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Daily US Opening News And Market Re-Cap: September 26

Tyler Durden's picture





 

Submitted by RanSquawk:

  • ECB said to debate new 12-month loans at the October 6th policy meeting where they may discuss a rate cut
  • EU may speed up ESM enactment to stem the crisis with Euro aides discussing setting up the fund in 2012 a year early.
  • German IFO data higher than expected on all three readings
  • CME raises margin requirements for longest dated T-Bond futures by 20%

Market Re-Cap
 
In early trade much of the attention and sentiment was driven by the weekends meeting of G20 leaders, and talk that the G20 is now preparing itself for Greek default after October, but markets remain resilient and early losses have been pared back as a solution for Greece feels slightly nearer. Commodity prices have come under some downward pressure as the CME hiked gold margins by 21%, silver by 16% and copper by 18% as of last Friday, and all trade in solid negative territory. In the European session we have also had several comments in relation to the ECB's interest rate, with BofA and ECB's Nowotny saying cuts are a possibility, although ECB's Mersch said wild expectations about ECB rate cut show that some people have lost direction. However news came later that the ECB may discuss a rate cut at the next meeting, but this is not on the official agenda. In addition the ECB is said to consider restarting covered bond purchases and they are to debate new 12-month loans at the October 6th policy meeting.            
                          
Looking ahead into the North American open, markets will pay close attention to the US New Home Sales number and any comments from both Fed's Bullard and Kocherlakota. Markets also await the ECB's announcement for bond purchases in the previous week, which has seen a general decline in purchases since the first re-activation in August.
 
Asian Headlines
 
PBOC Governor Zhou says that high inflation remains the top concern as there were no immediate ways to control it. However, the Chinese growth outlook is positive and consumption has been boosted. He also said the general tone of the country’s fiscal and monetary policies won’t be changed. (Sources/China Business News)
 
EU and UK Headlines:
 
·   ECB said to debate new 12-month loans at the October 6th policy meeting where they may discuss a rate cut at the next policy meeting however this is not on official agenda, also they are said to consider restarting covered bond purchases.
·   According to sources the G20 is now preparing itself for Greek default after October with all efforts behind the scenes now going into recapitalising banks and preparing economies for default which could see the EFSF boosted to EUR 3trl.
·   According to a Draft, the EU may speed up ESM enactment to stem the crisis with Euro aides discussing setting up the fund in 2012 a year early. The ESM fund replacing the EFSF would have capital of EUR 500bln.
·   ECB’s Nowotny reiterated that the ECB could use 12-month tenders again and that the Eurozone could follow a US TARP/TALF system. Nowotny also said that ECB interest rate cuts cannot be excluded.
·   German deputy finance minister Asmussen said euro-region finance ministers won’t be in a position to decide on the disbursement of the next tranche of aid to Greece when they meet on October 3rd because a report by the IMF, ECB and EC has been delayed. (RTRS/Sources/El Economista/Corriere della Sera/Sky News/Caixin/Sunday Times)
·   German IFO Business Climate (Sep) M/M 107.5 vs. Exp. 106.5 (Prev. 108.7)
German IFO Current Assessment (Sep) M/M 117.9 vs. Exp. 115.7 (Prev. 118.1)
German IFO Expectations (Sep) M/M 98.0 vs. Exp. 97.3 (Prev. 100.1)
 
EQUITIES
 
Equity markets have performed surprisingly well in the European session so far, with the DAX index trading with a 4.00% gain on the day.  Risk appetite being fuelled by expectations of an ECB rate cut at the next meeting and the re-introduction of 12-month liquidity tenders.  As a result, the financial sector has outperformed with French banks in particular reaping the benefits of the rally, BNP Paribas shares trading up 8%.  The Oil & Gas and Basic Materials sectors weighed by the CME hiking commodity margins effective from today.
 
FX
 
EUR/USD rallied off Asian session lows below 1.3400 as risk sentiment picked up through the European session.  The USD-index slipped into negative territory after being up 0.75% at the European open as markets focused on the comments from ECB’s Nowotny that interest rate cuts cannot be excluded, also helped by the German IFO numbers coming in higher than expected.  The weakness in the USD-index provided strength to the energy complex and in turn the commodity linked currencies moved off their worst levels with AUD/USD and NZD/USD moving back into positive territory.  GBP/USD shook off dovish comments from BoE’s Broadbent to trade above 1.5500 amid talk that HSBC is buying in the pair ahead of dividend payments in the near future.

COMMMODITIES
 
Moving into the NYMEX pit open WTI and Brent crude futures have traded in negative territory as European debt concerns weigh on oil prices, although much of their earlier losses have been pared back.
 
Oil & Gas News:

·   The OPEC Research Director said that expectations for 2011 demand had been revised down by 300,000BPD and that he expected non-OPEC oil production to increase by 800,000BPD. Meanwhile the Qatar oil minister said that OPEC is closely monitoring supply/demand developments with the market currently well supplied.
·   Saudi Arabia is likely to try to stop Brent crude oil prices falling below USD 90 a barrel, according to Sonia Song, head of Asia Oil & Gas research at HSBC Holdings.
·   The UAE and Kuwait’s oil exports fell in June, despite both backing a June 8th proposal for OPEC to raise supplies.
·   China will encourage investments in shale gas exploration and development through the formation of joint ventures.

 


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Mon, 09/26/2011 - 08:15 | Link to Comment rajat_bhatia
rajat_bhatia's picture

I wish i could be the Bernanke 

Mon, 09/26/2011 - 15:01 | Link to Comment covert
covert's picture

minor details are often very revealing, the devil is in the detail.

http://expose2.wordpress.com

 

Mon, 09/26/2011 - 08:16 | Link to Comment financeguru500
financeguru500's picture

I have a serious question for willing to answer.

