Daily US Opening News And Market Re-Cap: March 21

From RanSquawk

• BoE vote 7-2 to keep total QE unchanged at GBP 325bln; board members Miles and Posen voted for an increase to GBP 350bln.
• Goldman Sachs publish research note forecasting an upward trend in equities over the next few years.
• Markets await UK Chancellor Osborne presenting the UK budget at 1230GMT.

Market Re-Cap
 
Going into the US open, most major European bourses are trading in modest positive territory this follows the publication of a Goldman Sachs research note titled “The Long Good Buy” in which the bank outlines its thoughts that equities will embark on an upward trend over the next few years, recommending dropping fixed-income securities.
 
We have also seen the publication of the Bank of England’s minutes from March’s rate-setting meeting in which board members voted unanimously to keep the base rate unchanged at 0.50%; however there was some indecision concerning the total QE, with members Miles and Posen voting for a further increase to GBP 350bln, however the other seven members voted against the increase. Following the release, GBP/USD spiked lower 35 pips but has regained in recent trade and is now in positive territory.
 
Looking elsewhere in the session, UK Chancellor Osborne will present his budget for this financial year at 1230GMT. We will also be looking out for US existing home sales and the weekly DOE inventories.
 
US Headlines
 
Fed’s Bernanke has said weak European demand has slowed growth elsewhere. The Fed Chairman has further commented on USD-swap lines, commenting that they have helped ease funding pressures, adding that they are very safe for US and their usage has fallen in recent weeks. US money-market funds remain structurally vulnerable, but have almost no exposure to at-risk EU countries, according to Bernanke. (Sources)
 
Fed’s Kocherlakota has said the Fed is doing as well as it can on mandates, adding that it is clearly doing well on price stability. Kocherlakota has warned that US labour markets remain resistant to Fed assistance, however Kocherlakota did not comment on policy outlook. Kocherlakota further said the economy is recovering, but total employment may not match the levels seen in 2007. The Fed spokesman sees unemployment in the high 7% range by the end of 2012 and sees inflation of 2% or higher in the next two years. (Sources)
 
Asian Headlines
 
The ruling DPJ will make a proposed sales tax increase conditional on an improvement in the Japanese economy, with cabinet approval to be sought on Friday and no numerical target set for the economy. (Nikkei)
 
Bank of America have said Chinese Q1 growth may be as much as 8.5% on the year. (Sources)
 
EU and UK Headlines
 
Greece’s parliament have approved the new loan deal. (Sources) The EUR 130bln loan deal was passed by a wide majority, but now faces the challenges of implementing the measures that have been set out as a precondition for the loan by its international creditors.
 
Following the latest Troika review the EU Commission said that Portugal's 2012 goal of a 4.5% deficit target is still valid and the country’s adjustment programme on track, with the report not finding signs of "reform fatigue" in Portugal. (Sources)
 
Earlier in the session we saw the publication of the BoE’s minutes for their March meeting, in which all members voted to keep the base rate unchanged at 0.50%. However, there was some indecision concerning the total of the APF, as members Miles and Posen voted for an increase to GBP 350bln, although the remaining seven members voted to keep the total unchanged at GBP 325bln. (Sources)
 
UK Public Finances (PSNCR) (Feb) M/M -7.769bln vs. Exp. -1.0bln (Prev. -16.8bln, Rev. -31.95bln)
-UK PSNB ex. Interventions (Feb) M/M 15.138bln vs. Exp. 8.0bln (Prev. -7.8bln, Rev. -7.935bln)
-UK Public Sector Net Borrowing (Feb) M/M 12.909bln vs. Exp. 5.0bln (Prev. -10.7bln, Rev. -10.15bln) (Sources)
 
BoE's Dale said that the pace of recovery is likely to remain weak in the near term, but that economic growth will resume this year, and a decline in the GBP will help rebalancing of the economy. (RTRS) He added that inflation will be slow in the next few months, although the recent increase in oil prices is one obvious worry for UK CPI, as well as domestic and external price pressures.
 
Portugal sold to the top end at their T-Bill auction today with strong bid/cover ratios and falling yields across both lines.
Portugal sells EUR 382mln 4-month T-bills with a B/C of 6.7 (Prev. 2.6), yield 2.168% (Prev. 4.463%)
Portugal sells EUR 1.61bln 12-month T-bills with a B/C of 2.5 (Prev. 2.0), yield 3.652% (Prev. 4.943%)
As such, the spread between the Portuguese and German 10-year has tightened.
 
