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In Addition To China, Here Is What Other Central-Banks Moved Overnight Markets
While the biggest news of the day will certainly be China's rate cut (and the Dutch secret gold repatriation but more on the shortly), here is a list of all the other central-banking events which have moved markets overnight, because in the new normal it no longer is about any news or fundamentals, it is all about the destruction of the value of money and the matched increase in nominal asset values.
As RanSquawk recounts, European equities opened in the green in a continuation of the Wall Street close and positive performance overnight in Asia-Pacific equities with little else in the way of macro newsflow to dictate the price action. However, this subdued start to the session was short-lived as ECB’s Draghi took the stage in Frankfurt and presented an increasingly dovish tone. More specifically, the ECB head said the inflation situation in the euro area has become increasingly challenging and will seek to raise inflation as fast as possible, with participants taking these as comments as one of the clearest indications yet that an ECB QE programme is increasingly likely. This subsequently saw European stocks surge higher with gains in excess of 1% amid hopes of further liquidity while Bunds staged a fast-money move higher to print session highs and the Euribor strip was also seen bid following the dovish rhetoric. On a stock specific basis in Europe this morning, newsflow remains relatively light. However, energy and basic material names lead the way higher alongside the recent modest recovery seen in commodity prices.
Overnight Buletin Headlines form Ransquawk and Bloomberg
- European price action has been largely controlled by particularly dovish rhetoric from ECB’s Draghi.
- As such EUR/USD prints a weekly low, while European equities enter the North American crossover firmly in the green.
- Looking ahead, today’s session sees a lack of tier 1 US data, with Canadian CPI the main event.
- Treasuries headed for second consecutive weekly loss amid gains for stocks, surge in corporate issuance including Alibaba’s $8b, largest USD- denominated sale by an Asian issuer.
- China cut interest rates for the first time since July 2012, lowering the 1-year deposit rate to 2.75% from 3.00% and the one-year lending rate by 0.4ppt to 5.6%
- Draghi said the ECB must drive inflation higher “as fast as possible,” and will broaden its asset-purchase program if needed to achieve that
- Japan’s finance chief said the yen has been weakening too fast over the past week, the strongest statement yet by one of the nation’s top policy makers as the central bank’s expanded stimulus drives down the exchange rate
- Obama lifted the immediate threat of deportation and opened the way to better jobs for about 5m undocumented immigrants, thrusting a long-simmering fight to the forefront as he takes on a Republican-controlled Congress
- The U.S. health secretary, Sylvia Mathews Burwell, said her agency made a mistake when it added dental-plan customers to recent figures on Obamacare enrollment.
- Russia is seeking to build a high-speed rail link to further bolster ties with China after agreeing on the biggest natural gas supply deal in history
- The U.K. Independence Party dealt a new blow to Prime Minister David Cameron as it won a second seat in Parliament from his Conservatives in six weeks
- U.S. prosecutors are seeking to settle criminal currency- rigging cases with multiple banks at the same time, allowing lenders to avoid being singled out for industrywide conduct, according to people familiar with the matter
- Sovereign yields lower. Asian stocks gained. European stocks, U.S. equity-index futures higher. Brent crude, gold gain; copper falls
US Event Calendar
- 11:00am: Kansas City Fed Manufacturing Activity, Nov., est. 6 (prior 4)
- 10:00am: Senate subcommittee hearing on New York Fed
FX
In terms of FX moves, until the PBOC shocker just before 6 am eastern time, the comments from Draghi have dictated a bulk of the price action, with EUR/USD breaking back below 1.2500. This subsequently provided USD with a strong bid which lifted USD/CHF and subsequently saw EUR/CHF reach its highest level in 9 days, with some also citing SNB intervention alongside the move in the cross. Elsewhere, overnight, USD/JPY was dragged lower following the pair failing to break above 119.00 yesterday, with the move to the downside exacerbated by comments by Japanese Fin. Min. Aso who said the speed of JPY weakening has been too fast, with this move also resulting in heavy selling in EUR/JPY and GBP/JPY. Once the PBOC hit the tape, the AUD soared against all pairs, and as a result lifted all AUDJPY carry driven trades, which as we showed yesterday, was the key correlation pair for E-Mini algos, thus sending the S&P to new all time highs.
