The 6am Cut

6am Cut London Posted 2013-07-04 05:46:33 by Kate Mackenzie Asian stocks outside Japan rose after better than expected private sector US jobs data. Japanese stocks were slightly lower. The MSCI Asia Pacific was 0.2% higher in subdued trading ahead of today's July 4 holiday in the US. (Bloomberg)(Financial Times) US reacts cautiously to Morsi's ouster: A carefully-written statement issued by the White House on Wednesday evening about the ouster of Egyptian President Mohamed Morsi carefully avoided using the word "coup" or putting any label on the events. (Financial Times) Interviews for new RBS chief begin: "Sir Philip Hampton, chairman, has drawn up a list of four or five names and aims to finalise the process by the time of the bank's second-quarter results in a month's time, said people close to the exercise." (Financial Times) Peripheral bond yields jumped as investors grew nervous about the prospects of an early election in Portugal and another showdown between Greece and its creditors. In Portugal, Pedro Passos Coelho is struggling to hold his coalition together as political upheaval may undermine the country's efforts to exit its €78bn aid programme on schedule. A eurozone official said it was possible European finance ministers may decide on Monday to delay Greece's next aid instalment by three months, but added such a decision was unlikely. (Financial Times)(Reuters) China is considering a dramatic relaxation of its capital controls over the next few years as part of an accelerated push to make its currency freely tradable, despite international advisers warning against hasty implementation of reform. (Financial Times) Rupert Murdoch has dismissed investigations into phone hacking and other press abuses as "the biggest inquiry ever over next to nothing" in secretly recorded comments to Sun journalists that were broadcast on Channel 4. (Financial Times) NTT DoCoMo weighs overseas acquisitions: Kaoru Kato, DoCoMo's president and CEO, told the FT the group would consider buying assets outside Japan "if a good opportunity arose". (Financial Times) Sprint Nextel-Softbank deal said to meet FCC approval: "U.S. regulators on Wednesday collected the final vote to approve the merger of Sprint Nextel and SoftBank, sources familiar with the situation said, clearing the last hurdle in the Japanese company's drawn-out battle to take control of the No. 3 U.S. wireless provider." (Reuters) Russian oil shipments to Europe have slumped to a 10-year low, forcing refineries across the continent to pay more for scarce supplies. (Financial Times) COMMENT AND CURIOS: - Global fund managers are pulling money out of Chinese stocks in the largest outflow since 2008. (Wall Street Journal) - David Pilling: Japan is not ready for Abe's fourth arrow of consumption tax increase. (Financial Times) - Portugal's woes shine light on the rest of the eurozone periphery. (Reuters) OVERNIGHT MARKETS: MIXED Asian markets Nikkei 225 down -21.60 (-0.15%) at 14,034 Topix down -4.05 (-0.35%) at 1,170 Hang Seng up +353.88 (+1.76%) at 20,501 US markets S&P 500 up +1.33 (+0.08%) at 1,615 DJIA up +56.14 (+0.38%) at 14,989 Nasdaq up +10.27 (+0.30%) at 3,444 European markets Eurofirst 300 down -7.87 (-0.68%) at 1,151 FTSE100 down -74.07 (-1.17%) at 6,230 CAC 40 down -40.56 (-1.08%) at 3,702 Dax down -81.45 (-1.03%) at 7,829 Currencies €/$ 1.30 (1.30) $/¥ 99.82 (99.87) £/$ 1.53 (1.53) Commodities ($) Brent Crude (ICE) down -0.25 at 105.51 Light Crude (Nymex) up +0.01 at 101.25 100 Oz Gold (Comex) up +2.00 at 1,254 Copper (Comex) down -0.01 at 3.16 10-year government bond yields (%) US 2.50% UK 2.42% Germany 1.66% CDS (closing levels) Markit iTraxx SovX Western Europe +3.93bps at 98.6bp Markit iTraxx Europe +2.68bps at 116.55bp Markit iTraxx Xover +9.96bps at 464.66bp Markit CDX IG -0.51bps at 85.44bp Sources: FT, Bloomberg, Markit
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US Trade Balance

Location: United States

Date: 03/07/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: -$40.29B / Consensus: -$40.10B

Notes: The Trade Balance released by the Bureau of Economic Analysis and the U.S. Census Bureau is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the USD. If a steady demand in exchange for US exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the USD.Review Alex Nekritin's Article - Trading US Dollar with US Trade Balance

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US ADP Employment Change

Location: United States

Date: 03/07/2013

Time: 13:15 - 14:15

Strength: 2/3

Previous: 135K / Consensus: 160K

Notes: The Employment Change released by the Automatic Data Processing, Inc is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. So a high reading is traditionally seen as positive, or bullish for the USD, while a low reading is seen as negative, or bearish.

