- Cardinals head to conclave to elect pope for troubled Church (Reuters)
- Hyperinflation 'Unthinkable' Even With Bold Easing: Abe (Nikkei)
- Ryan Plan Revives '12 Election Issues (WSJ)
- Italy 1-yr debt costs highest since Dec after downgrade (Reuters)
- Republicans to unveil $4.6tn of cuts (FT) - Obama set to dismiss Ryan plan to balance budget within decade
- CIA Ramps Up Role in Iraq (WSJ)
- Hollande Hostility Fuels Charm Offensive to Show He’s No Sarkozy (BBG)
- SEC testing customized punishments (Reuters)
- Judge Cans Soda Ban (WSJ)
- Hungary Lawmakers Rebuff EU, U.S. (WSJ)
- Even Berlusconi Can’t Slow Bulls Boosting Euro View (BBG) - luckily the consensus is never wrong
- Funding for Lending ‘put on steroids’ (FT)
- Investigators Narrow Focus in Dreamliner Probe (WSJ)
- With new group, Obama team seeks answer to Karl Rove (Reuters)
A few observations about growth and policy backdrop that is shaping the investment climate. It is a large overview that may be helpful to start the week.
The US dollar rose to new multi-month highs against several of the major currencies, including the euro, Swiss franc, British pound and the Japanese yen. The BOJ, BOE and ECB meet last week and none changed policy. The Swiss National Bank meets on March 14 and is also unlikely to change policy. The Federal Reserve meets the following week and is widely expected to stay its course. It is not monetary policy then providing the new trading incentives.
Nor can the dollar's gains be attributed to political uncertainty in Europe stemming from the inconclusive Italian elections, as was the case previously. The immediate shock has worn off and Italian stocks and bonds have recovered the lion's share of those initial losses.
- Firms Send Record Cash Back to Investors (WSJ)
- And in totally opposite news, from the same source: Firms Race to Raise Cash (WSJ)
- China warns over fresh currency tensions (FT)
- Hollande faces pressure over jobs pledge (FT)
- Obama efforts renew ‘grand bargain’ hopes (FT)
- Shirakawa BOJ Expansion Gets No Respect as Stocks Cheer Exit (BBG)
- Japan’s Nakao Defends Easing as China’s Chen Expresses Concern (BBG)
- Boeing Had Considered Battery Fire Nearly Impossible, Report Says (WSJ)
- ECB Chief Plays Down Italy Fears (WSJ)
- China moves to make its markets credible (FT)
- Euro Group head says UK at risk of 'sterling crisis' (Telegraph)
So much for that December plunge in the US trade deficit, which plunged from $48.6 billion to three year low of $38.5 billion supposedly on a drop in energy imports, but in reality was due to a drop in broad imports as the US economy ground to a halt ahead of the Fiscal Cliff. In January, or after the stop gap measure to allow the economy to continue, things went back to normal, with the US returning to doing what it does best: importing, especially importing expensive energy, and sure enough the deficit spiked promptly back to $44.4 billion - it recent long-term average - as exports were $2.2 billion less than December exports of $186.6 billion while January imports were $4.1 billion more than December imports of $224.8 billion. Immediate result: look for banks to trim 0.2-0.3% GDP points from their Q1 GDP forecasts.
- French unemployment rises again to highest since 1999 (Reuters)
- BoJ rejects call for monetary easing (FT)
- North Korea threatens pre-emptive nuclear strike against US (Guardian)
- Firms Race to Raise Cash (WSJ)
- Time Warner Will Split From Magazine Unit in Third Spinoff (BBG) - slideshows, kittens, "all you need to knows" coming to Time
- U.S. economy, world's engine, remains in "neutral": Fed's Fisher (Reuters)
- BOE Keeps QE on Hold as Officials Weigh More Radical Measures (BBG)
- Jobs start to go as US sequestration cuts in (FT)
- BofA Times an Options Trade Well (WSJ)
- Congress Budget Cuts Damage U.S. Economy Without Aiding Outlook (BBG)
- Dell’s Crafted LBO Pitch Gets Messy as Investors Circle (BBG)
- Dell says Icahn opposes go-private deal (Reuters)
- Portugal Rating Outlook Raised to Stable by S&P on Budget Plan (BBG)
- China’s Richer-Than-Romney Lawmakers Reveal Reform Challenge (BBG)
The world is rapidly running out of clean water. Some of the largest lakes and rivers on the globe are being depleted at a very frightening pace, and many of the most important underground aquifers that we depend on to irrigate our crops will soon be gone. At this point, approximately 40 percent of the entire population of the planet has little or no access to clean water, and it is being projected that by 2025 two-thirds of humanity will live in "water-stressed" areas. But most Americans are not too concerned about all of this because they assume that North America has more fresh water than anyone else does. And actually they would be right about that, but the truth is that even North America is rapidly running out of water and it is going to change all of our lives.
