This page has been archived and commenting is disabled.
Market Awaits Coronation Of The QEeen
Japan growth cut in half, Europe growth cut by more than half, but none of that matters: today it will be all about the coronation of QEeen Yellen, who testifies before the Senate Banking Committee at 10am. Not even Japanese finance minister Aso's return to outright currency intervention warnings (in addition to the BOJ's QE monetary base dilution), when he said that Japan must always be ready to send signal to markets to curb excessive and one sided FX moves and it is important that Japan has intervention as FX policy option, which sent the USDJPY back up to 100 for the first time since September 11 made much of an impact on futures trading which after surging early in the session following the release of Yellen's prepared remarks, have now "tapered" virtually all gains. Certainly, the follow up from Europe doing the same and also warning it too may engage in QE, has been lost. Which is odd considering the entire developed world is now on the verge of engaging in the most furious open monetization of virtually everything in history.
Key events on the US docket
- US: Initial jobless claims, cons 330k (8:30)
- US: Yellen testifies to Senate banking committee (10:00)
Market Re-Cap
Stocks traded higher in Europe, after the positive sentiment which saw the Nikkei 225 index finish up over 2% carried over into the European trading session. The move higher by the Nikkei 225 index, which moved into bull market territory was itself driven by a weaker JPY after Japanese finance minister said that it is important that Japan has intervention as FX policy option. As a result, broad based JPY weakness saw the spot rate move back above 100.00 level for the first time since early September, which in turn erased DNT barrier level and prompted profit taking as delta hedge positions were unwound. In spite of the risk on sentiment, dovish comments by Fed's Yellen who said that the economy and jobs are performing far short of potential ensured that Bunds and USTs also traded higher. Looking elsewhere, GBP underperformed EUR this morning, after the ONS said that UK retail sales volumes fell 0.7% in October, with mild weather affecting sales of winter clothing. Going forward, market participants will get to digest the release of the weekly jobs report from the US and the weekly DoE data. Also, the US Treasury will auction off USD 16bln in 30y Bonds.
Overnight news bulleting from Bloomberg and RanSquawk:
- Japanese Finance Minister Aso said Japan must always be ready to send signal to markets to curb excessive and one sided FX moves and it is important that Japan has intervention as FX policy option. The Nikkei 225 closed up 2.12% at 14876.41, after rallying in the session to enter into bull territory amid a weaker JPY.
- Fed's Yellen says economy and jobs performing far short of potential. Yellen said unemployment is too high, inflation short of 2% goal, and Fed has made significant progress towards goals but has more work to do.
- UK Retail Sales Ex Auto (Oct) M/M -0.6% vs. Exp. -0.1% (Prev. 0.7%, Rev. to 0.8%) - According to ONS, declining motor fuels sales led to fall in sales in October
- Treasuries steady before week’s refunding auctions conclude with $16b 30Y, Yellen testimony before Senate Banking Committee today.
- Yellen, in prepared remarks released yesterday, signaled she will continue continue with stimulus until she sees improvement in the economy.
- 30Y notes to be sold today yield 3.805% in WI trading; drew 3.758% at October auction and 3.820% in Sept., which was highest since August 2011
- 10Ys sold yesterday stopped at 2.750%, about 0.4bp below WI yield at 1pm bidding deadline; first 10Y refunding to stop through since May 2012, according to Stone & McCarthy
- The euro area’s recovery came close to a halt in the 3Q as German growth slowed, France’s economy unexpectedly shrank and Italy extended its record-long recession
- The Obama administration yesterday indicated it was willing to consider Democratic legislation to halt some of the hundreds of thousands of insurance cancellations that have raised alarm among voters and lawmakers
- Only 26,794 sign-ups for private plans were made through the federal marketplace since its Oct. 1 launch; figures reflect people who have selected a plan without necessarily paying their first premium, the final step in enrollment. The administration had projected 495,000 enrollees
- U.K. retail sales unexpectedly fell in October as consumers reduced spending on household appliances, clothing and automotive fuel
- Bruce Berkowitz’s Fairholme Capital Management LLC is seeking to buy two businesses that insure MBS from Fannie Mae and Freddie Mac and support them with $52b in equity
- Sovereign yields lower, EU peripheral spreads tighten. Asian and European stocks, U.S. equity-index futures higher. WTI crude and copper lower; gold lower
Asian Headlines
Japanese Finance Minister Aso said Japan must always be ready to send signal to markets to curb excessive and one sided FX moves and it is important that Japan has intervention as FX policy option.