COMMODITIES
Elsewhere, the commodity complex has been particularly subdued. Early in the European session spot gold failed to break above USD 1,200 before being dragged further away from the handle following the broad-based USD strength. WTI and Brent crude futures enter the North American crossover in modest negative territory with participants looking ahead to the OPEC meeting, ahead of which analysts at Commerzbank said OPEC are unlikely to cut 30mln bpd target next week, while SocGen sees Saudi Arabia leading 1mln b/d to 1.5mln bbd OPEC cut.
* * *
DB's Jim Reid concludes the overnight news recap
Yesterday was certainly a day for the data-watchers with a host of prints across Europe and the US. The result was, perhaps unsurprisingly, a mixed bag and continues the theme we’ve seen recently with less than encouraging PMI prints out of Europe in the morning being met with a generally solid set of releases in the US in the afternoon. Starting in the US, CPI came in modestly ahead of consensus as the flat mom October CPI headline print was a tad above the -0.1%mom expected, whilst the core reading showed further acceleration to +0.2%mom (+0.1%mom expected) from +0.1% previously. Our US economists interestingly pointed out that the continually deflating goods prices recently have been offset by ongoing gains in services prices – this in turn has raised the core inflation print by a tenth to 1.8% in year-over-year ended terms.
Looking further ahead, our colleagues expect that it’ll be difficult for core inflation to move lower given that core services prices accounts for a chunky 75% of overall core CPI inflation. With core goods prices moving lower as a result of a significant deceleration in non-petroleum import prices, we’ve seen core goods decline year-over-year since April 2013. On the other hand core services prices have consistently grown well above +2.0% for the last three years (with the current run rate at +2.5%). This is largely as a result of shelter costs that we mentioned yesterday which have once again risen in October to a +3.1% yoy growth rate, now a recession high. Given the expected further decline in the rental vacancy rate, we should see shelter costs continue to rise in the near term which should offset any downwards goods sector pressure and hold inflation above 2%. All-in-all the divergence in the two factors of CPI highlights the current inflationary conditions in the US and is worth keeping a keen eye on as we move through 2015.
Away from the CPI readings, there were further positive prints in the housing market with existing home sales increasing 1.5%mom, ahead of expectations of a small decline. As well as this, the Philadelphia Fed survey was Strong with the solid 40.8 reading up from 20.7 in October. Claims were largely mixed although the flash manufacturing PMI was the slight blip in an otherwise encouraging day for the region with a 1.2pt fall to 54.7 weaker than expected. Finally October’s leading index showed a +0.9%mom rise, ahead of consensus.
Looking at how the market reacted, the +0.20% close in the S&P yesterday somewhat hides the +0.6% bounce off the lows, closing just shy of Wednesday’s record highs. Treasuries weakened modestly with the curve some 2-3bps wider whilst the Dollar closed down slightly weaker (DXY -0.06%).
Before all this yesterday, there was little for the market to get encouraged about in Europe following disappointing PMI’s. The Eurozone November flash print of 51.4 was materially down on expectations of 52.4 and last month’s 52.1 reading. However, this is largely explained by a drop in the German composite to 52.1 (54 expected) from 53.9 previously and comes after what had been an encouraging recent ZEW survey. Just on the German reading, the most disappointing reading was perhaps a fall in the services index to 52.1 from 54.4, marking the lowest level since July 2013. The weakness in these numbers backs up our German economists’ view that GDP is set to stagnate through the next two quarters with the potential for a risk of a negative quarter. Away from Germany, France didn’t fare much better with the composite coming in below expectations at 48.4 (vs. 48.7), although the services print improved from Octobers reading. Looking forward, our European economists see the overall PMI outcome consistent with their GDP growth call in 2015 of +0.8% as well as providing further strength around the argument that that the ECB will have to include government bonds in its QE programme to meet its inflation target. Over the last few weeks of touring round Europe its been noticeable how sentiment has changed towards QE. Two months ago at the start of my recent travels, most people were still skeptical that the ECB could ever sanction Government bond QE. Fast forward to the present day and the vast majority think it’s an inevitability.