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UK Markit Services PMI

Location: United Kingdom

Date: 03/07/2013

Time: 9:28 - 10:28

Strength: 2/3

Previous: 54.9 / Consensus: 54.5

Notes: The PMI service released by both the Chartered Institute of Purchasing & Supply and the Markit Economics is an indicator of the economic situation in the UK services sector. It captures an overview of the condition of sales and employment. It is worth noting that the UK service sector does not influence, either positively or negatively, the GDP as much as the Manufacturing PMI does. Traders want the highest possible reading as that will be taken as positive for the GBP. Any reading above 50 signals expansion, while a reading under 50 shows contraction.

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DE Markit Services PMI

Location: Germany

Date: 03/07/2013

Time: 8:53 - 9:53

Strength: 2/3

Previous: 49.7 / Consensus: 51.3

Notes: The Services PMI released by Markit Economics interviews German executives on the status of sales, employment, and their outlook. Because the performance of the German service sector is extremely consistent over time, services does not impact final GDP figures as much as the more volatile figure on the manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction.

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The 6am Cut

6am Cut London Posted 2013-07-03 05:31:35 by Kate Mackenzie Asian stocks fell and WTI crude oil rallied above $100for the first time in nine months on political turmoil in Egypt and shrinking US stockpiles. The Nikkei was 0.1% lower after rallying earlier in the day and the Hang Seng fell 1.9%. The yen, South Korea's won and Australia's dollar all fell and the US dollar strengthened against major currencies. (Bloomberg)(Reuters) TODAY: US ADP private employment figures; US initial jobless claims; European services PMIs. Egypt's Morsi defies army: In a rambling speech the president warned of bloodshed if he were removed. "Military sources told Reuters the army had drafted a plan to sideline Mursi and suspend the constitution after a 5 pm (1500 GMT) deadline passes." (Reuters)(Financial Times) Portuguese PM pledges to stay on amid threat of election: Pedro Passos Coelho says he will seek to establish a stable government despite the resignation of two key ministers and the threatened break-up of his ruling coalition. However, opposition parties called for an early general election, saying there was no possible solution for the governing coalition. (Financial Times) The Fed plans to introduce capital requirements that go beyond Basel III. At a board meeting yesterday in which the central bank agreed to force US banks comply with Basel III rules, it also outlined proposals including forcing the biggest banks to hold a higher leverage ratio, and capital charges targeted at banks most exposed to short-term wholesale funding. Officials have previously mentioned the ideas in speeches but not as firm policy goals. (Financial Times) Investors pulled a record $9.9bn from Pimco in June: It was the largest outflow in the 26-year history of Pimco's flagship Total Return bond fund. (Financial Times)(NYT Dealbook) China's services sector PMIs improved slightly in June, with the HSBC/Markit measure rising to 51.3 from 51.2 in May, but new orders sub-index was 50.5, its lowest since November 2008. (Reuters) "Moody's has placed the credit ratings of the three biggest US custody banks on review for a downgrade in a move that illustrates the continued pressure of record low interest rates on the businesses of some of the largest financial institutions. Bank of New York Mellon, Northern Trust and State Street would most likely see their ratings trimmed by one notch, Moody's said in a statement on Tuesday." (Financial Times) Former FBI head to lead BP compensation probe: Louis Freeh, a former FBI director, was appointed to investigate allegations of misconduct at the office administering compensation claims against BP for the 2010 Deepwater Horizon disaster after complaints from BP, which is paying higher levels of compensation than were expected. (Financial Times) National Australia Bank filed a $230m arbitration claim against Goldman Sachs: People familiar with the matter said the claim, filed with Finra in December, relates to Hudson 1, a $2bn CDO. A 2011 US Senate report on the causes of the financial crisis said Goldman began pitching Hudson 1 in October 2006 without disclosing in marketing materials that the firm also was betting against it. It would be among the biggest arbitration cases in recent years, according to Securities Arbitration Commentator. (Wall Street Journal) A US federal judge has approved HSBC's record $1.92bn settlement with federal and state investigators, over charges that it flouted rules on money laundering and transacting with countries under US sanctions. While noting "heavy public criticism" of the settlement, which enabled HSBC to escape criminal prosecution, US District Judge John Gleeson in Brooklyn, New York, called the decision to approve the accord "easy, for it accomplishes a great deal". (Reuters) China will probably miss its modest 2015 target for shale gas production, energy executives and analysts say. Meeting the target of 6.5bn cubic metres would require a 130-fold increase in 24 months. Complicated geology, lack of technical staff and regulations are thought to be the main barriers. (Financial Times) Oil companies won a US court case against new SEC rules that would force them to disclose payments to foreign governments. (Financial Times) COMMENT AND CURIOS: - Martin Wolf: Could China hit its stall speed? (Financial Times) - China's plans for financial reforms could lead to yet more instability. (Reuters) - What Ian Hannam is doing next. (Financial Times) - Some CFTC officials still fighting the agency's own new rules for trading abroad. (NYT Dealbook) - John Kay: Evolution, adaptation and economics. (Financial Times) - Is it the end of competitive politics in Japan? (Financial Times) - Why Brent is so high despite commodities fall. (Financial Times) - What will be the legacy of long-serving PBoC chairman Zhou? (Bloomberg) - Deutsche Borse plans to trade cloud computing capacity. (Financial Times) OVERNIGHT MARKETS: DOWN Asian markets Nikkei 225 down -15.27 (-0.11%) at 14,083 Topix up +1.24 (+0.11%) at 1,173 Hang Seng down -388.98 (-1.88%) at 20,270 US markets S&P 500 down -0.88 (-0.05%) at 1,614 DJIA down -42.55 (-0.28%) at 14,932 Nasdaq down -1.09 (-0.03%) at 3,433 European markets Eurofirst 300 down -4.81 (-0.41%) at 1,159 FTSE100 down -3.84 (-0.06%) at 6,304 CAC 40 down -24.91 (-0.66%) at 3,743 Dax down -73.15 (-0.92%) at 7,911 Currencies €/$ 1.30 (1.30) $/¥ 100.69 (100.62) £/$ 1.51 (1.52) Commodities ($) Brent Crude (ICE) up +0.80 at 104.80 Light Crude (Nymex) up +2.01 at 101.61 100 Oz Gold (Comex) up +3.70 at 1,247 Copper (Comex) unchanged 0.00 at 3.14 10-year government bond yields (%) US 2.47% UK 2.40% Germany 1.71% CDS (closing levels) Markit iTraxx SovX Western Europe -0.43bps at 94.67bp Markit iTraxx Europe -0.95bps at 113.87bp Markit iTraxx Xover -5.28bps at 454.7bp Markit CDX IG +1.46bps at 85.95bp Sources: FT, Bloomberg, Markit
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US FOMC Member Powell Speech

