This page has been archived and commenting is disabled.

Ten Things to Watch in the Week Ahead

Marc To Market's picture





 

The third quarter begins with a bang this week. The main highlights include four major central bank meetings, Japan's quarterly Tankan survey, monthly purchasing managers' surveys and the US employment report.

 

The larger context in which the data and events will occur is important.  Retail and institutional investors are dramatically adjusting portfolios.  The Federal Reserve is expected to begin what could be a protracted exit from its unconventional easing policy.  The most acute phase of the Chinese liquidity squeeze may have been passed, but conditions have not completely normalized. Separately but related, the growth prospects of the world's second largest economy are being downgraded.

 

At the same time, one of the main characteristics are the investment climate is the desynchronized  business cycle and economic conditions.  While the Fed is contemplating the thresholds and timing of its tapering exercise, other central banks, remain committed to either their accommodative polices or are considering extending them.   The higher interest rates that emerged in the second half of the second quarter pose a new challenge for many countries that are experiencing contraction or weak growth.  

 

Here is our list of ten things that should be on your radar screen in the week ahead:

 

 

1.   Japan reports the Tankan survey first thing Monday in Tokyo.  The recent string of Japanese data has been constructive and there is no reason to expect the Tankan survey to break this pattern.  Indeed, the risk appears to be on the upside for the large manufacturers (consensus is 3 on the diffusion index and 7 for the outlook) and small manufacturers.  

 

2.  One of the surprising developments this year, namely the persistent selling of foreign assets by Japanese investors, show no signs of waning.  In fact, the selling of foreign bonds reached a new high in the most recent reporting week.  They have sold a net $93.5 bln of foreign bonds this year and $48.5 bln of foreign equities. 

 

3.  China reports purchasing managers surveys (Monday and Wednesday).   Many economists have cut their forecasts for this year's growth and the risk of the surveys appear on the downside.  The new government appears more committed to financial reforms and regaining control over the financial sector than trying to boost growth in the short-run.   After appreciating about 2% against the dollar from late February through late May, the yuan has been consolidating over the past month.  As the credit crunch unfolded and interest rates rose, the yuan tended to soften.  This lends credence to ideas that the yuan was part of a larger carry trade.  The Shanghai Composite slumped 21.2% to new multi-year lows from late May through late June.  The selling appears to have reached a climax and as the credit crunch eases, Chinese equities look poised to recover.  

 

4.  China and ASEAN countries agreed over the weekend to begin talks in September that will devise a broad framework of rules to resolve the regional territorial disputes.  This represents a shift by the new government toward a more conciliatory stance after having rejected such efforts over the past couple of years.  The volte face comes amid new openings for the US, which China seeks to avoid.  Last week, Philippines President Aquino acknowledged an agreement was being drafted to give US forces to Subic Bay.  

 

5. The Reserve Bank of Australia is the first of the central banks that meet this coming week.  The decision will be announced first thing Tuesday.   Most share our expectation that August is a more likely time frame for a resumption of the easing cycle.  The 12% decline of the Australian dollar on a trade-weighted basis since mid-April in tantamount to some easing of monetary policy.  It finished the second quarter at its lowest level since Sept 2010.   We suspect RBA officials will be more comfortable cutting rates again after inflation report (July 23), however, of the central banks that meet this week, the RBA is the most likely to surprise the market.  

 

6.  Sweden's Riksbank meets Wednesday.  There is little chance of a change in policy.  Surprising many observers, the Swedish krona and Norwegian krone have been the weakest of the major currencies since the eve of the June FOMC meeting, falling 3.9% and 5.5% against the dollar respectively.  Although Sweden's Prime Minister and Finance Minister have welcomed the decline in the krona and Norway's central bank has shifted toward a more dovish posture, the magnitude of the currency appreciation appears to be more a reflection of the thinness of the market than a significant deterioration of underlying macro fundamentals.  

