October FOMC Week Starts With Traditional Overnight Meltup

Just as it is easy being a weatherman in San Diego (“the weather will be… nice. Back to you“), so the same inductive analysis can be applied to another week of stocks in Bernanke’s centrally planned market: “stocks will be… up.” Sure enough, as we enter October’s last week where the key events will be the conclusion of the S&P earnings season and the October FOMC announcement (not much prop bets on a surprise tapering announcement this time), overnight futures have experienced the latest off the gates, JPY momentum ignition driven melt up.

There was not much in terms of newsflow: in China SHIBOR rates continued to creep up, albeit more slowly, with the O/N and 1 Week rates barely changed, however the 2 Week Shibor got the bulk of the upward brunt rising 53.4 bps as concerns about when the PBOC will proceed with another reverse repo liquidity injection mount. The lack of enthusiasm was evident in the SHCOMP which was up 0.04% following last week’s drubbing even if the Baltic Dry, which has now entered a bear market, indicates more liquidity driven pain may be in stock. Elsewhere in Japan, on the one year anniversary of Abenomics, where the only “improvements” are the plunging Yen and purchasing power, soaring energy and food input costs, and of course, a rising Nikkei225 offset by stagnant and declining wages,  the Nikkei rose on the follow through of Friday’s US meltup and was up 2.19% nearly offsetting all of Friday’s 2.75% losses.

Not much news out of Europe either, where the only notable development was Italian business confidence which rose to 97.3 on expectations of a 96.0 print, a two year high. At the same time the 1Y1Y Eonia jumped to as much as 39.14 bps from 37.5 bps as the ECB’s excess liquidity continued to drop and touched its lower level since December 2011. At this point – and with the EURUSD at an export-busting 2 years high as well – it will soon be incumbent on Draghi to start jawboning for more liquidity and a lower Euro as happened early in the  year.

On the US docket, we have the NAR’s pre-adjustment pending home sales data, as well as September’s delayed Industrial production. On the micro side, about a quarter of the S&P 500’s market cap are due to report this week including a number of heavy weights such as Exxon Mobil, Berkshire Hathaway, Chevron, General Motors and ConocoPhillips, with Apple set to print after the close today.

Market Recap from Bloomberg and RanSquawk

  • Treasuries steady before week’s auctions begin with $32b 2Y notes today, FOMC two-day policy meeting begins tomorrow; 10Y yields have held near 2.50% level after last week’s weak payrolls data pushed Fed taper expectations to at least March 2014.
  • 2Y notes to be sold today yield 0.325% in WI trading; drew 0.348% in September. June’s stopout of 0.43%, which came amid expectations for  imminent taper announcement, was highest since May 2011
  • The Bank of Japan will continue to buy bonds until it achieves its 2% inflation target as the country’s monetary and fiscal policies are at a critical point for ending deflation, Deputy Governor Iwata said yesterday
  • Japan’s Abe warned he wouldn’t permit China to use force to resolve territorial spats, as the renewed presence of Chinese aircraft near disputed islands led its neighbor to dispatch fighter jets
  • China’s yuan traded within 0.1% of its 20-year high on speculation the PBOC is allowing the currency to strengthen to curb inflation
  • Britain risks repeating the debt-fueled binge that led to the credit crisis as the government relies on a hair-of-the- dog remedy for the economy, said former Financial Services Authority Chairman Adair Turner
  • The troubled roll-out of the Obama administration’s health- care overhaul faced mounting problems when a key computer service failed yesterday, two days after the government said its insurance exchange website would take another month to function smoothly
  • Sovereign yields mostly higher, EU peripheral spreads tighten. Nikkei +2.2%, leading Asian equities higher; European stocks mostly higher, U.S. equity-index futures rise. WTI crude, gold and copper gain

Deutsche Bank’s Jim Reid concludes the overnight round up:

We’re set for a deluge of another kind this week as data blows in from all corners as we enter the last few days of the month and play catch-up from the US shutdown. Payrolls won’t come out on the first of the month though (which it usually would this Friday) and has been delayed a week. Outside of the data, we also have a Fed meeting that should be relatively uneventful but there’s always scope for the nuance of the statement to change. Indeed, the statement will be all there is this month in the absence of a post-meeting press conference from Bernanke.