Japanese GDP Annualized SA (Q3 P) Q/Q 1.9% vs. Exp. 1.7% (Prev. 3.8%); GDP SA (Q3 P) Q/Q 0.5% vs. Exp. 0.4% (Prev. 0.9%).
EU & UK Headlines
European GDP SA (Q3 A) Q/Q 0.1% vs Exp. 0.1% (Prev. 0.3%)
German GDP SA (Q3 P) Q/Q 0.3% vs. Exp. 0.3% (Prev. 0.7%)
French GDP (Q3 P) Q/Q -0.1% vs. Exp. 0.0% (Prev. 0.5%)
Italian GDP WDA (Q3 P) Q/Q -0.1% vs Exp. -0.1% (Prev. -0.3%)
Dutch GDP (Q3 P) Q/Q 0.1% vs Exp. 0.1% (Prev. -0.1%, Rev. 0.0%)
UK Retail Sales Ex Auto (Oct) M/M -0.6% vs. Exp. -0.1% (Prev. 0.7%, Rev. to 0.8%) - According to ONS, declining motor fuels sales led to fall in sales in October.
BoE's Mark Carney "would be prepared to raise interest rates before an election if this was necessary". While BoE's Fisher said timing of rate rise is very uncertain; BoE wont raise rates anytime soon.
US Headlines
Fed's Yellen says economy and jobs performing far short of potential. Yellen said unemployment is too high, inflation short of 2% goal, and Fed has made significant progress towards goals but has more work to do. These comments from Yellen came out earlier than expected as she is testifying to the Senate Banking Committee today.
Fed's Bernanke said Fed missing on it's jobs and inflation mandates adding that Fed credibility on inflation 'very strong'. Bernanke said sooner rather than later US employment rate will be back in 5-6% range and Inflation expectations have been quite stable around 2%. He added Fed will be able to normalize monetary policy once economy has been restored.
Equities
Stocks in Europe failed to maintain the momentum which was observed at the open and came off the best levels as market participants digested comments from Fed's Yellen and also Japanese Finance Minister Aso, which led to broad based JPY weakness overnight but in turn saw the USD index advance 0.5%. Of note, Spanish IBEX 35 and the FTSE MIB underperformed, where share placement of CaixaBank weighed on the Spanish index and less than impressive earnings from Tod's in Italy saw shares slide over 7%.
Cisco shares are seen down 11% ahead of the cash open after the company reported Q1 Adj. EPS USD 0.53 vs. Exp. USD 0.51 and also warned its revenues could fall as much as 10% in the current quarter.
FX
USD/JPY trended higher throughout the session, erasing touted 100.00 DNT option barrier level in the process after Japanese Finance Minister Aso said it is important that Japan has intervention as FX policy option. He added that Japan must always be ready to send signal to markets to curb excessive and one sided FX moves. As a result, USD index advanced almost 0.5% and in turn weighed on both EUR/USD and GBP/USD. The release of weaker than expected retail sales report from the UK briefly resulted in GBP under performing EUR, however the fact that the BoE is perceived to be in a more hawkish mode than the ECB meant that EUR/GBP resumed the downward trend.
Commodities
The IEA said that demand for oil products is on the verge of a seasonal increase and refineries should steeply raise the amount of oil they process in November and December.
An Iraqi oil official says there has been no reduction in oil production or exports from violence at Souther Rumaila Oilfield.
