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The Canadian Real Estate Association says home sales in June posted their largest monthly drop since 2010, with the Greater Toronto market leading the decline.

This is the third monthly decline in a row…

 

Under the covers, it's Toronto that is suffering the most…

Toronto existing home sales drop 37.7% y/y

• Average Toronto existing home price fell 5.8% m/m
• Average Toronto existing home price up 6.3% y/y

Vancouver existing home sales drop 12.2% y/y

• Average Vancouver existing home price fell 3.2% m/m
• Average Vancouver existing home price up 2.7% y/y

And as a reminder, there appears to be plenty of room for this to fall further…

 

Looking at the chart above, last month Bloomberg said:

 

 

On a real basis, Canadian housing prices experienced a much smaller, shorter decrease in prices during the financial crisis and a much larger, longer increase in prices during the recovery. When you couple this unfathomable rise in housing prices with near-record high household debt-to-income ratios, the Canadian housing bubble starts to look scary should the tide turn.

… and added:

 

 

No one knows when insanity like this will come to an end. Bubbles are like an avalanche. The longer they build up, the worse they will be when they eventually destabilize.

Well, nobody may know, but as Harley Bassman said yesterday, one can make an educated assumption, and as he said it most likely will be the result of higher rates… which reminds us of last week's decision by the Bank of Canada to hike its rates for only the first time since 2010.

And as US homebuyers from the time period 2004-2006 remember all too vividly, there is nothing that will burst a housing bubble faster than a spike in mortgage rates.

Which is why while Torsten Slok's original warning that "Canada Is In Serious Trouble" two years ago may have been premature, this time it appears all too real thanks to none other than the Canadian central bank, which may just have done the one thing that will finally burst the country's gargantuan housing bubble.

Finally, for those skeptical, here is David Rosenberg explaining why he is 'skeptical' about BoC's view of a robust economy ahead…

via http://ift.tt/2u0S8D3 Tyler Durden

Iconic Private Equity firm Kohlberg Kravis Roberts i.e., KKR, has appointed two executives to succeed co-founders Henry Kravis and George Roberts, in what the FT dubs is a “rare move for an industry where succession plans have not been set out publicly.”

KKR announced on Monday that it had named Joseph Y. Bae and Scott C. Nuttall, long rumoured to be favourites to fill the founders’ shoes, as its co-presidents and co-chief operating officers. The appointments will task Nuttall, 44, and Bae, 45, with essentially running the $137 billion firm on a day-to-day basis.  Kravis and Roberts, both of whom are in their early 70s, will continue to lead the group as co-chairmen and co-chief executive officers. This is the first time KKR has openly indicated clear successors to the founders.

“Today’s announcement is about the future and ensuring we have the right team and leadership structure to serve our clients and partners for decades to come,” Mr. Kravis and Mr. Roberts said in a statement.
Continue reading the main story. In naming their successors, Kravis and Roberts are joining other buyout titans in preparing for the not too distant day when they step away from the business.

Kravis and Roberts said: “Having joined the firm together over 20 years ago, Joe and Scott have a strong foundation of trust, professional respect and personal friendship that is critical for success.

Henry R. Kravis, right, and George R. Roberts in 2001

“They think and act globally, they embody KKR’s core values, and they are two of our most accomplished business leaders, with proven track records of managing large teams, building new businesses and driving value for our fund investors and our public unit holders.”

As the NYT reports, other PE firms have already laid out their succession plans: Blackstone has long had an heir apparent in its real estate chief, Jonathan D. Gray, a lifer at the investment giant. Warburg Pincus long ago named Joseph P. Landy and Charles R. Kaye as its chief executives., taking over from the co-founders Lionel I. Pincus and John Vogelstein.

Preparing for succession is not always an easy task. Carlyle hired Adena T. Friedman from Nasdaq in 2011 as its chief financial officer, setting off speculation that she would one day lead the private equity titan. But she left three years later to return to Nasdaq, where she finally took over as chief executive in November. And it had hired Michael Cavanagh, a much-lauded executive at JPMorgan Chase, only for him to leave the firm for Comcast a year later.