In terms of market reaction in Europe yesterday, 10yr Bunds closed some 5bps wider whilst the Stoxx 600 (-0.26%) and DAX (+0.12%) initially weakened some -0.9% post PMI’s only to rally into the close following the better sentiment out of the US. Credit markets largely reflected the equity moves, Xover closing some 4.5bps wider on the day.
Whilst on the subject of credit markets, the latest weekly fund flows are in. A look at the HY mutual fund flow numbers shows that the past week saw further outflows in Europe (-$143mn or -0.3% of NAV). We have now seen just one week of inflows in the past eight with 15 of the past 19 weeks seeing outflows. Net outflows over the 19 weeks have totaled $4.1bn (around 10% of NAV). US HY funds also saw outflows over the past week (-$809mn or -0.3% of NAV) breaking a streak of four consecutive weeks of inflows. Overall it does seem that flows have stabilised but we probably need inflows to encourage fund managers to exploit the wider and quite attractive levels - especially those in Europe. Maybe the US small set back is not being helped by the continued Energy sector concerns.
Just wrapping up the data prints yesterday, industrial orders out of Italy came in weaker than expected (-1.5% mom vs. -1.0% mom expected) although October retail sales in the UK surprised to the upside. The headline print including auto’s came in at +0.8% mom (vs. +0.3% mom expected and -0.3% previously) whilst the core reading (excluding auto’s) was above market at +0.8% mom. Finally, DB’s George Buckley noted that the picture painted by the UK’s CBI survey painted something of a mixed picture, with two key forward-looking activity measures in expected output and total orders – moving in opposite directions.
Elsewhere, Bloomberg has reported that the ECB has put together the necessary requirements to start purchasing ABS from as soon as today. This follows on from earlier comments from ECB member Mersch who commented that the central bank may start purchasing the securities this week. Rounding out central bank news, SNB board member Zurbruegg has defended the national banks cap of 1.20 to the Euro whilst commenting that the bank won’t hesitate to enact supplementary measures.
Before we look at the day ahead, markets in Asia this morning are generally firmer. In particular Japan appears to be trading well ahead of the anticipated dissolving of the lower house today. The Nikkei is currently +0.36% higher whilst the JPY has strengthened +0.21% versus the Dollar to 117.96 buoyed somewhat by comments from the Finance Minister that the currency’s decline had been too fast. Elsewhere bourses in China, Korea and Hong Kong are +0.76%, +0.35% and +0.19% better respectively as we go to print.
In terms of the day ahead, after yesterday’s raft of data releases the market could get something of a breather today with just the Kansas City Fed manufacturing index in the US to look forward to after we get public finances data in the UK and hourly wages out of Italy. Perhaps of more interest however, we will hear from both the ECB’s Draghi (commenting on ‘Reshaping Europe’) and Nouy (commenting on Banking and Regaultion) this morning as well as the Fed’s Williams later so we will keep an eye out for anything interesting.
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Here is a good overview of what the MSM is saying about the major "cold war" shift in Putin's current posture.
Both sides are represented in this analysis.
http://www.businessinsider.com/mauldin-on-russia-2014-11
This is far from a balanced article, but just another rehash of the USSA state department talking points. While it offers some useful analysis, the article is tainted by predetermined conclusions, the politically correct view that Putin is bad, Russia is isolated, blah blah blah. Better to watch CNN since you will learn as much and waste less time reading canned prose.
