French President François Hollande jumped straight in declaring in more Sarkozy-style fashion than ex-President Sarkozy himself that he would attack Syria. That was even before the UN investigators had been shot at by some unidentified people.
The current external environment and consequence of past policies are limiting options for EM nations (most specifically Indonesia and India). Citi believes the best they can do now is to smooth the (inevitable) macro adjustment (weaker FX, higher risk premiums, slower growth) through improved policy credibility (to curb volatility and overshooting) and find offsets to portfolio flows to ease the pressure. The 4 choices of various rocks and hard places do not hold much hope for anything but further FX devaluation. As Citi's Matt King points out, what goes up (in terms of Emerging Market central bank FX reserves) risks coming back down with a thud... and in case you were wondering why India, Turkey, and Indonesia were the most-hammered...
Earlier we showed one indicator of the US investor's (should they exist anymore) loss of interest in the Federal-Reserve-sponsored equity market - i.e. CNBC ratings at 20-year lows. In the interest of being more fair-and-balanced we present anther perspective... US equity trading volume in August of 2013 is the lowest on average in 16 years... and all-time highs, middle-east war, taper, weak macro, housing un-recovery, German elections, Asian FX crisis will do little to improve that risk-appetite for the retiring boomer army.
If last night the year 1993 was notable for India, as the Rupee had its largest plunge since March of that year two decades ago, today 1993 is just as memorable for CNBC. The reason: according to the latest Nielsen data, in July the financial network's prime (25-54 demographic) viewership just tumbled to a fresh 20 year low of just 37,000, the lowest since, you guessed it, March of 1993. Why is this a problem? Considering CNBC came on air in its current post-FNN incarnation in 1991, the core viewership is now about as low as it has ever been for the struggling broadcaster which as recently as 2007 was ranked as the 19th most valuable cable channel in the US. Now: not so much.
- Lew warns Congress to strike debt ceiling deal (FT)
- Central-Bank Moves Blur the View (WSJ)
- Brazil, Indonesia launch measures to shore up their currencies (FT)
- More mainstream media reminded about Fukushima - Radioactive ground water under Fukushima nears sea (AP)
- Fukushima inspectors 'careless', Japan agency says, as nuclear crisis grows (Reuters)
- New York Banker Arrested on Rape Charges in East Hampton (NYT)
- This time they mean business, for real: CFTC Moves to Rein In High-Speed Traders (WSJ)
- Britain operates secret monitoring station in Middle East (Reuters)
- Moody’s considers downgrading top US banks (FT)
- China's Bo calls wife mad after she testifies against him (Reuters)
- JPMorgan Sub-New Normal Growth Seen Vexing Next Fed Chief (BBG)
- SEC calls for cooling-off period for more staff (Reuters)
It was a quiet overnight session, in which the Nikkei was catching up to USDJPY weakness from the past two days, while China dipped once more despite the NDRC's chief economist stating China may cut RRR or conduct more reverse repos in H2 to maintain stable credit as loan growth slows down (or in other words things go back to normal). In Europe ECB's Nowotny decided to undo some of Draghi's recent work when he said that "good economic news" removes the need for a rate cut which in turn pushed the EURUSD higher (and European exports lower), even as former Cyprus central bank Orphanides said the Euro crisis may flare up after the German elections. In the UK Q2 GDP came in slightly stronger than expected at 0.7% vs 0.6% Exp. letting the GBP outperform since a need for the BOE to ease, at least in the short run, is becoming less pertinent. In amusing news, Moody’s late yesterday put six largest U.S. banks on review as it considers the effect of evolving bank resolution policies under Dodd-Frank and international regulations. As such GS, JPM, MS and WFC may be cut.
There’s always someone waiting to dethrone the one in the position at the top of the roost, isn’t there?
The daily presidential-tracking poll shows that on Sunday August 18th 51% of US citizens disapprove of what President Obama is doing in the country.
Recently, Fox News interviewed a self-described beach bum named Jason Greenslate who was very open about the fact that he has no problem sponging off of all the rest of us. When he was asked if he ever had any interest in actually getting a job, his response was "not whatsoever". Instead, he says that his job is to "make sure the sun's up and the girls are out" and he would rather spend his days partying. Of course every American should be free to live their own lives as they see fit, but the problem is that Jason Greenslate is using food stamps to help support his lifestyle. Of course the vast majority of those enrolled in the food stamp program are not like this. But there are also those such as Jason Greenslate that are openly abusing the system and making it more difficult for those that actually need the help to get it. Sadly, he is a product of the system that he was raised in.
Most readers have probably heard of the Silk Road. No, not the historical trade routes that linked Europe to Asia, but rather the online illegal drug marketplace accessible only via anonymity browsing software Tor, and where the only currency accepted is Bitcoin. Those of you who have heard about it, probably know far less about the man that runs it. A character who only goes by the name Dread Pirate Roberts. Irrespective of what you think of the Silk Road specifically, there is no doubt it has led the way in figuring out a way to retain a certain level of anonymity and privacy within the surveillance state due to the nature of its business. We can all learn from, and hopefully improve on their tactics, as we transition from extreme centralization to a more decentralized and freer world.
“For my own part I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s — I didn’t see any of that coming until it happened.” - Janet Yellen, 2010
If you are a stock picker, then it’s basically now or never for whatever investment discipline you might follow. Asset class and industry correlations have taken a surprising nosedive in recent weeks, which - as ConvergEx's Nick Colas notes. should allow your strategy/blend of magic to (hopefully) shine versus the benchmarks. Average industry sector correlations to the S&P 500 have dropped to 69.9%, by far the lowest observation for over two years. High yield bonds now show just 16% correlation to U.S. stocks, and the numbers for Emerging Markets (58%), EAFE stocks (76%), and currencies like the Australian dollar (11%) are also plumbing new lows. Why the sudden return to a ‘Normal’ world? Expectations that the Federal Reserve will begin to ‘Taper’ its bond buying help, to be sure. As do actual inflows (some $8 billion last month) into actively managed mutual funds. We’ll have to wait and see if current trends continue, but for now we welcome the return of the ‘Stock picker’s market’. Let the dart-throwing begin...
- U.S. Regulator Subpoenas Banks Over Long Warehouse Queues (BBG)
- Apple Said to Prepare Holiday Refresh of IPhones to IPads (BBG)
- Fed's Yellen Says Stance on Banks Hardened (WSJ)
- Mexico opens up its energy sector (FT)
- Spin: Greek GDP marks gradual deceleration of recession (FT) ... spin aside, it dropped 4.6%, and in reality, probably over 10%
- Made-in-Canada Solution For BlackBerry Avoids Nortel Fate (BBG)
- America's Farm-Labor Pool Is Graying (WSJ)
- Video of 'lame' cattle stirs new concern over growth drugs (Reuters)
- Paulson Bid for Steinway Trumps Kohlberg Offer (WSJ)
- Egyptian government yet to decide on pro-Mursi vigils (Reuters)
Two upcoming events could prove catalysts for a Japanese sovereign debt crisis.
When it was suggested it was considered in the blazing battles of the bail-outs and the scraping of the bottom of the drawers for extra cash as the God-sent answer to all EU woes and worries.