The 6am Cut

6am Cut London Posted 2013-05-28 05:47:08 by Kate Mackenzie "Asian stocks were mixed, with Japanese shares struggling to find direction amid continued volatility due to concerns over rising bond yields. The MSCI Asia Pacific index shed 0.5 per cent, falling for the fifth consecutive session, amid expectations that the US Federal Reserve will soon wind down its bond purchases on the back of the improving US economy." (Financial Times) China targeting 7% growth, says Li: Chinese Premier Li Keqiang told German business leaders his country faces "huge challenges" as it pursues an average annual growth rate of 7% this decade. The country's leadership appears increasingly willing to tolerate lower growth. At a press conference in March, Li referred to a target of 7.5% average growth through 2020; however state-media transcripts that day said Li gave a 7% figure. (Bloomberg) European lenders draw down on central bank reserves: 'Cash hoards' stashed at central banks by the 12 biggest European lenders have fallen 19% from their peak. (Wall Street Journal) "Huge disparities in the fees paid by the UK's local authority pension funds to their fund managers have been revealed in Financial Times research, with some councils paying three times as much as funds the same size elsewhere in the country." (Financial Times) New Co-op Bank chief warns of 'no quick fixes' to capital black hole. The Co-operative Group has turned to Niall Booker, a former 30-year veteran of HSBC to lead efforts to resuscitate its banking arm. Booker is due to join within days and the Co-op's directors are set to meet formally this week for the first time since the bank's credit ratings were slashed to junk status. (Financial Times) Valeant in $8.7bn Bausch & Lomb deal: "Valeant, the Bermuda-domiciled speciality pharmaceuticals group, has launched its most ambitious takeover yet with the agreed $8.7bn purchase of Bausch & Lomb, the privately held ophthalmology business." (Financial Times) Club Méditerranée is to be taken over by its biggest shareholders, Axa Private Equity and Chinese conglomerate Fosun, in a friendly deal that values the French holiday resort group at €556m. News of the deal saw Club Med's shares rise 22%. The offer, which was made with the company's management, is a €17 a share – a 23% premium to the Friday closing price. (Financial Times) Cov-lite loans rise: More than half of new leveraged loans issues this year were without covenants, more than double the level of 2007. (Financial Times) COMMENT AND CURIOS: - BoJ minutes reveal tensions over 'contradictions'. (Financial Times) - Could tech chiefs follow bankers into a populist backlash? (Financial Times) - China eyes cap on carbon emissions by 2016. (Financial Times) - Britain's four biggest banks will have eliminated about 189,000 jobs from their peak levels, by 2014. (Bloomberg) OVERNIGHT MARKETS: Asian markets Nikkei 225 up +165.77 (+1.17%) at 14,308 Topix up +19.46 (+1.69%) at 1,174 Hang Seng up +31.81 (+0.14%) at 22,718 European markets Eurofirst 300 up +3.77 (+0.31%) at 1,230 FTSE100 down -42.45 (-0.63%) at 6,654 CAC 40 up +38.37 (+0.97%) at 3,995 Dax up +77.98 (+0.94%) at 8,383 Currencies €/$ 1.29 (1.29) $/¥ 101.77 (100.93) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) up +0.01 at 102.63 Light Crude (Nymex) down -0.60 at 93.55 100 Oz Gold (Comex) unchanged 0.00 at 1,387 Copper (Comex) up +0.01 at 3.30 10-year government bond yields (%) US 2.05% UK 1.92% Germany 1.46% CDS (closing levels) Markit iTraxx SovX Western Europe +3.8bps at 82.99bp Markit iTraxx Europe +6.29bps at 98.23bp Markit iTraxx Xover +15.2bps at 401.44bp Markit CDX IG +2.44bps at 75.73bp Sources: FT, Bloomberg, Markit
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US Durable Goods Orders

Location: United States

Date: 24/05/2013

Time: 13:30 - 14:30

Strength: 3/3

Previous: -5.7% / Consensus: 1.5%

Notes: The Durable Goods Orders, released by the US Census Bureau, measures the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. The final figure shows the state of US production activity. Generally speaking, a high reading is bullish for the USD.

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DE German Buba President Weidmann speech

Location: Germany

Date: 24/05/2013

Time: 11:00 - 12:00

Strength: 2/3

Previous:

Notes: Dr Jens Weidmann is the president of the Deutsche Bundesbank. He is member of the Governing Council of the ECB and has some responsabilities: Communication, Legal, Economics Research Centre...