The FT adds that “the move will add pressure to other buyout groups, whose founders are reluctant to relinquish power, to outline their own succession plans.”

Private equity investors have grown increasingly concerned about succession with just 12 per cent of funds set to close in less than a decade.

The worry has intensified as limited partners — pension plans and other institutions that lock up their capital in private equity vehicles for years — cut back on under-performing managers.

But for Kravis and Roberts, the anointment of potential successors is perhaps more notable than for most. The men, cousins who co-founded Kohlberg Kravis 41 years ago, helped put private equity on the map.

The pair led the firm’s pursuit of RJR Nabisco and earned the immortal sobriquet “barbarians at the gate.” Since then, the private equity industry has largely shed its reputation as uncouth raiders and become an enormous industry, with some $820 billion in uninvested capital as of Dec. 31, according to Prequin. In recent years, the two men have praised the firm’s growing bench, with Mr. Kravis once saying that any of 15 executives could lead the firm should he and his cousin retire.

As for the new KKR executives, they will have different areas of primary responsibility, KKR said: Nuttall will concentrate on corporate and real estate credit, capital markets, hedge fund and capital raising businesses together with the corporate development, balance sheet and strategic growth initiatives. Bae will focus on global private equity businesses and real asset platforms across energy, infrastructure and real estate private equity.

Of the four major private equity titans that are publicly listed: K.K.R., Blackstone, Carlyle and Apollo Global Management, the share price of K.K.R. has performed second-best, rising almost 50% over the past 12 months.

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Who could have seen this coming?

The latest hot tech IPO just went from bad to worse to worserer as Blue Apron tumbled over 10% in the pre-market (down over 40% from its IPO-day highs) after Amazon filed a trademark for a meal-kit service.

As MarketWatch's Tonya Garcia notes, the filing has the word mark "We do the prep. You be the chef."

And it describes the service as "Prepared food kits composed of meat, poultry, fish, seafood, fruit and/or and vegetables and also including sauces or seasonings, ready for cooking and assembly as a meal."

 

The description also includes "frozen, prepared, and packaged meals," soup and salad ingredients, advertising and "business management for others of retail and online retail stores and supermarkets," customer loyalty programs and other services.

Pets.com anyone?

via http://ift.tt/2uAkt6e Tyler Durden

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

On August 14, 1997, shortly after the Thai baht collapsed on July 2nd, Indonesia floated the rupiah. This prompted Stanley Fischer, then the Deputy Managing Director of the International Monetary Fund and presently Vice Chairman of the U.S. Federal Reserve, to proclaim that “the management of the IMF welcomes the timely decision of the Indonesian authorities. The floating of the rupiah, in combination with Indonesia’s strong fundamentals, supported by prudent fiscal and monetary policies, will allow its economy to continue its impressive economic performance of the last several years.”

Contrary to the IMF’s expectations, the rupiah did not float on a sea of tranquility. It plunged from a value of 2,700 rupiahs per U.S. dollar to lows of nearly 16,000 rupiahs per U.S. dollar in 1998. Indonesia was caught up in the maelstrom of the Asian Financial Crisis.

By late January 1998, President Suharto realized that the IMF medicine was not working and sought a second opinion. In February, I was invited to offer that opinion and was appointed as Suharto’s Special Counselor. Although I did not have any opinions on the Suharto government, I did have definite ones on the matter at hand. After nightly discussions at the President’s private residence, I proposed an antidote: an orthodox currency board in which the rupiah would be fully convertible into and backed by the U.S. dollar at a fixed exchange rate. On the day that news hit the street, the rupiah soared by 28% against the U.S. dollar on both the spot and one year forward markets. These developments infuriated the U.S. government and the IMF.

