Sentiment Muted As Northeast Braces For "Historic" Blizzard

Tyler Durden's picture

It was a busy session for Chinese "data" (more on the laughable validity of Chinese economic releases shortly), after China released January export and import data, which rose 25% and 28.8% from a year ago respectively. Futures were delighted by the data, until someone pointed out that January 2013 had some five more working days than 2012 due to the calendar shift of the Chinese new year, and that adjusted for this effect exports were a far more modest 12.5% while imports rose only 3.4%. Credit growth in January also rose to a record, with aggregate financing of 2.54 trillion, including new local-currency loans of 1.07 trillion, exceeding forecasts, as China dumped gobs of money into the economy, while somehow quite mysteriously inflation came right on top of the expected 2.0%. The Yen soared overnight following comments from Taro Aso who said that the Yen had depreciated too fast. Heading to Europe, the biggest news so far was the latest ECB LTRO repayment which saw some 21 banks repay €4.992 billion, less than the estimated €7.0 billion, and far less than the first announcement repayment of €137 billion.

Contrary to Draghi's promises that as a result of LTRO repayments, excess liquidity is still abundant, the excess cash in the Eurosystem is now in line with the market operation reduction, and any incremental balance sheet tightening as a result of LTRO shrinkage is priced in by now, and is offset by Draghi's inflation-cautionary words from yesterday.

Perhaps the key development that Europe is waking up to is that the upcoming Italian vote will likely be inconclusive and the risk of a second ballot is rapidly growing as Berlusconi cuts Bersani's lead (more on that shortly as well).

Finally, trading today will be slower than usual as Nemo is finally found in the shape of some 12 inches of snow blanketing the Northeast.

A quick recap of European key markets as US traders trickle in on this Nemo-shortened day:


  • Spanish 10Y yield down 11bps to 5.31%
  • Italian 10Y yield down 5bps to 4.53%
  • U.K. 10Y yield down 1bp to 2.1%
  • German 10Y yield little changed at 1.61%
  • Bund future up 0.04% to 142.87
  • BTP future up 0.28% to 110.92
  • EUR/USD up 0.1% to $1.3412
  • Dollar Index down 0.25% to 79.99
  • Sterling spot up 0.32% to $1.5766
  • 1Y euro cross currency basis swap little changed at -21bps
  • Stoxx 600 up 0.64% to 285.69

Key events on the calendar today as summarized by SocGen:

The EUR was offered across the board yesterday as ECB president Draghi conveyed his latest views on the economy and bank liquidity. In so far as the message on the exchange rate went, Draghi never tried to deliberately stop the currency's ascent, but the assertion that the currency appreciation could alter the inflation outlook was enough to send bulls scrambling. In practice, the ECB will now mull over its inflation forecast and any changes that the appreciation may have caused will be communicated in March. That does not necessarily make the EUR a sell in the short-run, but the resistance above 1.3500 in EUR/USD, after yesterday, will have become more congested. Note the rally too in euribor and bunds and a corresponding fall in yields and narrowing in yield differentials as the EBC reasserted its commitment to tenders with full allotment. The ECB stated that excess liquidity will stay over EUR200bn after the2nd LTRO payment later this month, which caused yield differentials to compress and EUR/G10 to deflate. Unless we observe a sudden worsening in incoming macro data over the coming weeks, there should still be enough pockets of support for the EUR to stop the corrective price action from morphing into a deeper pullback. Technically, a weekly close below 1.3375 would initiate a deeper move towards 1.3250. Watch euribor futures for price leadership.

A fairly busy calendar today will see the ECB announce the weekly LTRO repayment amounts. A potentially big day for the CAD lies ahead as employment data for January are published. For the EUR/CAD, a strong jobs report would squeeze down towards 1.3200 with a return to 1.30 not an unrealistic short-term target.

Finally, the full recap of overnight events comes from DB's Jim Reid:

It was a busy day for policy makers across the globe with Draghi and Carney – as well as the Fed and the BoJ – making headlines over the last 24 hours.

Starting with Draghi whose overall message at the post-ECB press conference seemed to be that monetary policy will remain accommodative. Like last month, Draghi talked about the remaining market fragility and reiterated that credit is yet to flow to the real economy. The ECB President didn’t appear too concerned about LTRO payments, but his comments that the euro’s strength was creating downside risk to inflation and an implicit downside risk to growth was taken to be “dovish” enough to send EURUSD down 0.92%.

Interestingly, Draghi mentioned that the ECB had “taken note” of the Irish government’s proposal to liquidate the Irish Bank Resolution Corporation and swap promissory notes for longer-term Irish government bonds. The move was seen by some as a form of monetary financing, but Draghi stopped short of offering an opinion, commenting instead that “this is not the last word on Ireland”.

