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Daily US Opening News And Market Re-Cap: September 6

Tyler Durden's picture




 

From RanSquawk:

  • The SNB set the minimum exchange rate target for EUR/CHF at 1.2000, and said that it will take further measures if risks to the economic outlook or that of deflation emerge
  • According to an article in the FT, global bank regulators are preparing to ease new rules that would require banks to hold more liquid assets to withstand a funding crunch in a crisis
  • Early market talk of a planned merger between Societe Generale and BNP Paribas provided support to equities
  • The Italian/German and Spanish/German 10-year government bond yield spreads narrowed partly on the back of market talk that the ECB is buying the Italian and Spanish government bonds

Market Re-Cap
 
In one of the major moves today, the SNB set the minimum exchange rate target for EUR/CHF at 1.2000, and said the central bank will take further measures if the economic outlook and deflationary risks persist. This resulted in a significant weakening in CHF across the board, and at 1114BST, EUR/CHF and USD/CHF were trading at 1.2033 (+935pips) and 0.8484 (+613pips), respectively. The move raised expectations that the Japanese government and the BoJ may take further measures to curb the strength in JPY, which resulted in weakening of the currency. In other forex news, weakness in the USD-Index supported EUR/USD, GBP/USD and commodity-linked currencies. Elsewhere, European equities traded higher during the session as they retraced some of yesterday's loss, together with an article in the FT saying that global bank regulators are preparing to ease new rules that would require banks to hold more liquid assets to withstand a funding crunch in a crisis. Market talk that Societe Generale and BNP Paribas are planning to merge together with news that big US banks have been offered a deal, in the FHFA case, which may limit their legal liabilities further helped equities. In other news, strength in equities weighed upon Bunds and tightening was observed in the Italian/German and Spanish/German 10-year government bond yield spreads partly on the back of market talk that the ECB is buying the Italian and Spanish government bonds.
 
Moving into the North American open, the economic calendar remains thin, however the ISM Non Manufacturing Composite report is due for release later in the session. Also, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Mar'13-Feb'14, with a purchase target of USD 0.5-1bln is also scheduled for later.
 
Asian Headlines:
 
China will stop renewing punitive additional increases in reserve requirement ratios for some banks to ease a liquidity crunch. (21st Century Business Herald)
 
GLOBAL
 
Global bank regulators are preparing to ease new rules that would require banks to hold more liquid assets to withstand a funding crunch in a crisis. The move follows complaints from banks that the new Basel III standards on liquidity would force them to sharply curtail lending to consumers and businesses. (FT-More)
 
US Headlines:
 
Fed’s Lacker said further stimulus from the Fed would raise inflation without doing much to lower unemployment. “My sense is that more monetary policy at this point would likely show up almost entirely in higher inflation and very little constructive influence on growth” he added. (FT - More)
 
In other news, President Obama at Thursday’s speech may propose a major infrastructure program and signal an extension of Payroll tax breaks. (WSJ)
 
Elsewhere, big US banks in talks with state prosecutors to settle claims of improper mortgage practices have been offered a deal that is proposed to limit part of their legal liability in return for a multibillion dollar payment. (FT-More)
 
EU and UK Headlines:
 
The European session yesterday was dominated by risk averse trade with German Bund futures hitting record highs as European debt concerns sharply resurfaced.  Italy bore the brunt of the sell-off due to increased concerns regarding their austerity package which is currently being debated in the Italian parliament amid internal political disputes.  The Italian 10-yr government bond yield spread over Bunds widened by 40BPS and the Italian 10-yr cash yield moved over 5.50%, after having been pushed below 5.00% after the initial actions of the ECB’s Securities Market Programme a month ago.  The equity markets were pulled lower by banks after the FHMA in the US confirmed over the weekend that they were to sue the global banks involved in mortgage securities for a combined total of USD 200bln.  The financial sector also reacted to comments for Deutsche Bank CEO Ackermann who underlined how close some European banks were to collapse.
 
·       Austrian bond auction for EUR 0.6bln, 3.20% 20-Feb-2017, bid/cover 2.048 vs. Prev. 2.31 (yield 1.973% vs. Prev. 3.210%)
·       Austrian bond auction for EUR 0.6bln, 4.15% 15-Mar-2037, bid/cover 2.37 vs. Prev. 1.93 (yield 3.447% vs. Prev. 4.011%)
·       Greek 26-week T-Bill auction for EUR 1.3bln (incl. EUR 300mln in non-comp. bids), bid/cover 3.02 vs. Prev. 3.06 (yield 4.80% vs. Prev. 4.850%)
·       UK conventional Gilt auction for GBP 1bln, 4.75% Dec'30, bid/cover 1.88 vs. Prev. 1.49 (RTRS)
 
EQUITIES
 
European equities traded higher during the session as they retraced some of yesterday's loss, together with an article in the FT saying that global bank regulators are preparing to ease new rules that would require banks to hold more liquid assets to withstand a funding crunch in a crisis. Market talk that Societe Generale and BNP Paribas are planning to merge together with news that big US banks have been offered a deal, in the FHFA case, which may limit their legal liabilities further helped equities. Elsewhere, weakness in the USD-Index provided support to basic materials and oil & gas sectors. Moving into the North American open, equities are trading mixed, with health care and consumer goods as the best performing sectors.

