The 6am Cut

London 6am Cut Posted 2013-06-14 05:34:20 by FT Alphaville COMMENT AND CURIOS - America's economy: the stealth boom. - Jonthan Portes on UK immigration. - Breakthrough with Honduran charter cities. - What is neoclassical economics? - David Beckworth's proposal for fiscalist and monetarist cooperation. - Sympathy for the Luddites. ROUND-UP Bond sales dry up as interest rates rise: "The number of companies tapping the bond market has collapsed as a result of rising interest rates, threatening to halt a global refinancing wave that helped companies boost earnings and strengthen balance sheets. Bond investors have retrenched in the face of increasing market volatility since Fed chairman Ben Bernanke hinted on May 22 at a possible "tapering" of US quantitative easing. This has left companies unable to raise financing on previously beneficial terms." (Financial Times) Fear Hester exit will speed RBS defections: "The ousting of Stephen Hester as Royal Bank of Scotland's chief executive has sent staff confidence to "rock bottom" and is set to accelerate a recent wave of defections from the group's investment bank, senior insiders have warned. Shares in the bank, which is 82 per cent state-owned, initially fell 8 per cent on Thursday morning, with investors taking fright at the prospect of greater political interference in RBS's management as well as a likely delay of its reprivatisation timetable. The shares later recovered to close down 3 per cent at 315p." (Financial Times) House prices in England and Wales top pre-credit crunch high: "House prices in England and Wales rose to a record last month, beating their pre-recession peak, as government measures to boost home ownership started to stimulate the market. A month-on-month rise of 0.4 per cent in May, to £233,061, took the annual growth rate to 2.7 per cent, according to the LSL/Acadametrics house price index, which the Financial Times helped set up." (Financial Times) Rupert Murdoch filed for divorce. Mr Murdoch's marriage with Wendi Deng Murdoch, his third wife, had "broken down irretrievably for a period of more than six months". Ms Murdoch does not have equity in News Corp, and has no voting rights. (Financial Times) Ashley Bacon is JPMorgan's new head of risk. Bacon, a Jamie Dimon favourite, survived the heat of a recent Senate hearing into the London Whale trades, having been brought in to deal with the debacle. John Hogan will move from chief risk officer to "chairman of risk" on the bank's operating committee, but is ultimately likely to step down from the group of executives that run JPMorgan. (Financial Times) "Naturally occurring" human genes cannot be patented, the Supreme Court ruled. However, the decision also said that patents could be valid for synthetic DNA modified in a lab. The case involved patents by Myriad Genetics, a Utah biotech company, on two genes whose mutations have been linked to breast and ovarian cancer. "A naturally occurring DNA segment is a product of nature and not patent-eligible merely because it has been isolated," Justice Clarence Thomas wrote in the unanimous ruling. (Financial Times) Brazil acts after real hits four-year low: "Brazil has reduced a financial transactions tax on currency derivatives to zero after its currency, the real, hit four-year lows against the dollar on Wednesday. The measure was the second such move in a week to dismantle currency controls as the government sounds a rapid retreat from its earlier "currency war" against foreign capital inflows." (Financial Times) Hopes for G8 trade and tax deals dented: "Hopes of a deal to boost the world economy at next week's Group of Eight summit were in the balance on Thursday night, as France and Canada resisted a last-minute push for an ambitious trade and tax package. France's refusal to include its film industry in EU-US trade negotiations has thrown into doubt plans to launch talks on Monday, when European leaders meet Barack Obama, US president, at the summit in Northern Ireland." (Financial Times) Germany seeks to halt EU-Turkey talks over handling of protests: "Germany is seeking to delay EU membership talks with Turkey scheduled for this month, in response to Ankara's crackdown on mass demonstrations that have shaken the government of Recep Tayyip Erdogan. The prospect that the negotiations – a potential turning point in the long and troubled relationship between Ankara and the bloc – could be put on hold came as the Turkish prime minister delivered a "final warning" to protesters that they were no longer safe to remain in Istanbul's Gezi Park, epicentre of the demonstrations." (Financial Times) OVERNIGHT MARKETS Asian markets Nikkei 225 up +298.97 (+2.40%) at 12,744 Topix up +25.02 (+2.40%) at 1,069 Hang Seng up +206.46 (+0.99%) at 21,094 US markets S&P 500 up +23.84 (+1.48%) at 1,636 DJIA up +180.85 (+1.21%) at 15,176 Nasdaq up +44.93 (+1.32%) at 3,445 European markets Eurofirst 300 down -0.81 (-0.07%) at 1,174 FTSE100 up +5.18 (+0.08%) at 6,305 CAC 40 up +4.28 (+0.11%) at 3,798 Dax down -47.88 (-0.59%) at 8,095 Currencies €/$ 1.33 (1.34) $/¥ 94.91 (95.36) £/$ 1.57 (1.57) Commodities ($) Brent Crude (ICE) down -0.15 at 104.80 Light Crude (Nymex) up +0.06 at 96.75 100 Oz Gold (Comex) up +6.30 at 1,384 Copper (Comex) up +0.03 at 3.21 10-year government bond yields (%) US 2.15% UK 2.15% Germany 1.56% CDS (closing levels) Markit iTraxx SovX Western Europe +1.35bps at 90.9bp Markit iTraxx Europe +0.51bps at 112.72bp Markit iTraxx Xover +0.95bps at 471.98bp Markit CDX IG -5.14bps at 82.22bp Sources: FT, Bloomberg, Markit
#END