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UK BBA Mortgage Approvals

Location: United Kingdom

Date: 24/05/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 31.2K / Consensus: 32.7

Notes: The Mortgage Approvals published by the British Bankers' Association (BBA) measure the number of home loans issued by the BBA during the previous quarter. It is considered as a leading indicator of the UK Housing Market. A Mortgage growth represents a healthy housing market that stimulates the overall UK economy. Normally, 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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DE IFO - Business Climate

Location: Germany

Date: 24/05/2013

Time: 9:00 - 10:00

Strength: 2/3

Previous: 104.4 / Consensus: 104.5

Notes: This German business sentiment index released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).Review Alex Nekritin's Article - Trading Euro with IFO Report

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DE IFO - Current Assessment

Location: Germany

Date: 24/05/2013

Time: 9:00 - 10:00

Strength: 2/3

Previous: 107.2 / Consensus: 107.2

Notes: The IFO Current Assessment released by the CESifo Group is closely watched as an indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).Review Alex Nekritin's Article - Trading Euro with IFO Report

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DE IFO - Expectations

Location: Germany

Date: 24/05/2013

Time: 9:00 - 10:00

Strength: 2/3

Previous: 101.6 / Consensus: 101.6

Notes: The IFO Expectations released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations for the next six months, where firms rate the future outlook as better, same, or worse. An optimistic view of those 7,000 business leaders and senior managers is considered as positive, or bullish for the EUR, whereas a pessimistic view is considered as negative, or bearish.Review Alex Nekritin's Article - Trading Euro with IFO Report

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DE Gfk Consumer Confidence Survey

Location: Germany

Date: 24/05/2013

Time: 7:00 - 8:00

Strength: 2/3

Previous: 6.2 / Consensus: 6.2

Notes: The GfK Consumer Confidence 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. Generally speaking, a high reading is positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

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The 6am Cut

6am Cut London Posted 2013-05-24 05:46:08 by Kate Mackenzie Asian stocks fell, the yen strengthened and Australian bank shares headed for their largest weekly drop in a year after comments from Bank of Japan's governor suggested the central bank wouldn't increase its bond buying. The Nikkei fell 1.3%, reversing earlier gains. The ASX fell more than 2% and the MSCI Asia Pacific was 0.4% lower. (Bloomberg) BoJ governor says stable JGB market '"extremely desirable'; will work to head off volatility in bond yields. "As far as the markets for long-term government securities are concerned, in which the Bank of Japan is directly involved through its market operations, it is extremely desirable for them to move stably," Haruhiko Kuroda said today during a seminar on Asia's economic future. (Wall Street Journal) Proctor & Gamble brings back AG Lafley: The world's biggest consumer product maker has returned Lafley, who led the company from 2000 to 2009, as CEO. He replaces embattled Bob McDonald, who will retire next month. Lafley's return comes amid a $10bn restructuring launched in February 2012, and about a year after activist investor Bill Ackman took a stake in P&G and began agitating for change. (Financial Times)(Reuters) Spanish banks will need to provision up to another €10bn to cover loans that borrowers will struggle to repay, according to an internal estimate by the Bank of Spain. It is the first official assessment of the likely impact of the central bank's new approach towards more than €200bn of loans that were rolled over before they were due to expire, often because of doubts over corporate borrowers' ability to repay. (Financial Times) Draghi wants UK to become 'more European': "I cannot say which of the two sets of arguments is stronger, the economic or the political ones, neither am I going to enter into a domestic policy debate, but what I can say is that Europe needs a more European UK as much as the UK needs a more British Europe," Draghi said in a speech met with applause at the City of London Corporation last night. (Financial Times) German shale industry takes on shale gas: "Germany's brewers have warned Berlin that permitting unconventional gas exploration in Europe's biggest economy could put the purity of the country's celebrated beer at risk." (Financial Times) "The US Federal Trade Commission has begun an informal inquiry into Google's display advertising business, opening a new front in the internet search company's antitrust battles just months after it appeared to resolve earlier investigations on both sides of the Atlantic." (Financial Times) Gold is having a good week: Prices are headed for the highest weekly performance in a month amid worries about monetary stimulus. (Bloomberg) COMMENT AND CURIOS: - Abe's big agenda is constitutional change, not economics. (Reuters) - Martin Wolf: Osborne should not be so complacent about IMF criticism. (Financial Times) - The day the UK had six hours of gas left. (Financial Times) - Martin Wolf: Austerity's failure was predictable, and predicted. (Financial Times) - Market bulls run into the sand. (Financial Times) - Nick Butler: Carbon market collapse more than just a technical matter. (Financial Times) - How Chinese brokerages deal with regulators: 'kissing asses'. (Financial Times) - How US banks deal with regulators: write the legislation themselves. (NYT Dealbook) - Ford stops making 'Mad Max' style cars, blaming Aussie dollar. (Bloomberg) - Four senior executives of SAC Capital have been subpoenaed. (NYT Dealbook) OVERNIGHT MARKETS: MIXED Asian markets Nikkei 225 down -177.96 (-1.23%) at 14,306 Topix down -6.67 (-0.56%) at 1,182 Hang Seng down -45.47 (-0.20%) at 22,624 US markets S&P 500 down -4.84 (-0.29%) at 1,651 DJIA down -12.67 (-0.08%) at 15,295 Nasdaq down -3.88 (-0.11%) at 3,459 European markets Eurofirst 300 down -26.34 (-2.10%) at 1,230 FTSE100 down -143.48 (-2.10%) at 6,697 CAC 40 down -83.96 (-2.07%) at 3,967 Dax down -178.91 (-2.10%) at 8,352 Currencies €/$ 1.29 (1.29) $/¥ 102.21 (102.01) £/$ 1.51 (1.51) Commodities ($) Brent Crude (ICE) down -0.08 at 102.36 Light Crude (Nymex) down -0.33 at 93.92 100 Oz Gold (Comex) unchanged 0.00 at 1,392 Copper (Comex) unchanged 0.00 at 329.95 10-year government bond yields (%) US 2.03% UK 1.93% Germany 1.44% CDS (closing levels) Markit iTraxx SovX Western Europe +2.78bps at 79.19bp Markit iTraxx Europe +4.71bps at 91.94bp Markit iTraxx Xover +18.08bps at 386.24bp Markit CDX IG +1.73bps at 73.29bp Sources: FT, Bloomberg, Markit
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US Housing Price Index (MoM)