FX
 
In one of the major moves today, the SNB set the minimum exchange rate target for EUR/CHF at 1.2000, and said the central bank will take further measures if the economic outlook and deflationary risks persist. This resulted in a significant weakening in CHF across the board, and at 1114BST, EUR/CHF and USD/CHF were trading at 1.2033 (+935pips) and 0.8484 (+613pips), respectively. The move raised expectations that the Japanese government and the BoJ may take further measures to curb the strength in JPY, which resulted in weakening of the currency. In other forex news, weakness in the USD-Index supported EUR/USD, GBP/USD and commodity-linked currencies.
 
·       Australian RBA Cash Target (Sep) M/M 4.75% vs. 4.75% (Prev. 4.75%) (RTRS)

COMMODITIES
 
WTI crude futures came off last Friday’s lows, however still traded in negative territory, as the USD-Index weakened.
 
Oil & Gas News:

·       Kuwait pumped more than 2.8 MBPD of oil throughout August, the highest level since the global economic downturn in late 2008.
·       Libyan oil production will not return to pre-war levels until late next year at the earliest, with many of the country’s oil facilities having suffered heavy damage and looting during the conflict.
·       Soc Gen reports that oil prices are to stabilise. They say as a rule of thumb a USD 10 per bbl increase in the oil price triggered by a supply-side shock takes 0.3% off global growth for the first year after the shock. Looking ahead they expect oil prices to stabilise and no longer exert a drag on consumer spending.
 
Geopolitical News:

·       Iran is planning to send soldiers into northern Iraq to battle Kurdish militants that it blames for attacks on its own soil.
·       Forces of Libyan interim ruling council are poised for an assault on the desert town of Bani Walid after negotiators failed to persuade Gaddafi loyalists to abandon one of their last remaining bastions.
·       Scores of Libyan army vehicles have crossed the desert frontier into Niger in what may be a dramatic, secretly negotiated bid by Gaddafi to seek refuge in a friendly African state, according to military sources from France and Niger.
·      Syrian security forces killed at least eight civilians on Sunday in raids on restive north-western towns, residents and activists said, while the authorities blamed armed gangs for a bus ambush that killed nine people.
 
Full report

 

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Tue, 09/06/2011 - 08:55 | 1637870 wang (not verified)
wang's picture

Found a link to a live CNBC stream, which I have not watched in a couple of years

wtf Cramer and Melissa Lee

puke

Tue, 09/06/2011 - 08:54 | 1637871 lolmao500
lolmao500's picture

If all the banks followed Basel 3, most of them would go kaboom. They just don't have the money to comply with the minimum reserves asked.

In other news, Shangai has raised margin on silver and gold yet again.

Tue, 09/06/2011 - 09:01 | 1637898 doomandbloom
doomandbloom's picture

I attended a presentation on risk management some time ago and the calculations for capital reserves seemed dodgy. They calculated capital on a small % of the overall amount ( after a lot of exclusions).

So while the % looks high ..the actual amount is small because they dont take the whole amount into consideration.

Does anyone know how these guys are calculating capital reserves in more detail?

Tue, 09/06/2011 - 08:55 | 1637876 digitlman
digitlman's picture

"Looking ahead they expect oil prices to stabilise and no longer exert a drag on consumer spending."

Gas is still around $3.68 /gal in NC this morning.  This is still a drag, you assholes!

 

Tue, 09/06/2011 - 09:00 | 1637897 Racer
Racer's picture

and in the UK it is not far off all time highs... yeah stabilising at extremely HIGH price which people can't afford

Tue, 09/06/2011 - 09:01 | 1637902 SheepDog-One
SheepDog-One's picture

'Stabilizing' around record highs, wow thats great.

Tue, 09/06/2011 - 08:57 | 1637884 spanish inquisition
spanish inquisition's picture

Uncle Warrens quid pro quo? After bailing out BOA and people started talking about how none of his banks were being sued. I heard on CNBC (yes, I know), that they were not included because they are in settlement negotiations. hmmmmm

Tue, 09/06/2011 - 09:00 | 1637899 SheepDog-One
SheepDog-One's picture

Theyre loading up the lifeboats, damn sure are.