In the UK, BoE governor-elect Mark Carney played down suggestions that he would rapidly press for changes in the monetary policy framework at the BoE. Regarding the inflation-targeting regime, he said that the “bar for alteration is very high” but he did hint at a potential change in the BoE’s communication policy to something more akin to that of the Fed.

Turning to the Fed, Board governor Jeremy Stein made an interesting speech warning on potential overheating in some parts of the credit market including high yield bonds and mortgages. Stein made a number of observations including the fact that the annualised pace of pay-in-kind bond issuance in the fourth quarter of 2012 was comparable to the highs from 2007. Stein also mentioned that the past year had set a new record in the use of loans for dividend recapitalizations.

In Japan, the PM’s push for a new governor to lead a policy shake-up at the BoJ has run into resistance from his own cabinet, according to Reuters. The report suggests that members of Abe’s government prefer former deputy BoJ governor Toshiro Muto, who advocates more asset purchases but has also warned that excessive financing of public debt could backfire through a rise in bond yields. Meanwhile, PM Abe prefers Asian Development Bank President Haruhiko Huroda who has been a sharp critic of the outgoing BoJ governor’s policies (Reuters). The article cites a source close to Abe as saying that the final choice of BoJ governor “will be a close call with a lot of complexities involved”.

Returning to the markets, it was a rather mixed day for European equities which saw a small bounce as Draghi spoke. The Stoxx600 (-0.22%) was unable to hold into gains however, with a weak tone in US equities (S&P500 -0.2%) weighing on the European close.

Italian stocks underperformed again (MIB -1.22%) as one of the final updates before the polling blackout is due to kick in on Saturday showed that Berlusconi had pulled to within 3.6% of the pro-reform centre-left (vs a 3.7% gap on Wednesday). The ECB and BoE remained on hold as widely expected. Datawise it was a relatively quiet day. German industrial production rose 0.3% in December (vs +0.1% expected). In the US, initial jobless claims fell 5k to 366k, leaving our US economists calling for a 180k rise in non-farm payrolls this month.

Turning briefly to the overnight session where the focus has been on Chinese and Japanese trade reports. Starting with the Chinese data, December exports grew 25.0%yoy (vs 17.5% expected). Import growth also surprised to the upside (28.8% vs 23.5%) as the trade surplus grew to $29.15bn (vs $24.7bn expected). In Japan, the December current account deteriorated to JPY264bn (vs JPY144bn expected) with Bloomberg reporting that this is the first consecutive monthly current account deficit since 1981. In terms of markets, Asian equities are enjoying solid gains ahead of the Lunar New Year break with the Hang Seng, KOSPI and Shanghai Composite up 0.3%, 0.8% and 0.8% respectively, helped by the stronger Chinese trade data. The Nikkei (-1.5%) is the notable underperformer overnight weighed by the abovementioned BoJ headlines and with USDJPY 0.30% lower overnight (93.35).

Looking at the day’s data docket, the highlights include German and US trade reports. The EU leader’s summit will continue today with a goal of agreeing a medium-term budget.

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Cult of Criminality's picture

Don`t worry FEMA`s got your back.

Cult of Criminality's picture

Now they can leave the earthquake drill and go to the blizzard drill.Already having the continuous shooting drills.

goldfish1's picture

A snow storm in snow country no less. Whoda thunk it?


Badabing's picture

fucking HAARP

fucking bankers!

goldfish1's picture

Maybe they don't want the following as headline news:


Legal memo from Obama DOJ justifies assassination of US citizens

Obama targeted an American for execution without any charges or due process,

"In September 2011, it killed US citizen Anwar Awlaki in a drone strike in Yemen, along with US citizen Samir Khan, and then, in circumstances that are still unexplained, two weeks later killed Awlaki's 16-year-old American son Abdulrahman with a separate drone strike in Yemen."

goldfish1's picture

The White House has bowed to demands from Congress to release its legal reasoning for the killing of US citizens by armed drones in an attempt to ease pressure on John Brennan, the architect of the drones strategy, at his Senate confirmation hearing as CIA director on Thursday.

The Associated Press reported that Barack Obama ordered that the 50-page legal rationale finally be given to the Senate intelligence committee as members' anger at the administration's refusal to share the classified document led to an implied threat from some senators to hold up Brennan's nomination.

trav777's picture

legal rationale...LOL.

When the Constitution explicitly mandates trial by jury and due process for ANY citizen accused of a crime.

Isotope's picture

I'm sure that this will serve as another excuse to steal tens of billions of dollars from the rest of the country to pump into New England as disaster relief.

ParkAveFlasher's picture

+1.  Nail on the head.  Or, to declare vast swaths of seafront real estate "zone 1" or something like that, de-price and hit the existing property owners with massive insurance upcharges, and then swoop in to grab it all at low prices.