 

7.  The Bank of England meets Thursday.  It is widely expected to do nothing.  The meeting will be led by the new Governor, Carney, who replaces King starting Monday.  Carney was chosen for largely the same reasons Kuroda was recently selected to lead the Bank of Japan.  Their approach better fits with the government's.  Carney does not believe that monetary policy has been exhausted.  However,  the BOE needs a new policy framework to avoid the same fate at King, who had been repeatedly out-voted, trying to purchase more gilts.  Carney is helping to shape the new framework and the next step is not until next month.   On one hand, the backing up of yields in recent weeks suggests gilt purchases may be more effective then when yields were at record lows. On the other, the most recent prints of high frequency data suggests a nascent recovery is taking hold, while price pressures remain sticky.  Market-based indicators suggest expectation that monetary policy will not be tightened for more than 2 years, which does raise questions over the effectiveness strengthening forward guidance.  

 

8.  The European Central Bank also meets on Thursday.  In order to spur another rate cut by the ECB, a new deterioration of the region's economy is necessary and this has not materialized over the past month.   In fact, as the PMI data is likely to show, the worst of the latest downturn is past and a gradual and fragile recovery appears to be unfolding.  The rise in yields and lower equity prices means that financial conditions, have tightened and lending to the private sector continues to contract.  The tighter conditions has not been offset by the euro, which was largely steady on a trade-weighted basis in June.  The ECB can only hope that its forward guidance will be sufficient to lean against the increase in short-term rates.  One issue that we hope Draghi is asked and addresses is about continued decline in liquidity, as banks pay down their ECB borrowings, that if its persists, that may fall below levels consistent with the overnight rate (EURONIA) near zero.  We recognize that the quarter-end pressures were behind the spike in rates last week that saw the EONIA more than double (to 20 bp), the EURONIA  (7 bp) has been gradually drifting higher.  

 

9.  The US jobs data is most important economic report of the week.  However, we do not expect a change in the underlying trend, which we argue has slowed a bit in recent months.  The three-month average of net private sector job growth was 163k in May compared with 212k in Q1 and 232k in  Q4 12.  Aggregate hours worked are running about 2% over Q1, though this is still below the Q4 12 average.  The composition of  the downward revision to Q1 GDP and the softer expenditure figures warn that US GDP has not yet re-accelerated.  If the Federal Reserve thinks the market is pricing in too early of a rate hike in the Fed funds rate, it can lower the threshold of the unemployment rate from the current 6.5% and we would not rule this out.  

 

10.  The IMF's COFER data was reported at the end of last week.  It showed that about 2/3 of the $300 bln increase in allocated reserves in Q1 (when adjusted for changes in foreign exchange rates) were  accounted for by the US dollar.  Separately, we learned from the Federal Reserve that foreign central banks patronizing its custodial serves sold a record $32.4 bln worth of Treasuries in the most recent reporting week, according to the Financial Times.  Foreign central banks have reduced their holdings of  Treasuries for the third time in four weeks.  Some of the selling appears fit well with reports of some emerging market countries trying slow the decline of their currencies as some of the capital that flowed in, now flows out.  Redemptions of emerging market bonds reached a new record ($5.6 bln) in the week to June 26, according to EPFR data.   Over the past five weeks, EPFR figures show that $22.5 bln has been pulled from emerging market funds and $22.5 bln were equity funds.  Separately, according to their figures, US funds accounted for $10.6 bln of the $23.3 bln that left fixed income funds during that week.  Japanese equity funds continue to report net inflows.   Weekly MOF data shows foreigners have bought about $93 bln of Japanese equities this year.  

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 07/01/2013 - 09:48 | Link to Comment orangegeek
orangegeek's picture

got my POMO for July report.

 

NYSE = Fed-SE

Mon, 07/01/2013 - 06:40 | Link to Comment Enki Ea
Enki Ea's picture

CRIME/TERROR/WEAPONS Bank in South America...

 

The outfit in question is Banco Paulista and its controlled subsidiary broker/dealer SOCOPA.

 

This little bank, owned by a very traditional "Paulistano" family (the Vidigal family) has turned itself into the go to bank for money laundering, black market currency, corrupt politicians accounts, etc.

 

They are even taking deposits (turned into cash usually within 48 hours) from known terrorist groups, known drug dealers, arms dealers, pirated/contraband goods dealers, etc.

 

± USD 400 Million per month comes from the triple frontier of Brazil/Paraguay/Argentina and into Banco Paulista in Sao Paulo. From there, they cash this money on a weekly basis and deliver it to the owners "Casas de Cambio" to keep on moving. The bank is charging between 3% and 5% to cash out moneys and 20% to launder moneys.