Asian equities have started the week on the front foot. The strong close to US trading on Friday, where the S&P500 forged another record high, is helping sentiment this morning. The Nikkei (+1.8%) is erasing most of it’s losses from last Friday when it closed down 2.75%. We’re also seeing firmer sentiment across the Hang Seng (+0.5%) and KOSPI (+0.4%). Elsewhere Chinese interbank rates continue to climb, rising to 5.03% today or an increase of 40bp, but still remain well below the spike seen in June. Chinese A-shares are underperforming again this morning (-0.6%). On a longer time scale, Chinese A-shares are one of the only major Asian equity markets, together with India, which are still trading in negative territory on a YTD basis.
Continuing with China, as we mentioned on Friday, there has been increasing chatter of wide-spread financial and economic reforms being explored in advance of next month’s 3rd plenary meeting of the Chinese government, and this was repeated by both government officials and domestic media over the weekend. In the FX market, both USDJPY and AUDUSD are higher to start the week, the former helped by BoJ deputy governor Iwata who reiterated the central bank’s commitment to achieve its inflation targets. As we go to print, US 10yr yields are a touch higher (+1bp) at 2.52% reflecting the stronger risk sentiment to start the week.

This week’s unusually heavy US data docket starts with September industrial production and pending home sales later today. This will be followed tomorrow by September retail sales, PPI and the conference board’s consumer confidence index for October. While we won’t be getting payrolls this week, the ADP employment report on Wednesday will provide an important indicator of hiring activity. The September CPI report and FOMC’s  post-meeting policy statement are also scheduled for Wednesday. Delving deep into the latter half of the week, initial jobless claims and the Chicago PMI for October will be the  main focus on Thursday. The latter may show the extent of slowdown in manufacturing activity as a result of the government shutdown, as may the ISM manufacturing report for October which is due on Friday. Fed officials will exit blackout the day after the FOMC meeting when Bullard, Kocherlakota and Lacker are due to speak at various forums. On the micro side, about a quarter of the S&P 500’s market cap are due to report this week including a number of heavy weights such as Apple, Exxon Mobil, Berkshire Hathaway, Chevron, General Motors and ConocoPhillips. More than US$90bn of 2s/5s/7s treasury supply is scheduled across the week.

Something to also look out for this week is the re-opening of congressional budget talks in the US via the convening of the bipartisan House-Senate budget committee on Wednesday. The committee is due to report back to Congress by December 13th on a budget resolution. Democrats are seeking  to boost spen
ding higher than the $967 billion sequestration level that goes into effect early in 2014. Senate Majority Leader Harry Reid and other top Democratic leaders refuse to trade sequestration cuts, for cuts to other spending programs, such as Medicare or Medicaid — unless Republicans agree to raise revenue.

In Europe, we have a lighter data schedule this week. French consumer confidence and retail sales are due out tomorrow, followed up by Spanish Q3 GDP (where a gain is expected by the market in Q3 after 9 consecutive falls) and German unemployment on Wednesday. Eurozone unemployment and inflation data are due on Thursday. In Germany, Merkel’s CDU bloc will continue talks with the Social Democrats with the aim of forming a coalition government. The bond market will also see new supply in the form of Italian 10yr linkers (today) and new 5/10yrs (Wednesday) throughout the week. About one-fifth of the Stoxx600 will report earnings this week including a number of the large financial institutions such as UBS, Barclays and RBS. We may hear more about the potential for a split of RBS between a good bank and a bad bank which have been widely discussed by the financial media during recent weeks. Staying in the UK, a speech from the BoE’s Mark Carney is scheduled for Thursday.

In Asia, China’s official manufacturing PMI reading is the major data release (Fri) together with the final HSBC manufacturing PMI the same day. Consensus is expecting the official PMI to increase by 0.1pt to 51.2. In Japan, the BoJ’s monetary policy meeting is scheduled for Thursday. Data releases include employment, retail sales (Tues) and industrial production (Wed). So a fairly busy week.


via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ry5nZQsafeI/story01.htm Tyler Durden

With a nod to Lou, PTC opens renovated Glenloch rec center

Longtime Peachtree City resident Lou DeFranco was the dean of the Glenloch Tennis Court.