US Retail Sales (MoM)

Location: United States

Date: 13/06/2013

Time: 13:30 - 14:30

Strength: 3/3

Previous: 0.1% / Consensus: 0.4%

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).

#END

US Initial Jobless Claims

Location: United States

Date: 13/06/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 346K

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.

#END

US Retail Sales ex Autos (MoM)

Location: United States

Date: 13/06/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: -0.1% / Consensus: 0.3%

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.

#END

The 6am Cut

London 6am Cut Posted 2013-06-13 05:40:26 by FT Alphaville COMMENT AND CURIOS - "The Purest Political Economist of Them All: Albert Hirschman's Legacy", by Dan Drezner. - What the sharp rise in real interest rates means for the US economy. - Should Japan default? - Overt monetary financing and crisis management. - The biggest economic mystery of 2013: What's up with inflation? - Google offers some detail about how it transfers data to the US government. ROUND-UP Stephen Hester will step down as RBS chief executive at the end of the year. Hester parted ways with the bank after the UK government, its part-owner, and the RBS board decided that a fresh face should lead a five-year transition to normal commercial banking again. "Having brought RBS back from the brink, now is the time to move on from the rescue phase," Chancellor George Osborne said (Financial Times). Hester is the sixth chief executive to leave a British bank since the financial crisis began, including his predecessor at RBS, Fred Goodwin. The RBS board will launch a formal search for a successor (Wall Street Journal). Yen's rise through Y95 hits Japanese shares hard: "Japanese stocks fell sharply after the yen rose to its strongest level against the US dollar since the first week of April. The Nikkei 225 sank 5.6 per cent in morning trading, while the Japanese currency broke through Y95 per dollar for the first time in two months. Fast Retailing, the largest weighted stock on the Japanese index, dropped 6.9 per cent, while Softbank lost 8.7 per cent. The broader Topix index fell 4.2 per cent" North Dakota's fields helped spur the biggest annual jump in oil production in US history last year. The 14 per cent increase to 8.9 million barrels per day was also the largest around the world in 2012, according to BP's statistical review (Wall Street Journal). The EU abandoned data-privacy safeguards that would have limited US spying on European citizens after lobbying by the Obama administration. The 'anti-Fisa clause' was removed from legislation in January 2012. It would have nullified US requests to hand over data, but was also opposed by many commissioners from EU member-states who did not want to antagonise the US as an ally (Financial Times). Apollo Tyres will pay $2.5bn for Cooper Tire, the biggest-ever US acquisition by an Indian company. The $35 per share all-cash offer is a 43 per cent premium to Cooper's closing price on Tuesday, and will allow Apollo Tyres to diversify away from a slowdown in India's car market (Financial Times). UK MPs demand Google tax revamp: "MPs have demanded urgent changes to Google's "highly contrived" tax arrangements in a hard-hitting report that said the internet giant's tax avoidance had damaged its reputation and that of HM Revenue & Customs. The public accounts committee said Google put the "enormous profit" derived from the UK out of reach of its tax system. It said Google's defence of its tax position by claiming that its sales of advertising space to UK clients take place in Ireland was "deeply unconvincing"." (Financial Times) UK regulator investigates FX rates trade: "The UK markets watchdog has launched a preliminary investigation into the foreign exchange market after receiving complaints alleging that banks traded ahead of customer orders and attempted to manipulate benchmarks. The Financial Conduct Authority requested information from several banks with large London foreign exchange businesses about their trading, people familiar with the matter said. " (Financial Times) OVERNIGHT MARKETS Asian markets Nikkei 225 down -579.30 (-4.36%) at 12,710 Topix down -40.11 (-3.66%) at 1,056 Hang Seng down -572.49 (-2.68%) at 20,782 US markets S&P 500 down -13.61 (-0.84%) at 1,613 DJIA down -126.79 (-0.84%) at 14,995 Nasdaq down -36.52 (-1.06%) at 3,400 European markets Eurofirst 300 down -4.78 (-0.41%) at 1,175 FTSE100 down -40.63 (-0.64%) at 6,299 CAC 40 down -16.86 (-0.44%) at 3,794 Dax down -79.19 (-0.96%) at 8,143 Currencies €/$ 1.34 (1.33) $/¥ 94.77 (96.00) £/$ 1.57 (1.57) Commodities ($) Brent Crude (ICE) down -0.38 at 103.11 Light Crude (Nymex) down -0.50 at 95.38 100 Oz Gold (Comex) down -0.90 at 1,391 Copper (Comex) unchanged 0.00 at 3.23 10-year government bond yields (%) US 2.20% UK 2.18% Germany 1.60% CDS (closing levels) Markit iTraxx SovX Western Europe +0.33bps at 89.55bp Markit iTraxx Europe +1.31bps at 112.21bp Markit iTraxx Xover +7.95bps at 471.03bp Markit CDX IG +1.9bps at 87.36bp Sources: FT, Bloomberg, Markit
#END