Ruthless attacks on the currency board idea and the Special Counselor ensued. Suharto was told in no uncertain terms – by both the President of the United States, Bill Clinton, and the Managing Director of the IMF, Michel Camdessus – that he would have to drop the currency board idea or forego $43 billion in foreign assistance.

Economists jumped on the bandwagon, trotting out every imaginable half-truth and non-truth against the currency board idea. In my opinion, those oft-repeated canards were outweighed by the full support for an Indonesian currency board by four Nobel Laureates in Economics: Gary Becker, Milton Friedman, Merton Miller, and Robert Mundell. Also, Sir Alan Walters, Prime Minister Thatcher’s economic guru, a key figure behind the establishment of Hong Kong’s currency board in 1983, and my colleague and close collaborator, endorsed the idea of a currency board for Indonesia. 

Why all the fuss over a currency board for Indonesia? Merton Miller understood the great game immediately. As he said when Mrs. Hanke and I were in residence at the Shangri-La Hotel in Jakarta, the Clinton administration’s objection to the currency board was “not that it wouldn’t work, but that it would, and if it worked, they would be stuck with Suharto.” Much the same argument was articulated by Australia’s former Prime Minister Paul Keating: “The United States Treasury quite deliberately used the economic collapse as a means of bringing about the ouster of Suharto.” Former U.S. Secretary of State Lawrence Eagleburger weighed in with a similar diagnosis: “We were fairly clever in that we supported the IMF as it overthrew (Suharto). Whether that was a wise way to proceed is another question. I’m not saying Mr. Suharto should have stayed, but I kind of wish he had left on terms other than because the IMF pushed him out.” Even Michel Camdessus could not find fault with these assessments. On the occasion of his retirement, he proudly proclaimed: “We created the conditions that obliged President Suharto to leave his job.”

Why did Suharto have to go? President Clinton had his own personal reasons for leading the charge for a regime change. This presented a golden opportunity for the neoconservative regime changers led by Paul Wolfowitz, a former U.S. Ambassador to Indonesia (and subsequently a key figure in the Pentagon—Deputy Secretary of Defense— who pushed for the invasion of Iraq and the overthrow of Saddam Hussein). Their agenda was for the U.S. to control the Greater Middle East, a swath stretching from Indonesia to Morocco.   

To depose Suharto, two deceptions were necessary. The first involved forging an IMF public position of open hostility to currency boards. This deception was required to convince Suharto that he was acting heretically, and that, if he continued, it would be costly. The IMF’s hostility required a quick about-face: Less than a year before the Indonesian uproar, Bulgaria (where I was President Stoyanov’s advisor) had installed a currency board on July 1, 1997 with the enthusiastic endorsement of the IMF. Shortly thereafter, on August 11, 1997, Bosnia and Herzegovina (where I advised the government on the implementation of its currency board) followed suit under a mandate contained in the Dayton Peace Agreement, and with the IMF’s full support.

Shortly after Suharto departed, the IMF’s currency board deception became transparent. On August 28, 1998, Michel Camdessus announced that the IMF would give Russia the green light if it chose to adopt a currency board. This was followed on January 16, 1999 with a little-known meeting in Camdessus’ office at the IMF headquarters in Washington, D.C. The assembled group included the IMF’s top brass, Brazil’s Finance Minister Pedro Malan, and the central bank’s Director of Monetary Policy Francisco Lopes. It was at that meeting that Camdessus suggested that Brazil adopt a currency board.

The other deception involved the widely-circulated story that I had proposed to set the rupiah’s exchange rate at an overvalued level so that Suharto and his cronies could loot the central bank’s reserves at a favorable exchange rate. It was intended to “confirm” Suharto’s devious intentions and rally international political support against the currency board idea and for Suharto’s ouster. This story was a linchpin in the Clinton administration’s campaign to dump Suharto. 

The overvaluation story was enshrined by the Wall Street Journal on February 10, 1998. The Journal reported that Peter Gontha had summoned me to Jakarta, and that I had prepared a working paper for the government in which I recommend setting the rupiah-U.S. dollar exchange rate at 5,500. This was news to me. I did not know of Peter Gontha nor the rest of this fictive story. 