China's Oct crude oil output up 0.24% Y/Y at 18.07mln tonnes. Further from China, the nation is to cut fuel prices by less than 2%.
China set to cut gasoline price by CNY 160/t from tomorrow.
US API Crude Oil Inventories (Nov 8) W/W 599k vs. Prev. 871k
- Cushing Crude Inventory (Nov 8) W/W 1700k vs. Prev. 999k
- Gasoline Inventories (Nov 8) W/W 1700k vs. Prev. -4300k
- Distillate Inventory (Nov 8) W/W 606k vs. Prev. -27
Israeli PM Netanyahu yesterday warned that a 'bad deal' with Iran on its nuclear programme could lead to war and his aides challenged US assertions to have offered Tehran only 'modest' relief from sanctions.
China was the world's top gold consumer in the third quarter, extending a demand gap against India, which is usually the No. 1 consumer of the precious metal, World Gold Council data showed Thursday. Indian demand was undermined by a slide in the rupee's value and import curbs, which pushed domestic prices to near-record levels.
SocGen's views on the key macro catalysts:
Fed chair nominee Janet Yellen will take centre stage today, testifying to the US Senate banking committee. Backed by strong support from Senate Democrats, her confirmation for the top post is thought to be a foregone conclusion though she is likely to grilled by certain Republicans. So what is the fuss all about? Republicans have been strong critics of the bond buying stimulus programme and so they will scrutinise Ms Yellen about her take on the programme and the path to stimulus exit. It is doubtful however that she will provide clues on when tapering will start and may instead present her thoughts on the labour market and threshold conditionality for raising rates. Her plans to improve transparency and communication will also be a source of scrutiny. Will Yellen inspire participants to further short the Treasury market (higher yields) and add to long USD positions?
In the eurozone, the advance GDP estimate for France shows that the economy contracted by 0.1% q/q in Q3. The German economy grew by 0.3%, a touch slower than the strong 0.7% q/q increase in Q2. We forecast Italy to report a 0.6% qoq contraction and consequently the eurozone average to come in flat q/q. A negative surprise will add to speculation of further policy easing in the New Year even if inflation risks are now thought to be balanced by the ECB after last week's 25bp rate cut. Weak data and the fact that the ECB chief economist has openly put “asset purchases” on the table as a policy tool supports the widening in US/EU swap spreads, and our outlook for lower EUR/USD.
The pound strengthened but cable gains were capped yesterday at 1.6000. UK 10y swaps edged higher after the BoE quarterly inflation report upgraded the outlook for GDP growth for this and next year to 1.6% and 2.8% (from the previous 1.4% and 2.5%) respectively, and brought forward its forecast of unemployment reaching the 7% threshold by 18 months to Q3 2015 from late 2016. The BoE emphasis on a market rate based set of projections for unemployment implies a 25bp rate hike by Q2/Q3 2015. The press is rife this morning with talk of a first hike earlier than that (late 2014) but we see no move before H2 2015, though we forecast inflation rising to around 3.5% within the next 2 years.
Within emerging markets RBI Governor Raghuram Rajan tried to calm nerves after the recent INR depreciation through an emergency press conference. The aim was to allay market fears of renewed stress on the rupee. Rajan reiterated that the current account shortfall is improving and is expected to fall to less than 3% of GDP this fiscal year. Today the ball will be back in the court of the USD with EM investors bracing for fresh turmoil.
DB's Jim Reid concludes the overnight recap:
The initial chatter, second guessing and eventual release of Yellen’s confirmation testimony saw the S&P 500 add more than 1.2% or 21 points from the early lows as equities powered through to the close. The S&P 500 managed to close 0.8% higher as cyclical sectors such as consumer goods (+1.2%), tech (+1.1%) and banks (+1%) led the list of outperformers yesterday. Retail posted a 1.3% gain after Macy’s Inc provided an upbeat holiday sales outlook. 10yr UST yields firmed 7bp yesterday, including a sharp 5-6bp rally in the final minutes of trading, capping a turnaround for fixed income across most DM and EM markets. Gold (+1.1%) enjoyed a much needed rally after fears of a December tapering led to a 6% drop in the precious metal over the past two weeks.
