail Sales ex Autos released by the US Census Bureau is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes except the automobile sector. The retail sales index is often taken as an indicator of consumer confidence. This report is the "advance report, which can be revised fairly significantly after the final numbers are calculated. The positive economic growth anticipates bullish movements for the USD.

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US Retail Sales (MoM)

Location: United States

Date: 13/05/2013

Time: 13:30 - 14:30

Strength: 3/3

Previous: -0.4% / Consensus: -0.2%

Notes: The retail Sales released by the US Census Bureau measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. 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 Monthly Budget Statement

Location: United States

Date: 10/05/2013

Time: 19:00 - 20:00

Strength: 2/3

Previous: -106.5B / Consensus: 106.5B

Notes: The Monthly Budget Statement released by the Financial Management Service summarizes the financial activities of federal entities, disbursing officers, and Federal Reserve banks. A positive budget statement that receipts exceed budgetary outlays is seen as bullish for the USD. On the other hands, a negative figure (deficit) that indicates government debt is seen as bearish.

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US Fed's Bernanke Speech

Location: United States

Date: 10/05/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous:

Notes: The fed Governor Ben Shalom Bernanke was born in 1953. He graduated from Harvard University and a Ph.D. in economics in 1979 from the Massachusetts Institute of Technology. In 2006 he became the Chairman of the Federal Reserve System. He gives a press conference as to how the Fed observes the current U.S. economy and the value of USD. His comments may determine a short-term positive or negative trend.

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UK Goods Trade Balance

Location: United Kingdom

Date: 10/05/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: -�9.416B / Consensus: -�9.000B

Notes: The trade balance released by the is a balance between exports and imports of goods A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the GBP. If a steady demand in exchange for UK exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the GBP.Review Alex Nekritin's Article - Trading British Pound with UK Trade Balance

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DE Trade Balance s.a.

Location: Germany

Date: 10/05/2013

Time: 7:00 - 8:00

Strength: 2/3

Previous: �17.1B / Consensus: �16.5B

Notes: The Trade Balance released by the Statistiches Bundesamt Deutschland is a balance between exports and imports of total goods and services. A positive value shows a trade surplus, while a negative value shows a trade deficit. It is an event that generates some volatility for the EUR. If a steady demand in exchange for German exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the EUR. Review Alex Nekritin's Article - Trading the Euro with Germany Trade Balance

