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Daily US Opening News And Market Re-Cap: September 27

Tyler Durden's picture




 

From Ran Squawk:

  • A European official said a detailed plan is being worked on leveraging
    EFSF money with the plan using some EFSF money to shore up bank
    capital.
  • The Austrian finance minister said Euro-zone officials are to discuss the EFSF leveraging plan on Monday
  • German Chancellor Merkel says we are not prepared to implement further stimulus programmes.
  • Confirmation of the EFSF leveraging talks sparked outrage in Germany,
    where opposition politicians threatened to derail the plans by voting
    against a key amendment to the bail-out fund this Thursday.

Market Re-Cap
 
Early European trade saw a continuation of the Asian session with easing concerns over the impact of the Europe debt crisis on the global economy. An interesting article in the Telegraph drew attention this morning, which said that the German opposition politicians threatened to derail boosting the Eurozone bail-out fund plans by voting against a key amendment to the fund this Thursday, although government bond yield spreads tighter across the board following reports that a detailed plan is being worked on leveraging the EFSF. Early in the session Spain's Salgado said plans to extend EFSF to EUR 2trl was not on the table, causing a downtick in EUR/USD, breaking through the 1.3500 handle, and earlier gains in the pair how now been pared back. The EU commission said no formal debate has started on EFSF leveraging and leveraging of the EFSF can be done without changing the treaty. Outside the Euro-zone UK CBI Reported Sales came in as expected at -15, with cable trading flat on the session despite some weakening in the USD-Index.
 
Looking forward to the North American open, market participants will be focussing on economic data in the form of US Consumer Confidence and political speakers EU's Junker, Fed's Fisher and the meeting between German Chancellor Merkel and Greek PM Papandreou after the European market close.
 
Asian Headlines
 
·   The IMF said Chinese inflation may decline below 4.5%, barring another wave of food price increases. Meanwhile, China should keep a proactive fiscal policy according to a researcher. (People’s Daily/21st Herald)
 
EU and UK Headlines:
 
·   A European official said a detailed plan is being worked on leveraging EFSF money with the plan using some EFSF money to shore up bank capital. The plan would use some as seed money for a European investment bank that would form a Special Purpose Vehicle that could issue bonds and sovereign debts. These bonds would be able to be used as collateral at the ECB with the plan awaiting approval from Eurozone governments. (CNBC/Sources)
·   EU commission says no formal debate has started on EFSF leveraging, however no comments were given relating to informal talks. The Austrian finance minister said Euro-zone officials are to discuss the EFSF leveraging plan on Monday (Sources)
·   German Chancellor Merkel says we are not prepared to implement further stimulus programmes. Echoed by a German government spokesman who said that the finance minister told the cabinet the EFSF volume will not be expanded, volume stands as it is. (RTRS)
·   Confirmation of the EFSF leveraging talks sparked outrage in Germany, where opposition politicians threatened to derail the plans by voting against a key amendment to the bail-out fund this Thursday. (Telegraph)
 
EQUITIES
 
Equity markets in Europe have reacted positively to the news that a detailed EFSF leveraging plan is being worked upon. As in the Asian session, financials have outperformed with French banks again seeing significant gains.  Elsewhere, the rally in commodity prices has helped the Basic Materials and Oil & Gas stocks so far in the European session, with the German and French bourses the main beneficiaries.

FX
 
Despite the positive reaction in the equity markets regarding the EFSF developments EUR/USD has been trading relatively flat given the uncertainty created by Germany steadfastly refusing to acknowledge any increase to the EFSF beyond that which has already been agreed.  There has been market talk through the session that an Asian central bank has been trading a short-term 1.3400-1.3600 range in EUR/USD which has capped the upward momentum.  Elsewhere, commodity linked currencies have been well supported by the general strength in commodities with AUD looking to move back toward parity against the USD.  Commentary from JPMorgan noted that there is an increased risk of JPY intervention between now and the 30th of September which is the fiscal half-year end in Japan, with the BoJ possibly looking to help Japanese exporters.  As a result the JPY has weakened slightly across the board.

COMMMODITIES
 
The Asian and European sessions have both seen WTI crude futures trade in firm positive territory as commodities have rallied across the board from yesterday’s sell-off, aided by EFSF developments in Europe supporting risk sentiment.
 