When do you think we will reach the point when Bernanke or whomever admit that they have made a big mistake and that our economy is not getting better?

Mon, 09/26/2011 - 08:20 | Link to Comment Mae Kadoodie
Mae Kadoodie's picture

I'm still waiting for Greenspan to admit his mistakes.

Mon, 09/26/2011 - 08:21 | Link to Comment kurzdump
kurzdump's picture

When I started to think about the problems in our economy it took me just a few weeks until I became convinced that the economic system will crash within a few months. I started to prepare, stocked up some food and physicals and bought some other useful crisis-crap.

Now, almost a year later I start to doubt. I underestimated the power of all the "weapons" central banks and politicans developed and stocked up in their arsenals by far. Every time the game seems to be over they just dig out another cheat code to steal themselves away.

My findings are that there will bo no crash as long as the PEOPLE do not cause it. If we keep accepting everything we will lose our properties and become poor eventually. However, the system will not collapse. Globalism causes restructuring of assets in a long term. Maybe the dollar loses its reserve curreceny status some day in the future and starts to hyperinflate - even then it will not be the system that causes a collpase it will be the PEOPLE rioting and fighting for food.

As long as the sheeples are asleep nothing will stop the nightmare.

Mon, 09/26/2011 - 08:39 | Link to Comment financeguru500
financeguru500's picture

I think you are correct. Your answer is the best I think I have ever heard when considering if our economy will ever collapse and restructure. If the government can keep the game going, then it will just be a transfer of wealth until the middle class is gone and everyone is either rich or poor. Then there could a "new deal" to put all the poor people to work and keep people from complaining. That would be my best guess as to how things are going to go. It will come in the form of a solution to "reinnovate the American industrial complex" but will really just be Americans working at sub-par wages to equalize competition across the board for all countries.

The other solution i see happening is a one world currency to solve the issue of countries over indebting themselves and bringing down the system (i.e. greece, U.S.A etc). This could come in the form of a way to immediately boost the economy and bring the world out of recession while also stopping the chinese from pegging their currency.

 

*BTW the next big crisis will be the student loan crisis. Mark my words. It is a HUGE problem that is going to be out of control with the millions of graduates not finding jobs. Government subsidized Americorp is already offering student loan forgiveness "repayment" for people who volunteer their time. If there is any sort of New Deal, I see it tied up with a program like Americorp where people are working subpar wages to get their loans forgiven.

Mon, 09/26/2011 - 09:06 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

With regards to the CME raising margins on treasuries, I hope this goes to show the risk involved in using these instruments as a tool for speculation. US treasuries are stricly a SAFE HAVEN asset and should be accumulated as an insurance policy against a catastrophic event.

Mon, 09/26/2011 - 08:26 | Link to Comment EvlTheCat
EvlTheCat's picture

Well it only took The Fed 70 years to apologize for the first Great Depression. Lets just say neither you or I will probably be around if it happens again.

Mon, 09/26/2011 - 09:13 | Link to Comment He_Who Carried ...
He_Who Carried The Sun's picture

...

To put it mildly: all those who traded against Bernanke should be in intensive care by now.
This man is dangerous, if misunderstood!

Mon, 09/26/2011 - 08:20 | Link to Comment machineh
machineh's picture

'CME raises margin requirements for longest dated T-Bond futures by 20%.'

Having broken gold's parabolic spike with a margin hike, now they're going after Benny Bubbles' top-tick bond buying.

Benny's not concerned, so he claims. 

'Margin be damned! I print all the margin I need. I AM THE MARKET!'

And that's exactly the problem, Benny ...

Mon, 09/26/2011 - 08:21 | Link to Comment fishface
fishface's picture

There is a good article on the Der Spiegel website

German Central Bank Opposed to Merkel's Euro Course

 

http://www.spiegel.de/international/europe/0,1518,788352,00.html

Mon, 09/26/2011 - 08:41 | Link to Comment somethingelse
somethingelse's picture

TD, Sac: Block user Annabelle!

Mon, 09/26/2011 - 08:54 | Link to Comment spanish inquisition
spanish inquisition's picture

I for one, have stated,  that anything short of infinite printing and complete backstopping is a disappointment to me personally and the market (I suppose). I have taken some liberties with a historical speeches and have created a speech for Ben that would rally the base and calm them down for at least a week.

"Even though large tracts of Europe and many old and famous States have fallen or may fall into the grip of the Deflation and all the odious apparatus Markets, we central bankers shall not flag or fail. We shall go on to the end. We shall print in France, we shall print on the seas and oceans, we shall print with growing confidence and growing strength in the air, we shall defend the ownership capitol of the Fed and its Wall Street distribution system, whatever the cost may be to the average citizen. We shall print on the beaches, we shall print on the landing grounds, we shall print in the fields and in the streets, we shall print in the hills; we shall never surrender, and if, which I do not for a moment believe, this Fed or a large part of it were subjugated and starving, then our Empire of Central Banks beyond the seas, armed and guarded by our US and NATO Fleets, would carry on the struggle, until, in God's good time, the new world, with all its power and might, steps forth to the rescue and the liberation of the old. Where central bankers can siphen off interest with impunity and leave the debt with the citizenry. (standing ovation)

Thank you. Now if you will excuse me, I have another non speech about "Economics" (hehe) to write for CONgress and am reading Jabberwocky for inspiration."

http://en.wikipedia.org/wiki/We_shall_fight_on_the_beaches

 

Tue, 11/01/2011 - 04:49 | Link to Comment karmete
karmete's picture

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