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The 6am Cut

6am Cut London Posted 2013-05-10 05:47:26 by Kate Mackenzie Asian stocks were higher, particularly in Japan where the Nikkei soared nearly 3% and the Topix headed for a new multi-year high as the yen weakened beyond 100 per dollar. Most other Asian benchmarks were weaker with the Hang Seng falling 0.1% and the Kospi down 1.3%, while the ASX rose 0.4%. (Bloomberg) Yen weakens further beyond 100: The currency touched 101.2 against the dollar in Tokyo morning trade, its weakest level since April 6, 2009. Meanwhile current account data published today shows Japanese investors were net buyers of foreign bonds in the past two weeks, after six straight weeks of sales. Such moves will be a key determinant of the yen's future direction. The current account surplus for March was Y1.25tn, the highest in a year, boosted by repatriated earnings. (Bloomberg)(Financial Times) ENRC blasted in Kofi Annan report for costing Congo $725m: Deals cut by the FTSE 100 miner are lambasted for "opaque concession trading" in a report to be published today by the Africa Progress Panel, chaired by Kofi Annan. The report calculates that the Democratic Republic of Congo incurred losses of $1.36bn between 2010 and 2012 as a result of the alleged undervaluation of state assets in five mining deals, three of which involve ENRC. (Financial Times) Hester wants to lead RBS to reprivatisation: The bank's CEO signals determination to lead the sell-off, saying he does not regard his job as "time limited by me". Stephen Hester also said the government had been "Overwhelmingly... very good at treading the balance," in contrast to the fractiousness of a few months ago when RBS management was clearly furious at the government's level of interference in its operations. (Financial Times) UK accounting watchdog has launched two KPMG probes: "The Financial Reporting Council said on Thursday it was investigating whether KPMG was independent when it audited car dealer Pendragon's financial statements for 2010 and 2011 as well as looking into a "non-timely disposal of a shareholding" in a client by a KPMG member." It also faces a possible government inquiry over its HBOS audits. (Financial Times) Vietnam said it would cut interest rates to boost economic growth. The central bank will cutthe refinancing rate to 7% from 85 effective May 13, and the discount rate will be reduced to 5% from 6%. (Bloomberg) Schäuble warns of central bank stimulus risks: "German Finance Minister Wolfgang Schäuble on Thursday said the wave of stimulus provided by central banks around the world is causing "critical problems," as it may prompt investors to make bad decisions." (Wall Street Journal) Cameron seeks to reassure investors on EU membership: "David Cameron sought to reassure international investors that Britain's future lay within the European Union on Thursday, denouncing as "pessimists" those in his party demanding an immediate exit." (Financial Times) MPs back third Heathrow runway: "The Commons transport select committee rejected the case for a new hub airport in the Thames estuary – as promoted by Boris Johnson, London's mayor – and instead recommended that Heathrow should get a third and possibly a fourth runway." (Financial Times) COMMENT AND CURIOS: - Gillian Tett: US household debt-to-income ratios are now below Europe's. (Financial Times) - Martin Wolf: The time for UK's decision on EU is now, not 2017. (Financial Times) - Greece and Portugal make bailout progress but unemployment rises. (Wall Street Journal) - Swiss watch sales suffering from China graft crackdown. (Bloomberg) - Lots of central bank cuts, but still not much growth. (Bloomberg) - Who could really watch over Jamie Dimon? (Financial Times) - The trouble with Jens Weidmann. (Bloomberg) OVERNIGHT MARKETS: UP (IN JAPAN) Asian markets Nikkei 225 up +419.74 (+2.96%) at 14,611 Topix up +27.73 (+2.35%) at 1,210 Hang Seng down -39.28 (-0.17%) at 23,172 US markets S&P 500 down -6.02 (-0.37%) at 1,627 DJIA down -22.50 (-0.15%) at 15,083 Nasdaq down -4.10 (-0.12%) at 3,409 European markets Eurofirst 300 down -0.28 (-0.02%) at 1,229 FTSE100 up +9.26 (+0.14%) at 6,593 CAC 40 down -27.70 (-0.70%) at 3,929 Dax up +12.84 (+0.16%) at 8,263 Currencies €/$ 1.30 (1.30) $/¥ 100.93 (100.59) £/$ 1.54 (1.54) Commodities ($) Brent Crude (ICE) down -0.20 at 104.27 Light Crude (Nymex) down -0.25 at 96.14 100 Oz Gold (Comex) down -12.10 at 1,457 Copper (Comex) down -0.70 at 333.45 10-year government bond yields (%) US 1.84% UK 1.80% Germany 1.27% CDS (closing levels) Markit iTraxx SovX Western Europe +0.53bps at 90.02bp Markit iTraxx Europe +1.11bps at 92.86bp Markit iTraxx Xover +4.61bps at 379.09bp Markit CDX IG +2.11bps at 70.95bp Sources: FT, Bloomberg, Markit
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US Initial Jobless Claims

Location: United States

Date: 09/05/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 324K / Consensus: 335K

Notes: The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market which influences the strength and direction of the US economy. Generally speaking, a decreasing number should be taken as positive or bullish for the USD.

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UK BoE Asset Purchase Facility

Location: United Kingdom

Date: 09/05/2013

Time: 12:00 - 13:00

Strength: 3/3

Previous: �375B / Consensus: �375B

Notes: The Asset Purchase Facility is the value of money the BoE plans to create and inject into the economy through open market bond purchases as a way to influence long-term interest rates. This monetary policy tool is also called Quantitative Easing.

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UK BoE Interest Rate Decision

Location: United Kingdom

Date: 09/05/2013

Time: 12:00 - 13:00

Strength: 3/3

Previous: 0.5% / Consensus: 0.5%

Notes: BoE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the U.K. economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.Review Alex Nekritin's Article - Trading British Pound with BoE Rate Decision

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UK Industrial Production (YoY)

Location: United Kingdom

Date: 09/05/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: -2.2% / Consensus: -1.6%

Notes: The Industrial Production released by The National Statistics measures outputs of the U.K. factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. A high reading is seen as po

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UK Manufacturing Production (YoY)

Location: United Kingdom

Date: 09/05/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: -1.4% / Consensus: -2.0%