Location: United States

Date: 23/05/2013

Time: 14:00 - 15:00

Strength: 2/3

Previous: 0.7% / Consensus: 0.8%

Notes: The Housing Price Index released by the Office of Federal Reserve Housing Enterprise Oversightprovides an estimated value of housing market conditions. It is an important indicator as the housing market is considered as a sensitive factor to the US economy. 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 Markit Manufacturing PMI

Location: United States

Date: 23/05/2013

Time: 13:58 - 14:58

Strength: 2/3

Previous: 52.1 / Consensus: 53.0

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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US Initial Jobless Claims

Location: United States

Date: 23/05/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 360K / Consensus: 345K

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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US Continuing Jobless Claims

Location: United States

Date: 23/05/2013

Time: 13:30 - 14:30

Strength: 2/3

Previous: 3.009M / Consensus: 3.000M

Notes: The Continuing Jobless Claims released by the US Department of Labor measure the number of individuals who are unemployed and are currently receiving unemployment benefits. It presents the strength in the labor market. A rise in this indicator has negative implications for consumer spending which discourage economic growth. Generally speaking, a high reading is seen as negative, or bearish for the USD, while a low reading is seen as positive, or bullish.

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UK Total Business Investment (YoY)

Location: United Kingdom

Date: 23/05/2013

Time: 9:30 - 10:30

Strength: 2/3

Previous: 0.8%

Notes: The Total Business Investment released by the National Statistics presents the total amount of capital expenditures made by private firms. A large business investment is indicative of overall growth and demand in the UK economy. Generally speaking, 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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UK Gross Domestic Product (QoQ)

Location: United Kingdom

Date: 23/05/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous: -0.3% / Consensus: 0.3%

Notes: The Gross Domestic Product released by the National Statistics is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic. Generally speaking, a rising trend has a positive effect on the GBP, while a falling trend is seen as negative (or bearish).

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UK Gross Domestic Product (YoY)

Location: United Kingdom

Date: 23/05/2013

Time: 9:30 - 10:30

Strength: 3/3

Previous: 0.2% / Consensus: 0.6%

Notes: The Gross Domestic Product released by the National Statistics is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity. Generally speaking, a rising trend has a positive effect on the GBP, while a falling trend is seen as negative (or bearish).

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EMU ECB President Draghi's Speech

Location: European Monetary Union

Date: 23/05/2013

Time: 8:30 - 9:30

Strength: 3/3

Previous:

Notes: The European Central Bank's president Mario Draghi was born in 1947 in Rome, Italy. Graduated of the Massachusetts Institute of Technology (MIT), Draghi became the president of the European Central Bank in 2011. As part of his job in the Governing Council he gives press conferences in the back of how the ECB observes the current European economy. President's comments may determine positive or negative the Euro's trend in the short-term. Usually, if he shows a hawkish outlook, that is seen as positive (or bullish) for the EUR, while a dovish is seen as negative (or bearish).

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DE Markit Manufacturing PMI

Location: Germany

Date: 23/05/2013

Time: 8:28 - 9:28

Strength: 2/3

Previous: 48.1 / Consensus: 48.5

Notes: The Manufacturing Purchasing Managers Index (PMI) released by 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 Germany. Normally, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.

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US FOMC Minutes

Location: United States

Date: 22/05/2013

Time: 19:00 - 20:00

Strength: 3/3

Previous:

Notes: FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.Review Alex Nekritin's Article - Trading the US Dollar with the FOMC Minutes

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DE 10-y Bond Auction

Location: Germany

Date: 22/05/2013

Time: 10:30 - 11:30

Strength: 2/3

Previous: 1.28%

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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