Looking at markets this morning, S&P 500 futures are up a further 0.15% and Asian equities are up around 1-2% across most major indices. The dovish sentiment has been bolstered by Bernanke who commented at a townhall event that the Fed is missing on its jobs and inflation mandates. And while we’re on the topic of central bank stimulus, the ECB’s Praet was on the newswires again overnight. He again suggested that the ECB can go into negative deposit rates and take a number of measures, including presumably outright purchases as he mentioned yesterday. EURUSD is down 0.10% this morning. Praet also said that the disagreement among council members was on the timing of the recent rate cuts. So within the space of the last 12 hours we’ve had three senior central bank officials (including arguably the two most powerful in the monetary policy world) make dovish statements to the market.
Yellen’s testimony has provided some respite for EM Asian names such as Indonesia. Indonesian stocks are up 1.6% as we type, erasing much of yesterday’s losses and the lower UST yield is prompting better buying across in the Indonesian bond curve. 5yr Indonesian CDS is quoted around 8-9bp tighter on the day. Chinese stocks opened up weaker as the plenum disappointment continues to cascade through A-shares, and they are still lagging somewhat this morning (Shanghai Comp +0.2%). In Japan, Q3 GDP growth was reported at 1.9% QoQ which is better than the 1.7% rate of growth expected but is half of last quarter’s 3.8%. Some analysts have noted a slowdown in external export demand. Japanese finance minster Aso commented that it is important that Japan has intervention as a FX policy option. The Nikkei is up by a region leading +2.5%. The USD is steady against major currencies amid relatively light flows after cheapening yesterday, and gold is up a further 0.23%. Coming back to the Fed, the WSJ’s Hilsenrath wrote overnight that in addition to weighing up a lowering of the central bank’s employment threshold to 6% from 6.5%, other potential changes to forward guidance are being floated. One idea is that the Fed could signal that it won’t hike rates if inflation falls below a threshold like 1.5%. Another idea being floated is to somehow strengthen the Fed’s commitment that rate hikes would come slowly even after the 6.5% employment threshold is crossed.
Looking at the day ahead, all eyes will on the Q&A session of Yellen’s testimony before the Senate Banking Committee. The hearing starts at 3pm London time. We also get an important data point in the form of Q3 GDP numbers for the euro area (consensus is +0.1% QoQ vs 0.3% last quarter) as well as the individual growth numbers for Italy, France and Germany. UK retail sales data are also due today. In the US, jobless claims and the September trade balance are the main data releases.
»
- 5453 reads
- Printer-friendly version
- Send to friend
- advertisements -
Gold getting taken to the Woodshed as we speak, mustn't have a positive Gold print as she takes the helm
See that girl, watch that scene, diggin' the QE queen
You're a teaser, you turn 'em on
Leave them burning and then you're gone
Great day for the stock market and for DOW 36Kers.
And Ben can barely contain himself now to "get the fuck outta here before the roof caves in!!"
Gotta give props.....I think he's gonna make it!
No, my thinking is more like we have the Bernank at the helm, the Titanic has struck an iceberg, we are taking on water, and he turns to his yeoman Yellen and says, "Hey, you want to steer the ship for a bit? I'm going to go check out the lifeboats. Just keep steering straight, everything is fine."
Yeah, But Ben & Co has an appointment,the upcoming 13th December will mark the 100th anniversery of the Federal Reserve. Of course liquor-idity will remain plentiful and since none of us will be receiving any invitations to Ben & Co's private little party he's instructed us all to partake in the S&P 1800 celebration.
A toast to ya Yellen......F.U. Ben.
Regardless of what Yellen does or does not do,
this is going in only one direction.
