As Wall Street struggles to explain last night’s trade data out of China which seemed to vividly illustrate the notion that the combination of the yuan’s dollar peg and generally weak demand can and will take a devastating toll on the country’s exports, and as iron ore does its best dead cat bounce impression on the “psychologically” important news that Australia’s fourth largest miner is suspending operations, Citi is out with a rather dismal take on the outlook for iron ore prices.
UPDATE: *RUSSIA WILL SUPPLY S-300 TO IRAN QUICKLY: INTERFAX
We showed yesterday the web of interconnected rifts and relationships among The Middle East's local and proxy war members and it seems this morning tensions are escalating once again. As Bloomberg reports, Russian President Vladimir Putin signed a decree on Monday lifting a ban on the delivery of S-300 anti-missile rocket systems to Iran. The ban was introduced by former President Dmitry Medvedev in 2010 under pressure from the West following UN sanctions imposed on Iran over its nuclear program.
WTI Crude broke back above $53 (twice) this morning (having tested down to $50 on Friday) following what BofA calls "the strongest pace of buying by hedge funds since the selloff began."
A gap open in AAPL has sparked a vertical stop-hunt in US equity indices driving Nasdaq back above 5,000 for the first time in3 weeks. Algo buying-panics are being seen across all US equity indices as the US equity open is clearly a fundamentally bullish thing...
While today's macro calendar is empty with no central bank speakers or economic news (just the monthly budget (deficit) statement this afternoon), it’s a fairly busy calendar for us to look forward to this week as earnings season kicks up a gear in the US as mentioned while Greece headlines and the G20 finance ministers meeting on Thursday mark the non-data related highlights.
Did the Japanese just get the tap on the shoulder from The Fed? Cabinet Office member and Special Advisor to Abe Koichi Hamada just jawboned the JPY higher (and USDJPY lower) with the following statement:
HAMADA: YEN AT 105/USD APPROPRIATE; WEAK AT 120 CONSIDERING PURCHASING PARITY
The reaction - an 80 pip plunge in USDJPY.
Everyone was shocked by yesterday's Chinese March trade update which showed that while imports slid largely as expected, it was the 15% drop in exports, the largest in over a year, that prompted many to wonder just how big the global trade slump really is, masked by what has now become pervasive, global QE. This was the worst performance, exports and imports combined, since late 2009. Below is a selection of responses by Wall Street analysts trying to justify how - with global equities, if only in local currency terms, at all time highs - China can be doing so badly.
- As reported here first a month ago: The $9 Trillion Short That May Send the Dollar Even Higher (BBG)
- As an instant target for foes, Clinton may struggle to get message heard (Reuters)
- Emerging Stocks Rally 11th Day as Aussie Weakens on China (BBG)
- Puerto Rico, Investors Enlist Ex-IMF Officials (WSJ)
- Dollar’s Rise Reshuffles Global Economy (BBG)
- Indonesia eyes regular navy exercises with U.S. in South China Sea (Reuters)
- Banca Monte dei Paschi Breaches Exposure Limits to Nomura (WSJ)
- European Bond Buyers Find Negative Doesn’t Necessarily Mean Bad (BBG)
China Stocks Soar To 7 Year High After Collapse In Exports; US Futures Slip On Continuing Dollar SurgeSubmitted by Tyler Durden on 04/13/2015 - 06:55
If there was any doubt that global trade is stalling, it was promptly wiped out following the latest abysmal Chinese trade data which saw exports tumble by 15% - the most in over a year - on expectations of a 8% rebound, with the trade surplus coming in at CNY18.2 billion, far below the lowest estimate. While unnecessary, with the Chinese GDP growth rate this Wednesday already expect to print at a record low, this was further evidence of weak demand both at home and abroad. Weakness was seen in most key markets, and the strength of China's currency was partly to blame, which again brings up China's CNY devaluation and ultimately QE, which as we wrote some time ago, is the ultimate endgame in the global reflation trade which, at least for now until the CBs begin active money paradropping to everyone not just the 0.01%, is only leading to inflation in stocks and deflation in everything else.v