I immediately attempted to have this fabrication—which had been concocted by Jay Solomon, a Dow Jones/Wall Street Journal reporter—corrected. It was a difficult and ultimately unsatisfactory process. Although the Wall Street Journal reluctantly published a correction on February 14, the damage had been done.

Interestingly, Sir Alan Walters warned me that the Wall Street Journal was planning to publish a hatchet job on the idea of an Indonesian currency board and the Special Counselor. As Sir Alan wrote to me: 

“I have heard from our Singapore office that the WSJ (Asia) are likely to publish an attack on you either tomorrow or the day after. From what I hear it is quite scandalous and obviously it is the product of some envious advisors or politicians. I find it astonishing that they have not consulted me at all.”

Even more interesting is that, as we reflect on the twentieth anniversary of the Asian Financial Crisis, Jay Solomon, the source of the Wall Street Journal’s great Indonesian fabrication and the Journal’s chief foreign affairs correspondent, reappears. Indeed, almost 20 years to the day after the Thai baht collapsed, Solomon was shown the door (read: fired). Concerning Solomon’s dismissal, the Journal’s spokesman Steve Severinghaus said, “While our own investigation continues, we have concluded that Mr. Solomon violated his ethical obligations as a reporter, as well as our standards.”

One of the few journalists who bothered to interview me in an unedited, no-spin, question-and-answer interview was Stephens Broening of the International Herald Tribune. In his interview, “Q&A/Steve Hanke, Voice of Suharto’s Guru” that published on March 20, 1998, I refuted the phony rupiah overvaluation story that had gone viral since Jay Solomon’s Journal reportage. But, by then, it was too late. 

The Journal’s original fabrication, or some variant of it, was repeated in virtually every major magazine and newspaper around the world, and it even continues to reverberate to this day, even in so-called “scholarly” books and journals. For example, in his 2000 memoir, From Third World to First, The Singapore Story: 1965-2000, Lee Kuan Yew asserts that “in early February 1998, Bambang, the president’s son, brought Steve Hanke, an American economics professor from Johns Hopkins University, to meet Suharto to advise him that the simple answer to the low exchange value of the rupiah was to install a currency board.” This bit of misinformation was a surprise, since I have never had any contact with Bambang Suharto. But it is not just politicians who fail to “fact check” their assertions. Theodore Friend’s 2003 tome, Indonesian Destinies, misspells my name, and then proceeds to say that I “counseled the [Suharto] family to peg the exchange rate at 5000.”

Setting the record straight has been complicated by the official spinners at the IMF. Indeed, they have been busy little bees rewriting monetary history to cover up the IMF’s mistakes, and Indonesia represents one of its biggest blunders. To this end, in 2001, the IMF issued a 139-page working paper “Indonesia: Anatomy of a Banking Crisis: Two Years of Living Dangerously 1997-99.” The authors include a “politically correct” version of the currency board episode, asserting that, among other things, I counseled President Suharto to set the rupiah-dollar exchange rate at 5000. This pseudoscholarly account, which includes 115 footnotes, fails to document their assertion because it simply cannot be done. This official IMF version of events also noticeably avoids referencing any of my published works or interviews based on my Indonesian experience.

After twenty years, what have we learned? Regime change never works as intended. In Asia, China has filled the vacuum created by the discredited efforts of the U.S. Government and the IMF. And what about the neoconservatives who embrace the regime change doctrine and the dream of a U.S. controlled Greater Middle East? After multiple failures, they continue to embrace their doctrine evermore tightly. 