Tue, 09/06/2011 - 08:57 | 1637885 papaswamp
papaswamp's picture

Massive money printing and merging of 2 sick banks into one massive one is some how seen as a positive? People have really lost their minds.

Tue, 09/06/2011 - 09:07 | 1637924 SheepDog-One
SheepDog-One's picture

Its so pathetic now its just like a major disaster movie...everyone knows theyre fuked, but got to keep looking up and maybe we can find a hole in the hull somewhere to get out.

Tue, 09/06/2011 - 09:01 | 1637901 lolmao500
lolmao500's picture

Warren invested in Wells Fargo... and of course it's not sued...

Tue, 09/06/2011 - 09:05 | 1637912 SheepDog-One
SheepDog-One's picture

Oh a 'major infrastructure program' from the clown in chief...yea lets fix some pot holes that ought to turn it around! Where does that money come from? Coupled with a payroll tax adjustment which is apparently the reason for the all time record high unemployment. What do they think, we're all retarded?

Tue, 09/06/2011 - 09:06 | 1637922 Shinrai
Shinrai's picture

We now know what happened to at least some of Libya's gold: 

http://af.reuters.com/article/libyaNews/idAFLDE7850BQ20110906


Libyan convoy with gold, cash crossed to Niger-NTC

Tue, 09/06/2011 - 09:11 | 1637940 Moneyswirth
Moneyswirth's picture

So with all the NATO "bombing" and the tsk-tsking of Gaddaffi by the world "community", he's able to slip out of the country AND loot the treasury at the same time?

Awesome...

Tue, 09/06/2011 - 09:21 | 1637985 Mitzibitzi
Mitzibitzi's picture

Only fair, really. It's what every other pol and bankster will be doing over the next couple of weeks. I kinda get the feeling that someone's chilling the Pinot and warming the BBQ on a bunch of private islands as we speak. Or maybe they're all gonna hide on the same one?

Tue, 09/06/2011 - 09:07 | 1637923 Jim in MN
Jim in MN's picture

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/874038...

Ambrose Evans-Pritchard goes a bit deeper into the German mindset and the Euro crisis.  Note this gem on the German constitutional court:

Otmar Issing, the ECB’s founding guru, fears that the current course must ultimately provoke the "resistance of the people". Instead of evolving into an authentic union with a "European government controlled by a European Parliament" on democratic principles, it has become deformed halfway house.

In its rush to save EMU, he said, Europe has forgotten that legislative primacy over tax and spending is the crucible of our democracies. It was monarchical assault on the power of the purse that led to England’s Civil War, and America’s Revolution.

We will find out to what extent Germany’s constitutional court shares these fears when it rules this Wednesday on the legality of the EU rescue machinery, and delivers its verdict of life or death for monetary union.

The opinion will be drafted by Udo di Fabio, a Wilhelmine nostalagic and declared enemy of "libertarian nihilism". The judge has an odd outlook perhaps for the grandson of an impoverished nobleman from the Abruzzi who found work in Duisburg steel mills. He is quintessentially German now.

His remarkable 2005 book "The Culture of Freedom" decries the "enfeebled" societies of the West, and judges multiculturalism and the welfare state to have failed miserably. He calls for a "renaissance of marriage and family" and a return to "the nation as common destiny". One awaits his Nieztschean verdict on Europe with curiosity.

Tue, 09/06/2011 - 09:10 | 1637937 Irish66
Irish66's picture

Thanks for the info on the judge

Tue, 09/06/2011 - 09:07 | 1637925 Moneyswirth
Moneyswirth's picture

ECB buying sovereign debt?  Interesting.

 

This underscores how boned the Eurppean banking system really is.  The plutocrats keep insisting that the banks are fine, which is complete nonsense.  Nobody can gauge the true value of this sovereign debt, and without assessing the inherent risk involved, nobody can say with certainty, that the banks holding said debt, are well capitalized.

They need to keep lying to keep the game of musical chairs going as long as possible...

Tue, 09/06/2011 - 11:26 | 1638380 earnulf
earnulf's picture

Why have rules when no one is expected to adhere to them, especially if they are banks that haven't been following the rules anyway?

Rules are for the suckers! (Of course, so are the pitchforks and rail ties for when the rule breakers are finally run down)

Fri, 09/16/2011 - 01:44 | 1676222 jasmine
jasmine's picture

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Fri, 09/16/2011 - 09:10 | 1676654 spanish inquisition
spanish inquisition's picture

Tyler,

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