A man with a mission, DeFranco would be the first on the courts in the morning. Not for his own workout or a match; he was there to squeegee the court, or remove debris so the first matches could begin around 10 or 10:30 a.m.

DeFranco was fondly remembered last week as the city rededicated the newly-renovated Glenloch Recreation Center in what some hope will be the rebirth of a revitalization for the whole neighborhood, one of the oldest in the city.

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via The Citizen http://www.thecitizen.com/articles/10-28-2013/nod-lou-ptc-opens-renovated-glenloch-rec-center

Coweta remembers family violence victims

It was a solemn occasion Tuesday night in front of the historic courthouse in downtown Newnan as nearly 70 people attended Coweta County’s first candlelight vigil honoring the victims of domestic violence.

The event was held to honor the people in Coweta and across Georgia who have been killed as a result of domestic violence, to support urvivors and victims who suffer in silence and to bring awareness to the problem, organizers said.

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via The Citizen http://www.thecitizen.com/articles/10-28-2013/coweta-remembers-family-violence-victims

Coweta sales tax receipts down

Portions of the Coweta County economy continue to improve over time and the Great Recession will hopefully become just a memory. Yet it has long been the case that higher unemployment is still an issue over the past few years. More recently, sales tax collections for the Coweta County School System are down by more than $950,000 over the same period a year ago.

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via The Citizen http://www.thecitizen.com/articles/10-27-2013/coweta-sales-tax-receipts-down

$23M expansion at East Coweta includes major renovation work

The $23 million expansion of East Coweta High School got underway during the summer and is expected to be completed in July 2015. Once completed, the project that includes the entire campus will add or renovate nearly 310,000 square feet of space and will accommodate 3,400 students.

It is a renovation, modification and expansion project that involves the entire East Coweta High School campus, said school system spokesman Dean Jackson.

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via The Citizen http://www.thecitizen.com/articles/10-28-2013/23m-expansion-east-coweta-includes-major-renovation-work

Booth students partner with cops to prepare for the worst

It was a mock exercise meant to educate school staff, students and parents and to enhance the skills of law enforcement in responding to an actual school shooting scenario. When the exercise was completed, the post-active shooter exercise held Friday morning at Booth Middle School in Peachtree City accomplished its goals.

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via The Citizen http://www.thecitizen.com/articles/10-28-2013/booth-students-partner-cops-prepare-worst

Dienhart, 4 others accused of defaming former chairman

Peachtree City mayoral candidate George Dienhart is one of five defendants in a defamation suit filed last month by former Fayette County Republican Party Chairman Lane Watts.

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via The Citizen http://www.thecitizen.com/articles/10-28-2013/dienhart-4-others-accused-defaming-former-chairman

RaceTrac, Chick-fil-A to start construction next month

The parcel is vacant for now, but activity is expected in the next few weeks as Chick-fil-A plans to start construction on its new restaurant on Ga. Highway 54 West at Line Creek Drive.

The company plans to start construction Nov. 4, the Peachtree City Planning Commission was told Oct. 8.

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via The Citizen http://www.thecitizen.com/articles/10-28-2013/racetrac-chick-fil-start-construction-next-month

Planners OK Fairfield Inn and Suites for Wisdom Rd.

A conceptual site plan for the new Fairfield Inn and Suites hotel was approved Oct. 8 by the Peachtree City Planning Commission.

The three-story hotel will be behind the Wisdom Pointe retail center that fronts directly on Ga. Highway 74. At 42,000 sq. ft. the building will have 82 guest rooms and suites.

Because of a required 75-foot buffer between the hotel and the Woodsmill Apartments, there is no room to locate a second hotel on the 2.8-acre site as originally planned by the developer.

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via The Citizen http://www.thecitizen.com/articles/10-27-2013/planners-ok-fairfield-inn-and-suites-wisdom-rd