Location: United States

Date: 02/07/2013

Time: 22:45 - 23:45

Strength: 2/3

Previous:

Notes: Jerome H. Powell took office as FOMC member on May 25, 2012, to fill an unexpired term ending January 31, 2014. His comments may affect dollar, an therefore trigger a short term movement positive or negative trend.

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EMU Producer Price Index (YoY)

Location: European Monetary Union

Date: 02/07/2013

Time: 10:00 - 11:00

Strength: 2/3

Previous: -0.2% / Consensus: -0.3%

Notes: The Producer Price Index (PPI) released by the Eurostat is an index that measures the change in prices received by domestic producers of commodities in all stages of processing (crude materials, intermediate materials, and finished goods). Generally, a high reading is seen positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

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UK PMI Construction

Location: United Kingdom

Date: 02/07/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 50.8

Notes: The PMI Construction released by the Chartered Institute of Purchasing & Supply and Markit Economics shows business conditions in the UK construction sector. It is worth noting that the construction sector does not influence, either positively or negatively, the GDP as much as the Manufacturing sector does A result that values above 50 signals appreciates (or is bullish for ) the GBP, whereas a result that values below 50 is seen as negative (or bearish).

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The 6am Cut

6am Cut London Posted 2013-07-02 05:40:36 by Kate Mackenzie Asian stocks were mostly higher following encouraging US ISM manufacturing data and European PMIs released on Monday. The MSCI Asia Pacific was 0.7% higher but the Hang Seng fell 0.4%. (Financial Times)(Bloomberg) TODAY: US factory orders for May; US vehicle sales for June. Rothschild to advise on RBS split: The US government has moved quickly to appoint advisers on the potential split of RBS, with Rothschild set to be named to run the assessment. Rothschild saw off competition from Deutsche Bank and BAML at presentations last week, and its role could be announced as soon as this week, according to people close to the situation. (Financial Times) Australia's central bank left rates on hold, as widely expected: The RBA board held the cash rate at 2.75%, with the governor noting the economy was growing "a bit below trend", but the Australian dollar may continue to fall, which would help rebalance the economy. (Statement) China's credit freeze deliberate, and just badly executed? "The People's Bank of China instigated the cash shortages that catapulted Chinese interest rates to nosebleed highs during the past two weeks because the central bank felt it had no alternative amid what it saw as out-of-control credit growth," says the WSJ, citing an internal PBOC document. However it adds the message was poorly communicated, underlined by the propaganda authorities' efforts to 'tone down' reporting of the cash crunch. (Wall Street Journal)(Financial Times) Japanese pension fund buys into US electricity: "One of Japan's biggest pension funds has joined a Canadian partner to buy a $2bn electricity plant in Michigan, said people familiar with the deal. The investment, which is the first infrastructure acquisition by a Japanese public pension fund, is a sign that the country's massive pension-fund industry is diversifying outside traditional assets such as government bonds." (Financial Times) Noble Corporation eyes move to UK: "Noble Corporation, one of the world's largest offshore drilling contractors, plans to relocate from Switzerland to the UK to benefit from its less restrictive corporate law." The company relocated from the US to Switzerland in 2009. (Financial Times) COMMENT AND CURIOS: - The Winklevoss Bitcoin