 

This piece was originally published on Forbes.

via http://ift.tt/2v9NliS Steve H. Hanke

Less than a week after Reuters confirmed a previous report from the Russian foreign ministry, that Islamic State head Aby Bakr al-Baghdadi had been killed during an airstrike in Syria, conflicting reports have emerged about Baghdadi’s death, with the Iraqi interior ministry first cited by Al-Arabiya that the terrorist group head is “likely still alive and hiding near Raqqa”, and subsequently a top Kurdish counter-terrorism official echoing the same, and telling Reuters that “he was 99 percent sure that Islamic State leader Abu Bakr al-Baghdadi was alive and located south of the Syrian city of Raqqa, after reports that he had been killed.”

“Baghdadi is definitely alive. He is not dead. We have information that he is alive. We believe 99 percent he is alive,” Lahur Talabany told Reuters in an interview, adding “don’t forget his roots go back to al Qaeda days in Iraq. He was hiding from security services. He knows what he is doing.”

By now, however, it no longer matters whether the “leader” is alive or dead: after Iraqi security forces retook Mosul from ISIS control last week, and the group under growing pressure in Raqqa, ISIS is scattered and on the run. If anything, Baghdadi has become a liability to others and himself.

Recall that it was the Islamic State which originally reported Baghdadi’s death, perhaps as a means of easing the blow from the ongoing ISIS failure:

“Daesh organisation (IS) circulated a brief statement through its media in the (IS-held) town of Tal Afar in the west of Mosul, confirming the killing of its leader al-Baghdadi without giving further details,” Xinhua news agency cited Iraqi news agency al-Sumaria News as saying. “Daesh called on the (IS) militants to continue their steadfastness in the redoubts of the caliphate and not being dragged behind the sedition.”

Still, Talabany said the Islamic State was shifting tactics despite low morale and it would take three or four years to eliminate the group. After defeat, Islamic State would wage an insurgency and resemble al-Qaeda on “steroids”, he said. Which likely means more unrest in Europe.

As Reuters also adds, the future leaders of Islamic State were expected to be intelligence officers who served under former Iraqi dictator Saddam Hussein, the men credited with devising the group’s strategy.

Meanwhile, the Kremlin which originally reported news of Baghdadi’s death now appears to be backing off, with spokesman Dmitry Peskov saying the Kremlin has “no precise info on ISIL leader al-Baghdadi’s death”, adding that “conflicting reports on the matter keep coming.”

via http://ift.tt/2uABiy0 Tyler Durden

The credit cycle is turning for the worse.

Delinquency rates are creeping up in the consumer loan and commercial/industrial loan space. This is a clear signal that both the consumer and the corporate sectors of the economy are beginning to run out of steam.

In response to this, banks are pulling back on lending.

If you want to put the above two graphs together, think of it this way:

The economy is showing signs of stalling, so banks are “pulling the plug.”

The last time both of these issues came to rise was in 2007 as the last major credit cycle turned.

We all remember what happened next, particularly given that stocks were in a massive bubble at the time (just like today).

A Crash is coming…

And smart investors will use it to make literal fortunes.

We offer a FREE investment report outlining when the market will collapse as well as what investments will pay out massive returns to investors when this happens. It's called Stock Market Crash Survival Guide.

Today is the last day this report is available to the general public.

To pick up one of the last remaining copies…

CLICK HERE!

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

via http://ift.tt/2t81GLp Phoenix Capital Research

With the VIX once again pummeled on Friday and set to open below 10 yet again, here are some statistics from Kyle Beard of Bloomsbury advisory:

The VIX has only traded below 10 41 times since 1993 (intra-day). 21 of those occurrences have taken place since May 1, 2017. When you consider there have been 6,179 trading days since 1993, you realize how incredible this is. By the numbers:

However, it’s not just the VIX: as BofA’s David Woo points out, volatility across financial markets has collapsed in recent months:

• The MOVE index, which measures interest rate volatility across the US yield curve, is hovering just above the 52 level that represents the trough of the index since 1988. Only in 2007 and 2013 was the index lower, and only barely.
• VIX has again dropped below 10. The only time it was lower since the inception of the index in 1990 was briefly in 1993.
• 3-month EUR/USD vol is now below 7. Since the inception of the euro, EUR/USD vol was only lower twice, in 2007 and 2014.