Claims that Russia is expanionist is a load of BS. Russia does not want or need to incorporate the economic and political catastrophe called the Ukraine, created by Nudelman and crew. Taking over the southeast would do more far more to destroy the Russian economy than sanctions ever could. Better for Russia to stick the EU with the bill, and let the Ukies turn on them as they get IMF'ed.
Biden's goal to create billionaire wealth by stealing the Donbass nat gas resources via his son is now a fleeting fantasy, You didn't really believe this war against Russia was for democracy, did you, LOL?
Like I said that is the official version.
But that other guy provides the Russian view, even going to the point of affirming that the Malaysian plane was downed by a Nato missile.
This is the FIRST time I have seen that event being affirmed in that light on US (or for that matter on westtern) MSM.
I think its worth pointing that out.
As the Malaysian plane affair is a key factor used by Ukraine to blame the Putin clique, putting this counter argument out on front page is a novel event in MSM.
What is important in this propoganda vs counter propoganda game is that ALL arguments be put on the table.
Let the people then come to their own opinion. You can't fool all the people all the time.
I think you mean "confirming" rather than "affirming".
DavidC
well both commentators provide arguments that affirm that Putin's propoganda is just that.
The whole issue about this plane has never been clarified.
What the US people need to know is that there are two versions of that story. That's my point as its getting exposure in the MSM, not just in more discreet media like ZH.
Confirmation has never officially occurred on this issue.
But from a bigger perspective, although I am not a Putin admirer, I have to admit that Putin's Russia has now come raging back into the geo political picture. And the China USA stand off is acquiring a broader Asia vs West configuration.
Whence my comparison of Saint Putin now seeing himself as Saint Alexander Nevsky, enemy of the Teutonic horde, ally to the Mongols.
You should listen to yourself: a NATO missile.
How come: because the Ukrainian airforce already had western built NATO missiles mounted under the wings of its planes, or was it even a NATO plane (from which country?) who got involved, or are we talking western surface to air missile?
That is obfuscation by hilarity - let's wait for someone to pose the claim it was a Chinese missile. Or maybe North Korean?
Ukraine’s President, Petro Poroshenko, in an Odessa TV address to the nation, on November 13th, said:
“We will have our jobs. They will not. We will have our pensions. They will not. We will have care for children, for people, and retirees. They will not. Our children will go to schools and kindergartens. Theirs will hole up in basements [from our bombs]. Because they are not able to do anything. This is exactly how we will win this war! [I.e., we will starve and terrorize them into submission.]”
-- video on Global Research
All made possible by the Jewish capture of the United States of "America" and "Ukraine"...
Obviously Brzezinski is Eastasian controlled opposition for the cabal to play off against Eastasia.
You can always count on your allies to sell you out and then kill you. After they burn you they can't have you around causing trouble.
It was written for -- sheeple (Business Insider) the sheeple don't have the intellectual capacity to absorb a Kissinger or Mearsheimer (whose pro-USSA imperial proclivities and nationalism are unquestioned, but yet blame the US for the quagmire it has found itself in).
Then there is who it was written by -- Mauldin ('nuff said), the President of the Eurasia Group (and the bass akwards intellect behind the NWO's J-curve), and then we have a bankster lightweight (institutional money management in the financial Mecca of Denver) but more importantly a first generation Russian immigrant who has a need to justify the decisions and course of his own life.
I may be a first generation immigrant in Switzerland (which is a vastly superior country to shitholes like the USSA or USSR) but that doesn't stop me often publicly leveling criticism at the Swiss government (with very un-Swiss frankness). There are always choices to made, I know a number of bankers who have emigrated back to Russia since the onset of the financial crisis, just as I know a number of western bankers who trying to get their ass (and big paychecks) evac'd out of Moscow right now.
Men don't go war, they get sent off to war. Nation-States go to war, and the decision is larger than any one man's choice. The deification of Putin can be childish, homoerotic or propagandist. However, the propaganda used to canonize Putin serves both sides' interests. In addition to Putin's reelection effort, there are are Russian analogues to the Eurasia Group, Rand, CFR, and other state and private elements of the MIC establishment pushing for war in Russia, just as is being done in the US right now. The imagery of bare chested gun toting Putin as the enemy is just as valuable to the neocons and MICS who need to finance their continued existence and justify their own demands upon the State and people.
