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One Minute Macro Update
U.S.: Markets mixed this morning. This week will see the release of a slew of economic figures, starting today with personal income estimated to rise 0.4%E v 0.4% prior and personal spending estimated to be 0.4%E v 0.7% prior. Market expectations for spending will likely be less robust than in January because of the recent rise in food and energy prices. The PCE data due out today is a reminder that we face commodity and input inflation, not wage inflation. This issue of divergent inflations will begin to rear its ugly head in the quarters to come as incomes are squeezed and the resulting impacts on spending are felt. In areas of the world where food/commodities/inputs are a significant portion of incomes, policy responses in EM and DM will be key to watch. Inflation hawks will push for rate hikes and there is concern those hikes would have little impact on the inflation at hand. Geopolitics do not help. Are we smoking at the gas station? Is our biggest worry actually not inflation, but global growth disappointment? Given a potentially disappointing consumer, tighter fiscal policies, geopolitical risks on the rise, and potentially tightening monetary policies it would appear so.
Europe: The ECB borrowed €14.1bn in its overnight loan facility last Friday v €2.2bn prior, reaching its highest level in 2011. Like the other recent spikes in overnight borrowing, the jump is attributed to the Irish banking situation. However we note that the attribution from the prior upswings was not crystal clear, leaving us with a feeling of nervousness. Despite the move, EURIBOR-OIS tightened to 25.3bp v 28.4bp a week ago. Euro zone CPI fell 0.6% MoM and rose 2.3% YoY v estimates of -0.6%E and 2.4%E, respectively. German import-price inflation for January increased 11.8% YoY v 11.2%E, keeping close to December’s 29-year high of 12.0%, due to large increases in costs for metal and energy. Ireland’s main opposition party came out victorious in Friday’s elections. The winning Fine Gael party had been in support of lowering interest rates on the Irish bailout package as well as imposing losses on senior bond holders. This week will see issuance from Portugal and Spain in the periphery as well as Belgium, which is rapidly entering the ‘periphery’ definition.
Asia: Chinese Premier Wen Jiabo promised yesterday to contain rising prices and cut GDP forecasts for the next five years to 7% from 8% prior. The interview also addressed corruption and China’s wealth gap. Japanese housing starts rose 2.7% YoY v 5.1%E and 7.5% prior. Despite declining approval ratings and a split Diet, Japanese Prime Minister Kan continues to try to push a $1 trillion budget. A resignation by the PM in order to pass the legislation may be a possibility, according to the Japanese press. Australian Reserve Bank board member Warwick McKibbin warned yesterday of the mounting threat of the country’s participation in an Asian commodity and real estate bubbles. The professor sees the economic cycle risks as much larger than the previous American housing bubble that popped in 2008.
From Brian Yelvington at Knight Capital
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AUDUSD
Target 0.9776.
http://www.zerohedge.com/forum/99er-charts-0
Awesome no media coverage about the Inminent IMF help to the Portuguese Economy and then Spanish Banking MegaBailout in June...
Look Portuguese 10yrs Bonds....7,58%¡ lol....
Regards,
And Italy is next on the list!
+60 DOW futures....WHEEEEEE
From -40 last night. I think I've seen this movie before...every day...for years now....
There's no strength. Banks are weak. Euro popped and if the buck break very long term support grab the keys to the bunker. I'm callin the top today. Viagra works on a guy that's 94 but it doesn't look right.
here, we read: "This week will see issuance from Portugal and Spain in the periphery as well as Belgium, which is rapidly entering the ‘periphery’ definition."
i'm trying to analyze the Belgium Bonds. hmmm...what do they even call them? waffles? waLoonies? how about the NoWaffleStompinWalQQkneeZ? plus, belgium may have that FILO thing workin with the EU, too......
hmmm...maybe if they pay 12.5% (which they probably should) cramer will buy the issue for his Chawitable Twust.
slewie is still advising:
my sources (both of them!) indicate We Be googlin up a funstorm w/ this:
black powder supplies - Google Search
slewie may try to regain his past archery skillZ: a nice fiberglas longbow that can "reversed" for a bit more Juice, if needed. i started by learning to hit the side of the barn. then one day, over a decade later, i was actually looking at a barn, trying to decide what to try for. i saw a knothole in a board. as i slowly drew down on it and felt the bow load up, the knothole went quantuume and opened to the size of a garbage can lid, swallowed up my arrow, and snapped shut, again. i wasn't even wearing tights.
and here's some marchin music 4 this fine morn: YouTube - Joan Jett & the Blackhearts - I Love Rock N Roll
back to work, slaves!
slewie out.
"Is our biggest worry actually not inflation, but global growth disappointment? Given a potentially disappointing consumer, tighter fiscal policies, geopolitical risks on the rise, and potentially tightening monetary policies it would appear so."
Trying to stop this credit bubble deflation is absurd. Ben's trying of course. There's just been too much credit in the system worldwide with concomitant mal-investment. Paper currencies in the West and Japan are dying. The World Bank and the IMF are rapidly setting up the infrastructure for SDRs (basket of titratable amounts of world's paper currencies). Fiat is they're golden goose and they will not give it up without setting the whole world on fire.
Ludwig von Mises: "If the credit expansion is not stopped in time, the boom turns into the crack-up boom; the flight into real values begins, and the whole monetary system founders." Is that not exactly what we're seeing now? http://therookiecynic.wordpress.com/2010/10/15/your-lethal-education-par...
Archery. Bow and arrow. Barns. knothole. Tights. I think i'm in love.
came into today short. looking at 1289 on ES: http://www.hedgefundlive.com/blog/stock-market-commentary-2252011-my-advice