BofA aggregates these volatility measures by first taking z-scores of the individual measure and then taking an average of the three series. The results are shown in the chart below. The aggregate volatility measure is near its lowest level in twenty years.

As the chart above shows, there are only two other periods during which volatility was as depressed as it is right now:

• Early 2007: The consensus at the time was that the Fed had completed the tightening cycle (the last hike was in June 2006) and was likely to remain on hold for the foreseeable future.
• Early 2014: The consensus at the time was that after the end of the winding down of QE4, the Fed would be in a holding mode for an extended period.

Woo then notes that what these two episodes have in common “was that the Fed was seen as either done with hiking rates or still far away from starting to hike rates” and adds that “this makes it very difficult to reconcile the current depressed level of volatility and the fact that the Fed is still in the middle of its hiking cycle.”

And, adding to BofA’s confusion, Woo says the he would go one step further: “If the market is underpricing the uncertainty with respect to the outlook of US monetary policy, we are even more concerned that it seems totally impervious to the risk of two potentially disruptive, if not dangerous, Games of Chicken likely to unfold in the summer and the beginning of the fall.”

While we will have more to say on these two particular “games of chicken”, we fast forward to Woo’s conclusion, in which he notes that “we find it difficult to reconcile the record low volatility in financial markets at the moment with growing political risk in Washington and geopolitical risk in Asia. There are many reasons why we are living in a different world than the one we used to know and we would caution against relying too much on history for forecasting the likely outcome of these risks.”

It appears that what is bothering David Woo is the same thing that bugged DB’s Aleksandar Kocic two weeks ago, who however unlike Woo, managed to not only define this decoupling between “risks” and markets, calling it simply “complacency”, but also quantified it and found precisely when the market “broke” – some time in 2012.

As a reminder, this is what Kocic said:

Current levels of complacency are alarming. This is what everyone is talking about. Despite growing uncertainties and tensions, the market volatility refuses to rise. Persistence of low volatility is increasing the penalty for potential dissent and reinforces one sided positioning. As a consequence, the risk of disorderly unwind is growing. And the longer this regime continues, the lower the threshold of painful unwind. Currently, VIX at 15% is perceived as a problem although before the crises it had traded above 20% most of the time. Similar observations hold for rates gamma, currently around 60bp, compared to pre-crisis averages around 100bp.

While we know what caused the problem (central banks), and when it emerged (2012), the open questions of when and why this decoupling will (violently) end and how it will impact asset prices remains unanswered.

via http://ift.tt/2uAaA8J Tyler Durden

Authored by Mohamed El-Erian via Bloomberg.com,

The blunt remarks by Jamie Dimon, the highly successful chief executive of JPMorgan Chase, during a conference call on July 14, have triggered a wide range of reactions, from supportive to accusations that he is anti-patriotic:

It's almost an embarrassment be an American citizen traveling around the world and listening to the stupid shit we have to deal with in this country and at one point we all have to get our act together. 

Put in a proper context, the comments speak to four consequential realities in the U.S. and global economies:

1. Dimon's main worry, which is rightly shared by many in this country, is that by unnecessarily increasing contextual uncertainty and delaying the implementation of sensible economic policies, political gridlock in Washington has for years undermined growth, made it less inclusive, and denied many Americans the higher level of prosperity that is both desirable and feasible.

 

2. Dimon was correct in observing during the call that, despite the "dysfunction" in Washington, the U.S. economy has still managed to deliver annual growth in the 1.5 percent to 2 percent range — an outcome that illustrates the resilience of the private sector. Yet the longer this low growth equilibrium persists, the greater the downward pressure on the country's potential and its future prosperity.

 

3. Given the role and importance of the U.S. in an interconnected global economy, much of the rest of the world — and especially America's friends and allies — has gone from looking at this situation with curiosity and bemusement to confusion and concern. For decades, America's traditional values, institutions and entrepreneurship have been the source of inspiration for efforts to improve the well-being of many people around the world. And America remains a very important growth locomotive for the global economy, and its most important anchor of financial stability.