In other ways, there is probably a "Rockaway" in progress.

trav777's picture

people should be paying realistic insurance rates for seafront property

ParkAveFlasher's picture

Who are you, the fuckin geicogecko?

GetZeeGold's picture



I'm sure the government will respond quickly to this event.

Mae Kadoodie's picture

Can Wall Street handle 12 inches?

Whiteshadowmovement's picture

Well the muppets certainly seem to be able to do it day after day...

fonzannoon's picture

This sucks. I gotta get outta here.

Whiteshadowmovement's picture

Hows this look to you:


Such a beautiful day in the middle of summer right now, Im strongly thinking about taking the afternoon off and going to play a round of golf (and burn one on the course...)

fonzannoon's picture

That sounds pretty damn good. Here is my view. By noon the sand will be gone.



Whiteshadowmovement's picture

yeesh, that does look pretty harsh...

incidentally a nice day for surfing today here:

The downside is I have to fly to Europe to get a proper skiing trip. There is one ski resort here high in the mountains but its kiddie-sized. If SA had a good place to ski, the rest of the world's geography could recede into the ocean as far as Im concerned...

Interesting side note- that little ski resort there cost millions to build but just a few months ago it went into foreclosure and some dude bought the whole thing lock-stock and barrel for ~ $600k usd at auction, he plans to develop it much more so im keeping my fingers crossed..

trav777's picture

I would move to RSA if it weren't for the majority population

Cult of Criminality's picture

Of course that will not really do anything for anybody,they just like to drill baby drill.

GetZeeGold's picture



Not in Alaska....where most of the oil is.


We can only drill in North Dakota.....cause there ain't no polar bears there.

Ghordius's picture

again: "The EU leader’s summit will continue today with a goal of agreeing a medium-term budget"

it's not a summit, it's the EU council meeting

and they have agreed to Prime Minister Cameron's (UK) proposal of shrinking the 7-years EU budget to 960bn

I still wonder why some media will do anything in order to avoid mentioning the council, or details on the EU budget

I can only presume this is done because it's contrary to a certain worldview - or could generate nasty questions at home

GetZeeGold's picture



For the love of Pete why can't we get the price of gas up? This crap is killing us!

Cult of Criminality's picture

Not in Alaska....where most of the oil is.

We can only drill in North Dakota.....cause there ain't no polar bears there.

Right...Funny GetZeeGold

youngman's picture

I love the way the NEWS makes this a HUGE thing...Storm of the Century I have heard....oh my...I love the shots of the reporters out in the snow saying its a good time to dump some bad one will cover it

ParkAveFlasher's picture

Yeah, a huge airshipment of bullion must be scheduled for this weekend.  Sorry, everyone's grounded / iced over / snowed in / drinking hot chocolate.

TuesdayBen's picture

Yeah, the annual storm of the century

Cult of Criminality's picture

Where is the Frontrunning the markets this morning? They may have to stay up 24-7 to frontrun this market.

Global Hunter's picture

Historic blizzard?  Good stuff, up here in Ontario it means the snowmobile races tomorrow are gona be awesome, the kids get to stay home from school and the adults have smiles on their faces and all giddy and chatty in the local Timmie Hortons.  We live in the real world and aren't going to worry about the hit to GDP...fuck you bernank.

goldfish1's picture

Everyday the kids aren't in the indoctrination prison is a good day.

goldenbuddha454's picture

Great, now Chris Christie can sit home, eat another 50 donuts and wait for Obama to come for another Post-Storm Photo Op!

CaptainSpaulding's picture

Jim Cantore is on it.

goldfish1's picture

lmao (do they even say that anymore?)

chistletoe's picture

Don't you find it so sad

that most people, including most copy writers and editors, even headline writers,

cannot spell correctly for themselves anymore.


try this:



Lord Of Finance's picture

Whatt a bunch of ass clowns the media are. That is why I don't watch the news, nor do I pay any mind to those that discuss it.


   I hear the shit of the day being parroted by the sheep I encounter on the street. They say, "hey Mike! Did you hear about the bahaa,bah,baaaha-bah." Literally. That is what I hear. I tune it out as though they were speaking a foreign language.


You should try this. I do watch some t.v. programming. But absolutely positively no news of any kind. I tune into Jerry Doyle and  Medved on the a.m. dial, but when they start discussing what the media is discussing, I click it to my playlist. 


I have much more peace of mind, as well as piece of mind. Seriously. Watching the news actually stupifies you. When I stopped watching the news, and that most especially refers to cable news programs, I rapidly recovered all my lost brain cells. 


Of course they were not lost, just de-activated. Watching less boob tube will reactivate the nearly dead cells. I find that about .02% of programming is watchable.