US Monthly Budget Statement

Location: United States

Date: 12/06/2013

Time: 19:00 - 20:00

Strength: 2/3

Previous: 112.9B / Consensus: -110.0B

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.

#END

US 10-Year Note Auction

Location: United States

Date: 12/06/2013

Time: 18:00 - 19:00

Strength: 2/3

Previous: 1.81%

Notes: Displayed in the calendar is the average yield on the notes auctioned by US Department of Treasury. US notes have maturities of 2, 3, 5, 7, and 10 years and pay interest every six months. The yield on the bonds 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.

#END

DE Germany Constitutional court ruling on OTM bond buying

Location: Germany

Date: 12/06/2013

Time: 11:00 - 12:00

Strength: 3/3

Previous:

Notes: Germany constitutional court is scheduled to rule about the legality latest ECBs bond buying program, the OTM.

#END

EMU Industrial Production w.d.a. (YoY)

Location: European Monetary Union

Date: 12/06/2013

Time: 10:00 - 11:00

Strength: 2/3

Previous: -1.7% / Consensus: -1.4%

Notes: The Industrial Production is released by the Eurostat. It shows the volume of production of Industries such as factories and manufacturing. Up trend is regarded as inflationary which may anticipate interest rates to rise. Usually, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the EUR, while low industrial production is seen as a negative sentiment (or bearish).

#END

UK Average Earnings including Bonus (3Mo/Yr)

Location: United Kingdom

Date: 12/06/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 0.4%

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

#END

UK Claimant Count Change

Location: United Kingdom

Date: 12/06/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous: -7.3K / Consensus: -7.0

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).

#END

UK ILO Unemployment Rate (3M)

Location: United Kingdom

Date: 12/06/2013

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.

#END

UK Claimant Count Rate

Location: United Kingdom

Date: 12/06/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 4.5%

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.

#END

DE Consumer Price Index (YoY)

Location: Germany

Date: 12/06/2013

Time: 7:00 - 8:00

Strength: 3/3

Previous: 1.1% / Consensus: 1.5%

Notes: The Germany consumer price index released by the Statistiches Bundesamt Deutschland measures the average price change for all goods and services purchased by households for consumption purposes. CPI is the main indicator to measure inflation and changes i

#END

DE Consumer Price Index (MoM)

Location: Germany

Date: 12/06/2013

Time: 7:00 - 8:00

Strength: 2/3

Previous: -0.5% / Consensus: 0.4%

Notes: The Germany consumer price index released by the Statistiches Bundesamt Deutschland measures the average price change for all goods and services purchased by households for consumption purposes. CPI is the main indicator to measure inflation and changes i

#END