Trust. For realz. (FT Alphaville) - Chinese banks' valuations are close to their lowest on record after the interbank funding crisis. (Bloomberg) -- Bail-in fears grow for big depositors in euro periphery. (Financial Times) - LME takes aim at warehousing queues that have helped boost profits of Goldman, Glencore, Trafigura. (Financial Times) - The JLo/Turkmenistan/China/oil connection. (Wall Street Journal) - Ruchir Sharma: Back to booms, busts and protests in EMs. (Financial Times) - Japanese husbands' monthly allowance at lowest level since 1982. (Bloomberg) - What the AUD's means for commodities. (Financial Times) - Japan's banks are still addicted to government bonds. (Bloomberg) OVERNIGHT MARKETS: UP Asian markets Nikkei 225 up +125.28 (+0.90%) at 13,978 Topix up +12.63 (+1.10%) at 1,163 Hang Seng down -81.78 (-0.39%) at 20,722 US markets S&P 500 up +8.68 (+0.54%) at 1,615 DJIA up +65.36 (+0.44%) at 14,975 Nasdaq up +31.24 (+0.92%) at 3,434 European markets Eurofirst 300 up +11.41 (+0.99%) at 1,164 FTSE100 up +92.31 (+1.49%) at 6,308 CAC 40 up +28.57 (+0.76%) at 3,767 Dax up +24.70 (+0.31%) at 7,984 Currencies €/$ 1.31 (1.31) $/¥ 99.53 (99.65) £/$ 1.52 (1.52) Commodities ($) Brent Crude (ICE) down -0.07 at 102.93 Light Crude (Nymex) down -0.16 at 97.83 100 Oz Gold (Comex) up +0.90 at 1,257 Copper (Comex) unchanged 0.00 at 3.15 10-year government bond yields (%) US 2.49% UK 2.44% Germany 1.72% CDS (closing levels) Markit iTraxx SovX Western Europe -1.3bps at 95.1bp Markit iTraxx Europe -4.79bps at 114.82bp Markit iTraxx Xover -16.87bps at 459.98bp Markit CDX IG -3.01bps at 84.49bp Sources: FT, Bloomberg, Markit
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US Construction Spending (MoM)

Location: United States

Date: 01/07/2013

Time: 15:00 - 16:00

Strength: 2/3

Previous: 0.4% / Consensus: 0.7%

Notes: The Construction Spending released by the US Census Bureau is an indicator that measures the total amount of spending in the US on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume. 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 ISM Prices Paid

Location: United States

Date: 01/07/2013

Time: 15:00 - 16:00

Strength: 2/3

Previous: 49.5 / Consensus: 51.3

Notes: The Institute for Supply Management ( ISM ) Manufacturing Index shows business conditions in the US manufacturing sector, taking into account expectations for future production, new orders, inventories, employment and deliveries

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US ISM Manufacturing PMI

Location: United States

Date: 01/07/2013

Time: 15:00 - 16:00

Strength: 2/3

Previous: 49.0 / Consensus: 50.1

Notes: The Institute for Supply Management (ISM) Manufacturing Index shows business conditions in the US manufacturing sector It is a significant indicator of the overall economic condition in US. A result above 50 is seen as positive (or bullish) for the USD, whereas a result below 50 is seen as negative (or bearish).

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US Markit Manufacturing PMI

Location: United States

Date: 01/07/2013

Time: 13:58 - 14:58

Strength: 2/3

Previous:

Notes: The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the United States. Readings above 50 imply the economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.

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EMU Consumer Price Index - Core (YoY)

Location: European Monetary Union

Date: 01/07/2013

Time: 10:00 - 11:00

Strength: 3/3

Previous: 1.2%

Notes: The core Consumer Price Index released by Eurostat is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services excluding the volatile components like food, energy, alcohol and tobacco. The core 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 EUR, while a low reading is seen as negative.

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