Notes: The Manufacturing Production released by the National Statistics measures the manufacturing output. Manufacturing Production is significant as a short term indicator of the strength of UK manufacturing activity that dominates a large part of total GDP. 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 2013-05-09 05:46:34 by Kate Mackenzie Asian stocks outside Japan climbed as the Bank of Korea cut interest rates and News Corp's earnings beat estimates. Japanese stocks were subdued as the yen strengthened. (Bloomberg) Today: The BoE's MPC meets and is expected to maintain its target for asset purchases. Jobless-claims data will be released in the US. Chinese inflation nudged higher in April on the back of soaring vegetable prices but the data also pointed to industrial overcapacity and a fragile economic recovery." The CPI for April was 2.4% higher, year-on-year, after slowing to 2.1% in March. However core inflation remained subdued with the non-food index rising just 1.6%, and producer prices fell deeper into inflationary territory, declining 2.6%, a six-month low. (Financial Times) South Korea's central bank cut rates. The Bank of Korea lowered its benchmark seven-day repo rate to 2.5% from 2.75% today, in the same month as official rates were cut in the eurozone, India and Australia. The strong Wonhas put increasing pressure on the country's exporters in recent months as Japan has successfully weakened its own currency, and the Bank has come under heavy pressure to ease monetary policy from the new administration of President Park Geun-hye. (Bloomberg)(Financial Times)(Wall Street Journal) New City regulator swoops on banks and asset managers: Site visits to London offices of the world's biggest banks and asset managers are focusing on "transition management" services, such as custodian banks liquidate or move securities portfolios on behalf of pension and retail funds, or when funds are combined or change providers. "The site visits, people familiar with the situation said, are the most dramatic example yet of the Financial Conduct Authority's focus on ensuring that wholesale markets participants protect the interests of end users... the new sweep makes clear that the entire industry is facing scrutiny." (Financial Times) Jobs in both Australia and New Zealand surged according to data released today. "The number of people employed in Australia rose by 50,100 in April from a month earlier, more than four times economists' estimates, and the jobless rate unexpectedly fell to 5.5 percent, government data showed today. New Zealand employers added a record 38,000 jobs last quarter and its unemployment plunged to a three-year low of 6.2 percent. Economists expected 6.8 percent." The news boosted currencies of both countries, which their respective central banks have been battling to contain. (Bloomberg) Cable channels lift News profits: "Net income at News Corporation climbed to $2.85 billion, or $1.22 a share, compared with $937 million, or 38 cents a share, in the same period last year, the company reported on Wednesday." (New York Times) "JPMorgan Chase has been warned of a probable enforcement action by the Federal Energy Regulatory Commission, the bank acknowledged on Wednesday, the latest in a litany of legal woes for the Wall Street firm. The disclosure in a quarterly filing was made after Jamie Dimon, chief executive, met about 100 officials from the Office of Comptroller of the Currency and Federal Reserve, when he pledged to iron out a string of compliance problems and force his staff to co-operate with regulators." (Financial Times) Green bank directs £2.3bn into UK energy projects: The Green Investment Bank said today that it had committed £635m to almost a dozen wind, waste and energy-efficiency projectsaround the country in its first five months. The deals pulled in another £1.7bn of private funds, meaning that a total of £2.3bn will be invested in 11 UK green projects." (Financial Times) A fire at a garment factory in Dhaka killed at least seven people, highlighting the dangers plaguing the Bangladeshi clothing industry two weeks after another factory collapsed in the country's worst industrial disaster, which killed at least 892 people. (Bloomberg) Former Enron CEO Jeffrey Skilling's jail term could be shortened to 14 years from 24, under a deal reached with the Department of Justice. (Financial Times) COMMENT AND CURIOS: - Junk bonds below 5% for first time. (Wall Street Journal)(FT Alphaville) - David Pilling: Japan is revived by China and the post-tsunami spirit. (Financial Times) - Roger Altman: Bond markets are to blame for austerity, not politicians. (Financial Times) - Goldman said to earn $500m from arranging Malaysian bond sale. (Bloomberg) - European gas-fired plants mothballed amid cheap US coal influx. (Wall Street Journal) - Lex In-Depth on HP and Autonomy. (Financial Times) - Does splitting the CEO/chairman role actually help? (Wall Street Journal) OVERNIGHT MARKETS: MIXED Asian markets Nikkei 225 up +17.08 (+0.12%) at 14,303 Topix down -4.21 (-0.35%) at 1,190 Hang Seng down -64.83 (-0.28%) at 23,180 US markets S&P 500 up +6.73 (+0.41%) at 1,633 DJIA up +48.92 (+0.32%) at 15,105 Nasdaq up +16.64 (+0.49%) at 3,413 European markets Eurofirst 300 up +8.49 (+0.70%) at 1,229 FTSE100 up +26.18 (+0.40%) at 6,583 CAC 40 up +34.96 (+0.89%) at 3,956 Dax up +67.93 (+0.83%) at 8,250 Currencies €/$ 1.32 (1.32) $/¥ 98.77 (98.99) £/$ 1.55 (1.55) Commodities ($) Brent Crude (ICE) up +0.11 at 104.45 Light Crude (Nymex) up +0.03 at 96.65 100 Oz Gold (Comex) down -2.20 at 1,472 Copper (Comex) down -3.05 at 334.05 10-year government bond yields (%) US 1.81% UK 1.78% Germany 1.27% CDS (closing levels) Markit iTraxx SovX Western Europe +0.06bps at 89.49bp Markit iTraxx Europe +2.23bps at 91.75bp Markit iTraxx Xover +3.56bps at 374.48bp Markit CDX IG -1.78bps at 68.84bp Sources: FT, Bloomberg, Markit
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