 

4. American credibility and leadership still form the most critical elements for effective global policy coordination. Without them, the global economy will be subject to the uncertainties and challenges that come with greater fragmentation pressures, including the redefinition of regional economic orders that will be difficult to add up well at the international level.

It is one thing for foreign business and government leaders to express concern about the damage of U.S. political dysfunction. It is quite another for such comments to come from one of the country's most influential and respected CEOs. In doing so, Dimon rang an alarm bell about both foregone opportunities at home and eroding influence internationally.

The timing of Dimon's remarks also was important.

Delays in formulating and passing pro-growth legislation (such as tax reform and infrastructure investments), together with the diminishing effectiveness of Federal Reserve policies in continuing to buy time for the economy, exposes the U.S. to a higher risk of a downward drift. The low level of global policy coordination, as illustrated most recently by the outcome of the G-20 meeting in Germany, would make the potential economic, political and social consequences of such a move even more disturbing were it to occur.

Rather than dismiss Dimon's remarks as anti-patriotic and the product of an unfortunate outburst, the nation would be best served if they were to provide a wakeup call for Washington, which remains divided, distracted and continues to fall short in stepping up to its important economic governance responsibilities.

via http://ift.tt/2t7nuGU Tyler Durden

With little on the US economic docket in the coming days as the summer doldrums arrive, with Citi saying that “though several events of note linger on the horizon for later this week, G10 is firmly on the beach as of this morning”, this week’s focus is on the ECB and BoJ meeting along with minutes from the RBA and the Riksbank. Also important are inflation releases from the UK, New Zealand and Canada along with several China data prints. In EM, there are monetary policy meetings in Indonesia, South Africa, Hungary, Kazakhstan and Hong Kong.

Here are the key events to look, courtesy of Bank of America, for a macro preview of this week’s events and how they may impact currencies see “FX Week Ahead Preview: Is it “End Of Days” For The Greenback”:

Central banks take centre-stage: watch the ECB and BoJ:

BofA believes that after the “Sintra hiccup”, the ECB for next week has to choose between “backtracking” and “assuming”. They think the ECB will choose the latter, and toughen its language marginally, by removing the easing bias on QE, while insisting on the need for prudence and a “persistent” monetary stimulus. Looking ahead, we think the ECB may wait for the Fed’s decision in September before making a move and wait until October before revealing the quantum of QE buying in 2018.

At its 20 July meeting, the BoJ policy board is expected to keep its short rate unchanged at -0.1% and keep its guidance on QE unchanged. The weakness in YTD inflation means the BoJ board will likely cut its FY17 core CPI forecasts. But with other indicators pointing to a gradual acceleration in growth and prices, the board has little incentive to change policy, and will likely stick to its optimistic FY18/19 projections.

…along with minutes from the RBA and the Riksbank

That RBA is expected to likely downplay recent signs of rising prices given the expected tempering effect of supervisory measures on housing activity. Currency strength also argues against a shift to more hawkish tone at this stage. The Riksbank removed their easing bias at the July 4th meeting in a unanimous decision but nevertheless emphasized their dovish tilt and sensitivity to the ECB. It will be interesting to see the thought process of the various members in the Minutes.

The week ahead in Emerging Markets

There are monetary policy meetings in Indonesia, South Africa, Hungary, Kazakhstan and Hong Kong. Sovereign rating review in Turkey, Saudi Arabia, Czech Rep. and Abu Dhabi.