Oil & Gas News:

·   A Libyan oil official says oil exports are expected to resume today.
·   Supporters outnumbered critics at a government-sponsored hearing on the proposed TransCanada Corp's Keystone XL pipeline that would ship oil from Canada to the Texas Gulf Coast.

 

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Tue, 09/27/2011 - 08:30 | 1714387 RobotTrader
RobotTrader's picture

Nipple bottoms everywhere on most commodity charts.

http://clearstation.etrade.com/cgi-bin/bbs?post_id=9469555&Refer=

Tue, 09/27/2011 - 14:48 | 1715752 covert
covert's picture

platinum opportunities.

http://expose2.wordpress.com

 

Tue, 09/27/2011 - 08:31 | 1714389 The4thStooge
The4thStooge's picture

So after all of the rumors about other countries bailing out Europe have failed, the rumor that does the trick is that Europe can bail out itself. Remarkable.

Tue, 09/27/2011 - 08:39 | 1714416 Snidley Whipsnae
Snidley Whipsnae's picture

 

  • German Chancellor Merkel says we are not prepared to implement further stimulus programmes.
  • Confirmation of the EFSF leveraging talks sparked outrage in Germany,
    where opposition politicians threatened to derail the plans by voting
    against a key amendment to the bail-out fund this Thursday.
  • Maybe this has someting to do with Merkel's comments...

    "Germany's Top Judge Throws Major Monkey Wrench Into Leveraged EFSF Machinery, Demands New Constitution and Popular Referendum For Further Powers"

    "Germany's top judge has issued a blunt warning that no further fiscal powers may be surrendered to Europe without a new constitution and a popular referendum, vastly complicating plans to boost the EU's rescue machinery to €2 trillion (£1.7 trillion).

    Andreas Vosskuhle, head of the constitutional court, said politicians do not have the legal authority to sign away the birthright of the German people without their explicit consent.

    "The sovereignty of the German state is inviolate and anchored in perpetuity by basic law. It may not be abandoned by the legislature (even with its powers to amend the constitution)," he said.

    "There is little leeway left for giving up core powers to the EU. If one wants to go beyond this limit – which might be politically legitimate and desirable – then Germany must give itself a new constitution. A referendum would be necessary. This cannot be done without the people," he told newspaper Frankfurter Allgemeine.

    The extraordinary interview comes just days before the Bundestag votes on a bill to revamp the EU's €440bn bail-out fund (EFSF), enabling it to purchase EMU bonds pre-emptively and recapitalise banks."

    http://globaleconomicanalysis.blogspot.com/2011/09/germanys-top-judge-throws-major-monkey.html

    Tue, 09/27/2011 - 08:44 | 1714435 Smiddywesson
    Smiddywesson's picture

    Judges smudges.  In the end, the law will be ignored and they will go along with the party.  We all have to print to kick the can, and judges don't have any say in the matter.

    Tue, 09/27/2011 - 08:32 | 1714395 Racer
    Racer's picture

    yes, that is what the world needs, more leveraged debt

    Tue, 09/27/2011 - 08:35 | 1714400 HistorySquared
    HistorySquared's picture

    Solve a debt problem with more debt. Brilliant. This is just a temporary solution to the one we all know is coming, monetization and money printing. 

    Tue, 09/27/2011 - 08:41 | 1714421 willien1derland
    willien1derland's picture

    CDO SQUARED BABY - Place all of the EU's chips on 33 Black & SPIN the wheel...Mr. Geithner would like nothing more than to the croupier....I can feel the excitement in the air!

    Tue, 09/27/2011 - 08:44 | 1714432 kurzdump
    kurzdump's picture

    ...while China splits equally on black and red?

    Tue, 09/27/2011 - 08:52 | 1714464 kahunabear
    kahunabear's picture

    Meet the new debt, same as the old debt!

    We won't be fooled again!

    Or will we?

    http://www.efsf.europa.eu/about/index.htm

    Tue, 09/27/2011 - 09:01 | 1714489 snowball777
    snowball777's picture

    Okay, new rule: no more "official said" business...if it doesn't happen on video with whomever supposedly said something actually saying something, it doesn't exist.

    Sarkozy can make whatever claims he wants about the EFSF, but if Germany isn't on-board, he's "whistling dixie", as we say in the states.

     

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