"[T]he United States and its European allies share most of the responsibility for the crisis. The taproot of the trouble is NATO enlargement, the central element of a larger strategy to move Ukraine out of Russia’s orbit and integrate it into the West. At the same time, the EU’s expansion eastward and the West’s backing of the pro-democracy movement in Ukraine -- beginning with the Orange Revolution in 2004 -- were critical elements, too. Since the mid-1990s, Russian leaders have adamantly opposed NATO enlargement, and in recent years, they have made it clear that they would not stand by while their strategically important neighbor turned into a Western bastion. For Putin, the illegal overthrow of Ukraine’s democratically elected and pro-Russian president -- which he rightly labeled a “coup” -- was the final straw. He responded by taking Crimea, a peninsula he feared would host a NATO naval base, and working to destabilize Ukraine until it abandoned its efforts to join the West.
"Putin’s pushback should have come as no surprise. After all, the West had been moving into Russia’s backyard and threatening its core strategic interests, a point Putin made emphatically and repeatedly."
--John J. Mearsheimer, Foreign Affairs, Sept/Oct 2014 issue
What's wrong with that?
There's nothing wrong with it, it's just that most sheeple can't understand it in context, but there were more interesting aspects to that article than its core thesis-
http://www.zerohedge.com/news/2014-08-21/council-foreign-relations-ukrai...
Putin doesn't want Washington & London to control Ukraine, he doesn't actually need to control it himself.
The "separatist" leadership has made clear that their sights are far bigger than just the two "republics" and they don't intend to stop before taking Kiev.
Poroshenko is doing his best impersonation of a transgender ARVN succubus.
The question is whether the EUcrats, or the continental loyalists within NATO, will pursue peace through Balkanization before, or after, the separatists make it to Kiev, which is why the Mearsheimer piece was so "interesting".
http://www.zerohedge.com/news/2014-09-07/top-russia-expert-ukraine-joini...
The 2008 NATO Bucharest summit’s announcement that Ukraine and Georgia would eventually join the organisation infuriated Putin, who warned NATO leaders that further expansion would be a threat to Russia. Two days later, in a closed-door speech leaked to the accompanying media, he reportedly addressed U.S. President George W. Bush directly: “You understand, George, Ukraine is not a state. What is Ukraine? One part is eastern Europe. The other part, and a significant one, was donated by us”. According to the Russian newspaper Kommersant, Putin then “very transparently hinted that if Ukraine was accepted into NATO, it would cease to exist. That is, to all intents and purposes he threatened to start the process of seizing Crimea from Ukraine”.89
89 Kommersant, 7 April 2008.
http://www.crisisgroup.org/~/media/Files/europe/ukraine/231-ukraine-runn...
http://www.kommersant.ru/doc/877224
h/t Mearsheimer
Great article by Washington’s Blog/ZH. Thanks, UR.
I think it’s very distant and I’ve never heard before that the separatists would like to conquer Kiev. I don’t think they have any such plans. That would not be strategically wise.
I do think they have strong European enemies who are Ukrainian and live in Western Ukraine. There is one thing to say: if the situation just continues to worsen, Russia could move to attack and occupy all of Ukraine. And the reason for this is that a major power such as Russia would not be interested in some sort of border war where you do not go for the headquarters of the enemy.
The separatists obviously have no capacity to take on the full force of Kiev now with NATO in strong support of Kiev. But, in that eastern Ukraine not only is in the Russian orbit where the people speak Russian, watch Russian television and admire Vladimir Putin, the chance that the West is going to eventually end up with the areas that the separatists hold is very slim.
Putin can’t permit it. And we should be thankful for this as this is the last frontier of the imperial European Central Bank to do its part in establishing the elitists’ world order.