A weekly breakdown from DB’s Jim Reid

• To the week ahead now. After the excitement of China’s data dump this morning there isn’t a huge amount left over the course of the day with final June CPI report for the Euro area and the July empire manufacturing print in the US the only data of note.
• Tuesday is busy though and we kick off with China property prices data in the morning. In Europe we’ll get the ECB’s bank lending survey for Q2 followed by the June CPI/RPI/PPI data docket in the UK before we end with the July ZEW survey in Germany. Over in the US tomorrow we’ll get the June import price index reading and July NAHB housing market index print.
• With nothing of note in Europe or Asia on Wednesday, the focus will be on the US with June housing starts and building permits data.
• Thursday kicks off in Japan where the overnight data includes the June trade data, but the bigger focus will be on the BoJ meeting outcome. During the European session we’ll get Germany PPI and UK retail sales, shortly before the ECB meeting just after midday. In the US on Thursday we’ll get initial jobless claims, Philly Fed business outlook and conference board’s leading index.
• It’s a quiet end to the week on Friday with UK public sector net borrowing data the only release of note.
• With the Fed entering the blackout period there is no Fedspeak scheduled this week, while over at the ECB and BoE there are also no scheduled speakers. Other events to note however include the EU’s Barnier and UK’s David Davis meeting for a second round of Brexit talks, kicking off today. The inaugural meeting of the US-China comprehensive economic dialogue on Wednesday in Washington where the first gathering is due to cover economic and trade issues between the two nations. Finally earnings season ramps up in the US with 69 S&P 500 companies due to report including Netlfix (Monday), Goldman Sachs, BofA, IBM,  Johnson & Johnson (Tuesday), Morgan Stanley (Wednesday), Microsoft, eBay (Thursday) and GE (Friday).

Focusing only on the US, here is a summary table from BofA:

Finally, here is Goldman with a focus on the US, together with consensus estimate:

The key economic release this week is housing starts on Thursday. There are no scheduled speaking engagements by Fed officials this week.

Monday, July 17

• 08:30 AM Empire State manufacturing index, July (consensus +15.0, last +19.8)

Tuesday, July 18

• 08:30 AM Import price index, June (consensus -0.2%, last -0.3%)
• 10:00 AM NAHB housing market index, July (consensus 68, last 67): Consensus expects the NAHB homebuilders’ index to tick up in July, after homebuilder sentiment weakened by 2pt. The index remains close to the March cycle high of 71.
• 04:00 PM Total Net TIC Flows, May (last +$65.8bn)

Wednesday, July 19

• 08:30 AM Housing starts, June (GS +2.5%, consensus +6.2%, last -5.5%); Building permits, June (consensus +2.8%, last -4.9%): The lagged impact of higher mortgage rates appears to be weighing on single family demand for both new and existing homes, despite an otherwise favorable fundamental backdrop. At the same time, the large pipeline of apartment projects in the planning stages suggests scope for a rebound in that segment. Taken together, we expect a 2.5% rebound in overall housing starts, reversing some of the 5.5% drop in May.
• 08:30 AM Philadelphia Fed manufacturing index, July (GS +25.0, consensus +24.3, last +27.6): We estimate the Philadelphia Fed manufacturing index pulled back 2.6pt to 25.0 in July, after the index declined 11.2pt to 27.6 in June. We expect the index to retrench a bit, but likely to levels still consistent with a solid pace of expansion in manufacturing activity, given encouraging industrial commentary.

Thursday, July 20

• 8:30 AM Initial jobless claims, week ended July 15 (GS 245k, consensus 245k, last 247k); Continuing jobless claims, week ended July 8 (consensus 1,950k, last 1,945k): We estimate initial jobless claims edged down 2k to 245k in the week ended July 15. Initial claims can be particularly volatile around this time of year due to annual summer auto plant shutdowns, and we believe the prior week’s increase likely reflected at least some impact from closures around the July Fourth holiday. We expect this increase in auto-related claims filings to reverse in this week’s report, leading to a modestly lower overall reading. Continuing claims – the number of persons receiving benefits through standard programs – have risen over the last month following a sharp decline in the first four months of the year.

Friday, July 21

• There are no major economic data releases.

Source: DB, BofA, GS

via http://ift.tt/2tiEoX1 Tyler Durden