EQUITIES
 
Major European bourses trade higher going into the open of the North American markets following the publication of a Goldman Sachs research note highlighting their thoughts that it is time to embrace equities and drop fixed income, as the bank sees equities embarking on an upward trend across the next few years.
 
In individual equity news, Repsol shares are performing strongly following reports from an Argentinean Cabinet Chief, stating that Repsol’s Argentinean unit YPF will not be nationalised. As such, company shares now trade up 4.5%.
Elsewhere, ENRC reported their earnings premarket today, recording a miss on their expected net income levels. Although the company plan record levels of capital expenditure in 2012, company shares currently trade down 2.19%.
 
Fed’s Bernanke has said that US banks have some gross exposure to the European crisis but they remain hedged against sovereign defaults. Also, Senators from both parties are working to give regulators more time to write the Volcker rule, potentially easing banks’ concerns their activities will run afoul of the law as a July deadline passes. (Sources)
 
Top performing sectors in the BE500: Consumer Goods (+0.34%), Consumer Services (+0.19%), Technology (+0.18%)
Worst performing sectors in the BE500: Financials (-0.18%), Oil & Gas (-0.10%), Utilities (-0.04%)

FX
 
Following the relatively dovish minutes released by the BoE, GBP/USD spiked lower around 35 pips but the pair has regained its losses and remains in positive territory going into the US open.
 
EUR/AUD hit a 2012 high earlier in the session of 1.2667; the cross has seen some selling off since that point but remains in strong positive territory.
 
USD/JPY may see some fluctuations later in the session with market talk of option barriers at 84.25 and 84.50, however this remains unconfirmed.

COMMODITIES
 
WTI and Brent crude futures are trading higher ahead of the North American following a drawdown in US Crude oil inventories indicated by API data released overnight. The Saudi oil minister has reiterated his stance that the Saudi Kingdom will bring fair oil prices back to the market but this has failed to prevent oil from making gains today. Market focus now shifts towards DOE inventory figures to be released later today.
 
Oil & Gas News:

•   Al Naimi, Saudi Arabia’s oil minister, has reiterated reports, declaring that high oil prices were unjustified and vowing that the kingdom would boost output by as much as 25% if necessary.
•   China’s end-February commercial crude oil stocks were down 3.8% on the month, however oil product and gasoline stocks were up across the same period by 10% and 7.2% respectively, according to China Oil, Gas & Petrochemicals.
•   China refined 4% more crude in the first two months of 2012 compared with the previous year according to the Chinese National Bureau of Statistics.
•   President Obama intends to announce the fast-tracking of the permit process for the southern half of the Keystone XL pipeline, potentially shaving months off the timeline, according to source familiar with the announcement.
•   The Turkish energy minister has said it is out of the question to stop buying oil from Iran unless alternatives are found. The minister has also said the absence of Turkey from the US Iranian sanctions waiver list does not mean it will be included later.
•   Iraq have suspended oil exports from their new terminal due to a technical fault. To date the terminal has shipped just one cargo.
 
Geopolitical News:

•   According to sources the US is to grant sanctions exemptions to Japan and 10 EU nations that have significantly reduced their Iranian crude oil purchases. A US state department official added that 12 additional countries are importers of Iranian crude oil and could be subject to eventual US sanctions.
•   Japanese finance minister Azumi has welcomed the exemption from the US’s Iranian sanctions, adding that this reflects Japan’s wishes. Japanese trade minister Edano has said Japan’s efforts to cut Iranian crude have now been recognized, commenting that his country have cut Iranian crude imports by 40% in the past 5 years, however they will not be cut to zero immediately.

Comments

[poor fella]

Does anyone know if Bernanke and Geithner are representing themselves or accepting a public defender when they testify in Congress today?

A true Folie à deux (shared psychosis). A psychiatric syndrome in which symptoms of a delusional belief are transmitted from one individual to another.

http://en.wikipedia.org/wiki/Folie_%C3%A0_deux

[cosmictrainwreck]

yeah, if there was any justice in this life, they'd need lawyers....BUT...tough shit. Prob is that the "inquisitors" are complicit in the Folie a deux, so it's just soap-opera

[Ruffcut]

A true Ponzi a Douche (shared bullshit) A delirious meeting of government officials and banksters, where various spew is exchanged from one asshole to another.

[LongSoupLine]

CNBS interviewing GS's O'Neill with this banner - "Jim O'Neill - Goldman's Rock Star" and "Beginning of a Return to Normal".

Which "normal" would that be Mr. "Rock Star"...additional QE?   What a bunch of f'ing a-holes!