There have been some front office changes in eastern Ukraine since August, but Mozgovoi still there (and mouthing off occasionally, albeit more in sync with the tune Moscow is singing). Between throwing out the oligarchs in Kiev and pledging allegiance to the oligarchs in Moscow- I think most of the actual Ukrainians fighting in eastern Ukraine would probably prefer the former.
In regards to moving on Kiev, the Ukrainian separatists are short of manpower and material, but if there were enough little green men minding the home front (and basic humanitarian supplies coming through the pipeline), it would free up significant resources for an offensive. Given the parade of juvenile antics by the UK, Canada, and Australia at the G-20, Putin might feel the need to clarify those "costs" Obozo keeps yapping about.
So what end-game options are on the table? Going all the way back to March, even Kissinger was opining that the western desired outcome was an unrealistic crack pot pipe dream (while the undead one was doing WaPo, Mearsheimer was doing NYT, since then they've stepped it up to almost full retard in deference to their intended technocrat audiences' diminished intellectual capacities). So if 100% USSA is off the table, that leaves 100% USSR or some sort philosophical, if not physical division. Other than the intellectual and strategic arguments for accepting some sort of division of the spoils of Ukraine- there is also Bite-me Joe "Balkanization" Biden, who despite being a self proclaimed foreign policy expert (and one would assume familiar with the "costs" of British attempts to draw lines on maps) keeps saying "pass the Crayolas" in regards to every other trouble spot. Once Hunter reports back that the stone has been bled to death and the opportunities for personal enrichment are past- Biden will still need either street cred or political capital if he wants to mount a serious (if farcical) bid for the Presidency in about a year.
I just knew I was going to get to to hand out my Dow 20,000 hats at the Christmas party this year.
OT - Breaking: Dutch secretely repatriated 130 metric tonnes of gold bars from NY Fed vaults to Amsterdam!
http://www.telegraaf.nl/dft/nieuws_dft/23356897/__Goud_in_geheim_terug_u...
http://www.volkskrant.nl/economie/de-nederlandsche-bank-verscheept-in-di...
Try Google translate.
That should rile up the Swiss!
Central Bank automatons:
"Yes, we all have similar problems.
Yes, it seems we're all tackling them in similar, roundabout ways.
No, nothing's worked quite yet . . . but just you wait.
No, we can't try that, it might upset markets.
Why not? Because markets are more important than reality, our canvas, our movie screen to project our vision, ah, we mean our version, of reality.
Why? It buys us more time to (fail to) address issues directly. Gosh, you're asking stupid questions."
Dutch Repatriate 122.5 Tons of Gold From the U.S. Federal Reserve
The Dutch Bring Home 122.5 Tons of Gold From the New York Fed
https://smaulgld.com/dutch-repatriate-122-tons-gold-u-s-federal-reserve/
There is a whole banker goupthing around raising inflation - for the life of me I cant see how inflation is the answer to economic ills! Otherwise we would be taking about the inflation of the 70's as the good old days.
This is about bailing out the banks (again) because of the mountain of debt they sit on.
As much as I hate to say it, I think we have a few years of this crap left to run......
They fear the deflation boogeyman so much because it means rioting that threatens their thrones.
Inflation, most people are stupid enough to take it and not complain too much.
OK so the Dutch get their gold since it's done secretly and the Germans don't because they ask for it publicly?
Most analysts agree that money from countries with weakening currencies is flowing out of the troubled areas and the U.S. is receiving most of the benefit. The Japanese as well as many Chinese and Europeans know with so much money floating around and few safe harbors America is becoming the most comfortable option for temporary investing their money. More on why this should be viewed as a sign of massive instability rather than a reason to celebrate in the article below.
http://brucewilds.blogspot.com/2014/11/why-american-equities-are-rising.html
You ran this ad before, Bruce:
Thu, 11/06/2014 - 11:12 | 5419761 AdvancingTimeDutch secret gold repatriation??
PLACEBO
I laugh every time I hear Draghi say they need positive inflation so that they can have price stability.