Forbes has recently released its latest rich list, so now would be a good time to look at the world’s billionaires who have benefited most from the US oil industry.
- Kuroda to Hit ‘Wall of Reality’ at BOJ, Ex-Board Member Says (BBG)
- Venezuelans mourn Chavez as focus turns to election (Reuters)
- South Korea says to strike back at North if attacked (Reuters)
- Milk Powder Surges Most in 2 1/2 Years on New Zealand Drought (BBG)
- As Confetti Settles, Strategists Wonder: Will Dow's Rally Last? (WSJ)
- Pollution, Risk Are Downside of China's 'Blind Expansion' (BBG)
- Obama Calls Republicans in Latest Round of Spending Talks (BBG)
- Ryan Budget Plan Draws GOP Flak (WSJ)
- Samsung buys stake in Apple-supplier Sharp (FT)
- China Joining U.S. Shale Renaissance With $40 Billion (BBG)
- Say Goodbye to the 4% Rule (WSJ)
- Traders Flee Asia Hedge Funds as Job Haven Turns Dead End (BBG)
- Power rustlers turn the screw in Bulgaria, EU's poorest country (Reuters)
The most unsurprising news of the day has just hit, and while we have already had some 20+ rumors on this issue previously, this time it is official:
Venezuela's Hugo Chavez has died, says VP Maduro
Chavez who ruled Venezuela since 1999, died from cancer at the age of 58
Venezuela's army chiefs pledge to support President Nicolas Maduro after Hugo Chavez's death
Special deployment of armed forces announced in Venezuela after death of Hugo Chavez
Time to celebrate Hugo's memory with some more currency devaluation? It is unclear if Goldman's record profits on Venezuela exposure (see How The Glorious Socialist Revolution Generated A 681% Return For Goldman Sachs) are about to snap back with a vengeance.
The week ahead promises to be eventful. Three main items stand out: service sector purchasing managers surveys, five major central bank meetings, and the US employment data.
In the upcoming week the key focus on the data side will be on US payrolls, which are expected to be broadly unchanged and the services PMIs globally, including the non-manufacturing ISM in the US. Broadly speaking, global services PMIs are expected to remain relatively close to last month's readings. And the same is true for US payrolls and the unemployment rate. On the policy side there is long lost with policy meetings but we and consensus expect no change in any of these: RBA, BoJ, Malaysia, Indonesia, ECB, Poland, BoE, BoC, Brazil, Mexico. Notable macro issues will be the ongoing bailout of Cyprus, the reiteration of the OMT's conditionality in the aftermath of Grillo's and Berlusconi's surge from behind in Italy. China's sudden hawkishness, the BOE announcement and transition to a Goldman vassal state, and finally the now traditional daily jawboning out of the BOJ.
Washington is laying on the malaise pretty thick lately over automatic budget cuts set to take effect in March, with admonitions and partisan attacks galore. Of course, those of us who are educated in the finer points of our corrupt puppet government are well aware that the public debate between Democrats and Republicans amounts to nothing more than a farcical battle of Rock’Em Sock’Em Robots with only one set of hands behind the controls. The reality is, their decisions are scripted, their votes are purchased, and they knew months ago exactly how America’s fiscal cliff situation would progress. The drama that now ensues on the hill is meant for OUR benefit and distraction, and no one else. There are plenty of irrelevant federal appendages out there that could be amputated, but probably won’t be, while other more useful programs will come under fire. In the end, the budget cuts are not about saving money; they are about social maneuvering and political gain. They will be used as an excuse for everything, and will produce nothing favorable, not because cuts are not needed, but because the people in charge of them are not trustworthy.
MS has brought us another Awful Deal, basically MS sold Offal to the public.
- Grillo kills move to break Italy deadlock (FT)
- Abe nominates Kuroda to run BoJ (FT)
- More WMT bad news: Wal-Mart Chief Administrative Officer Mars to Leave: WSJ (BBG)
- Japan's Abe: Islands Are Indisputably Ours (WSJ) - Except for China of course
- Low-key departure as pope steps down, to enter the final phase of his life "hidden from the world" (Reuters)
- Cuts unlikely to deliver promised budget savings (Reuters)
- European Union caps bankers’ bonuses (FT)
- White House, Republicans dig in ahead of budget talks (Reuters)
- Jockeying Stalls Deal on Cuts (WSJ)
- Argentina Says It Won’t Voluntarily Comply With Bond Ruling (BBG)
- Italian president says forming new government cannot be rushed (Reuters) - or happen at all
- Central Banks Spewing Cash Must Plan Exit Timing, Rohde Says (BBG)
- China Regional Targets Cut in Sign Debt Concerns Heeded (BBG)
- RBA Says Up to 34 Central Banks Holding Australian Dollars (BBG)