When the markets, too, collaborate in the speculation
on food prices to the extent that price inflation is
breaking the bank of little guy USA, it simply can't go
on much longer. Feeding 7 billion + is no easy task
in the best of times.
"Global Financial Architecture and Economic Systems on Verge of Collapse"http://stateofthenation2012.com/?p=2200
.
Perfect time to print the highs for Indices for this year.
My guess is the top is in either today or within next couple of days.
Checkout the BBs/MACDs/RSIs of all time frames monthly, weekly and daily - and compare with 2000 and 2007.
Target: the high 178x SnP or maybe even up into my often mentioned 18xx - in that case we need a few more days. Latest around 23rd.
Thereafter a few months lasting correction and period of risk off starts. EURUSD, Indices, metals, yen-crosses, EURCHF - everything down. Down into another clowns show of "debt ceiling discussion".
Calamity Janet is going to be Bernanke's fall guy -- or should I say fall "QEeen" -- for the QE Calamity that is coming our way.
It will be momentous, even biblical! And it is being done intentionally! A few of the insiders have even said so!
And she knows it. But that's OK with her cause she'll be out the door with a ton of gold when the big circus tent collapses on all the muppets watching the final clown act!
Should be fun! Get your pop corn now!
But will she say when the SHTF that it is Bernanke's fault or Bush's fault? Or will she just disappear out the side door never to be seen again as per the usual sting operation. She could use the "we never saw it coming" schtick or the MSM will cover by using the you're sexist if you try to pin this on a woman BS. Either way, your pockets will still be empty Mr. and Mrs. Amerika.
what's that spike in the 10-yr yield?
suck in some more sheeple for the reversal just around the corner ... part of exhaustion moves
IS "sheeple + muppets = shuppets" ? Or is it "meeples"?
180IQ and yet she can't see that she's being setup as the patsy. ROFL.
I would have loved to be a fly on the wall at the secret ceremony held last night.
I wonder if the Queen Bee drank the blood of the one that they sacrificed?
Over.
The newest American fraud to be anointed by the house of clowns! No gentiles allowed!!
"It is better to live in a desert land than with a quarrelsome and fretful woman."
"Do not speak in the hearing of a fool, for he will despise the good sense of your words."
Thumbs up on the clever headline!
probably better job report today so yellen can said before the senat , look its QE is working but we need to do moar.
how is it possible in era of aducated people to allow for such a crime
Take an 8th graders test from 1920.....you'll find out how educated you actually are. No.....you can't get your college tuition back.
Here you go.....and good luck.
http://archiver.rootsweb.ancestry.com/th/read/BACKTOTHEPAST/2004-11/1101526996
From the exam:
Indoctrination by Bankers, since the 1920's.
Easily done when there are no cops.
Does this Old Yeller also have rabies??
She's the perfect fall guy for Ben's crimes. Can't wait for that "deer in the headlights, crapping it's pants" look on her face when TSHTF shortly.
But I'll give her my usual warm welcome from down here in the real world....
FUCK YOU MR(S) YELLEN!!!!
YUCK FELLEN!
Yes, and as she is the first woman to occupy that rank, after her death she will be kept in a glass container filled with formalin, as a monument in front of the FED .
After her death? Man, did you really not notice that she is UNDEAD? So, forget about that ...
" ... she is UNDEAD? "
I don't believe in supernatural but, .... could it be she is an artificially aged FEMBOT ?
Hmm, I wouldn't see any difference. So, yes, that could be.
Yellen = "There is still moar "work" to be done". "Work" in Fed speak = push print button. It's so complicated.
Assets quality doomed.
Long live the QEeen!
Im gonna miss Bennie and the Ink Jets. Ron Paul "Is Gold money?"
ITS TRADITION MUWAHAHAHAHHAHAHA
I don't always go grammar nazi, but when I do, it's to point out a 97 word sentence in the summary.
Could you point me to the rule that says anything over 96 words is ungrammatical?