 

The Bank also charges a 3% flat feet to accept hard cash deposits of any source.

 

Now the real deal is the black market currency exchange (known in Brazil as Doleiros).

 

The bank uses its license to purchase official US Dollars from the Brazilian Central Bank (to the tune of US$ 10 million per day) therefore at official exchange rates and than sells the  same dollars in the black market (via fraudulent forex contracts). The focal point of distribution for the hard cash (both dollars and reais) is SOCOPA's main office at Rua Funchal, 129  - 5º floor in Sao Paulo, Brazil.

 

The person in charge of handing the cash over there is Mrs. Maria Jose

 

There are 7 main "culprits" in this criminal activity:

 

Alvaro Augusto Vidigal

Alvaro Augusto de Freitas Vidigal

Marcelo Pereira

Tarcísio Rodrigues

Nilma Kodama (previously involved in financial/criminal scandals)

Antanos Nour Eddine Nasrallah (known drug/arms dealer along with brothers link to hezbollah)

Hwu Su Chi Law

Flavio Guimaraes (ex. Socimer Bank/Andres Group)

 

There are several companies involved:

 

Industrias Mangotex Ltda.

Esclimont Participacoes S/C 

SOCOPA

 

 

If one keeps an eye out on any regular day, they will see politicians, businessmen, regular people, criminals, etc., all going into SOCOPA to get their packets of cash.

 

The authorities in Sao Paulo don't care or at least pretend the issue does not exist and the local media is nowadays almost like in Venezuela (no reports involving politicians).

 

If this gets the media it deserves, it has the power to bring down some top figures in the Financial World of Brazil and also some heavyweights from the political arena as well. Let's not forget known/wanted criminals. 

 

This little bank is a true "Atomic Bomb."

 

#bcopaulista

#bancopaulista

#doleiros

#dolarblack

#lavagem

 

 

Banco Paulista e sua controlada e a corretora SOCOPA.

 

Este pequeno banco, de propriedade de uma família muito tradicional "Paulistana Quatrocentona" (a família Vidigal) transformou-se em um banco para lavagem de dinheiro, abastecimento de doleiros, e "mutretas" do PSDB em São Paulo.

 

Recebem dinheiro vivo e também TEDs (transformados em dinheiro geralmente dentro de 48 horas) de grupos de traficantes conhecidos, traficantes de armas, pirataria / contrabando de bens e até de grupos terroristas, etc. O PCC usa o banco para lavagem de grana e para saques milionários para compra de drogas.

 

± 400 milhões de dólares por mês, vem da tríplice fronteira do Brasil / Paraguai / Argentina direto para o Banco Paulista, em São Paulo. De lá, eles sacam o dinheiro semanalmente e entregam à vários doleiros para manter o mercado negro funcionando. O banco está cobrando entre 3% e 5% para sacar dinheiro e 20% para lavagem de dinheiro.

 

O Banco também cobra um fee de 3%  para aceitar depósitos em dinheiro vivo de qualquer fonte. Sem perguntas, é só pagar!

 

Agora o grande negócio do banco é o dólar paralelo e os doleiros.

 

O banco utiliza sua licença para comprar dólares oficiais do Banco Central do Brasil (no valor de $ 10 milhões por dia), e vende os mesmos dólares no mercado negro (via contratos cambiais fraudulentos). O ponto focal de distribuição para o dinheiro vivo (dólares e reais) é o principal escritório da SOCOPA na Rua Funchal, 129 - 5 º andar, em São Paulo, Brasil.

 

A pessoa encarregada de entregar o dinheiro lá é a Sra. Maria José

 

Quando os volumes são grandes, eles entregam onde você indicar!

 

Há sete principais "culpados" nesta atividade criminosa:

 

Alvaro Augusto Vidigal

Alvaro Augusto de Freitas Vidigal

Marcelo Pereira

Tarcísio Rodrigues

Nilma Kodama (anteriormente envolvidos em escândalos financeiros / criminoso)

Antanos Nour Eddine Nasrallah (traficante conhecido / contrabandista de armas, juntamente com os irmãos)

Hwu Su Chi Law (Esposa de Law Kin Chon - contrabandista)

 

Existem outros envolvidos:

 

Lúcio Funaro (doleiro)

Flávio Guimarães (ex Banco Socimer)

Joseph Nour Eddine Nasrallah (foragido da justíça, traficante, membro de facção criminosa)

 

Se alguém fica de olho em qualquer dia da semana, vai ver políticos, empresários, pessoas comuns, criminosos, etc, tudo indo para SOCOPA para obter os seus pacotes de dinheiro ou uma vez por semana vários caminhões levando dinheiro para os doleiros.

 

As autoridades de São Paulo não se importam ou pelo menos fingem que o problema não existe e os meios de comunicação tradicionais, não relatam este crime diário!

 

Este pequeno banco é uma verdadeira "bomba atômica" e ameaça nossa vida diariamente ajudando os assassinos, traficantes, corruptos que assolam nossa nação.

Mon, 07/01/2013 - 02:20 | Link to Comment The Heart
The Heart's picture

Well, besides the possible false flag event, anything is possible in the wacky world of the money-god.

Is it cheaper to rebuild after the crash, or before it?

Channel change. Here is the good Greg Hunter interviewing Dr. Jim Willie with lots to say.:

http://www.youtube.com/watch?v=SEHqlT0RmH0

 

Sun, 06/30/2013 - 17:11 | Link to Comment SAT 800
SAT 800's picture

Perhaps people who look for market information will be reading this post; so I'll put t his here. On the Kitco Site; they have a news and reports page; FORTIS, is the name of a report on Gold and Silver; they post the current moving averages for the metals along with the price charts and they aren't predjudiced against the metals. I'm going Long the AUD t omorrow. Presently short the GBP@156; the EUR@1.33; Long Silver from $18.60; and Long Live Cattle for August.

Mon, 07/01/2013 - 09:27 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

Long AUD?????

I dont have those kind of balls.

Sun, 06/30/2013 - 18:05 | Link to Comment Trampy
Trampy's picture

Thanks for the valuable "market information"!

Sun, 06/30/2013 - 16:56 | Link to Comment Chupacabra-322
Chupacabra-322's picture

Things to watch in the week ahead.  More Criminal NSA spying.

WARNING: The National Security Agency is likely recording and storing this communication as part of its Criminal unlawful spying programs on all Americans … and people worldwide. The people who created the NSA spying program say that this communication – and any responses – can and will be used against the American people at any time in the future should folks in government decide to go after us for political reasons. And private information in digital communications may be given to big companies by the government.

Sun, 06/30/2013 - 16:31 | Link to Comment Conax
Conax's picture

 "The Federal Reserve is expected to begin what could be a protracted exit from its unconventional easing policy."

I don't expect that at all. Benny farts and the world trembles.

Sun, 06/30/2013 - 18:31 | Link to Comment DeadFred
DeadFred's picture

Ahh, but you are assuming that smelly trembling is not what he is after. Believe his stated motivations at your own risk. He lies about some, does he lie about all?

 

Sun, 06/30/2013 - 16:04 | Link to Comment Marco
Marco's picture

The minicipal bond market won't be allowed to collapse for states and major cities ... onto the Fed balance sheet it goes.

Mon, 07/01/2013 - 09:24 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

More like a rap sheet.. Or a a rape sheet.

Sun, 06/30/2013 - 15:36 | Link to Comment SmittyinLA
SmittyinLA's picture

I think next week the US municipal bond market will collapse with the indictment and arrest of the speaker of the CA assembly and leadership if the CA legislature.

 

It s going to be a real bad week for the investors in Socialism.

Mon, 07/01/2013 - 06:10 | Link to Comment ISEEIT
ISEEIT's picture

LOL..That would be hilarious. Ain't gunna happen though. I think you're forgetting who runs the CA AG (hint..It's holders replacement and she's a gangbanger, if you know your gangs...)

Mon, 07/01/2013 - 01:38 | Link to Comment Silver Bug
Silver Bug's picture

It is only a matter of time before the system collapses.

 

http://schiffblog.blogspot.ca/

Do NOT follow this link or you will be banned from the site!