Tag: finance

For the first time since July 2009, the European equity markets have risen for 8 days straight. The 4.73% rise is the best run in 3 months and took Bloomberg’s European 500 index (akin to the S&P 500 in the US) to a perfect 61.8% retracement of the 2007/9 collapse. Greece and Spain are outperforming (the former +7% in the last 3 days alone). Away fdrom stocks, bonds are quiet, sovereign spreads are hardly moving as liquidity evaporates and while the EUR strengthened early on, as the US day session opened, the EUR sold off back to unchanged by the close of Europe. In the meantime, Europe’s VIX dropped to 9 month lows (below 16%) today. Oh – and by the way – European Macro data has collapsed to 3-month lows.

European stocks have retraced 61.8% of their 2007-9 losses…

 

and this makes perfect sense…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dhzvefrHfJ8/story01.htm Tyler Durden

We’ve heard statement after statement from any and all talking heads (a sample of the best 25 here) and we’ve seen the numbers (both internally and in context)… and we’ve discussed the unintended consequences and what to expect in 2014. So now (due at 1125ET – so who knows what time he turns up), it’s the big man’s turn to become the Sham-Wow guy; explain how great it actually is (and ignore the bloggers); how any minute now it will all be fixed, and how awesome this will all be (one day)… Don’t forget you can always call 1-800-F U-CKYO for advice.

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7F0vnL0AUEM/story01.htm Tyler Durden

We’ve heard statement after statement from any and all talking heads (a sample of the best 25 here) and we’ve seen the numbers (both internally and in context)… and we’ve discussed the unintended consequences and what to expect in 2014. So now (due at 1125ET – so who knows what time he turns up), it’s the big man’s turn to become the Sham-Wow guy; explain how great it actually is (and ignore the bloggers); how any minute now it will all be fixed, and how awesome this will all be (one day)… Don’t forget you can always call 1-800-F U-CKYO for advice.

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7F0vnL0AUEM/story01.htm Tyler Durden

Just two weeks ago we discussed the dismal smog that had closed roads and ariports around Beijing during the recent holiday. The situation has got worse, far worse, since then. As Reuters reports (and the stunning images below show), choking smog all but shut down one of northeastern China’s largest cities on Monday, forcing schools to suspend classes, snarling traffic and closing the airport in the country’s first major air pollution crisis of the winter. An index measuring PM2.5, or particulate matter with a diameter of 2.5 micrometers (PM2.5), reached a reading of 1,000 in some parts of Harbin, the gritty capital of northeastern Heilongjiang province and home to some 11 million people. A level above 300 is considered hazardous! China’s leadership is concerned about air quality because it is a constant source of public anger.

 

Via Reuters,

Users of China’s popular Twitter-like Sina Weibo microblogging site reacted with both anger and bitter sarcasm over Harbin’s air pollution.

 

“After years of effort, the wise and hard-working people of Harbin have finally managed to skip both the middle-class society and the communist society stages, and have now entered a fairyland society!” wrote one user.

 

Other parts of northeastern China also experienced severe smog, including Tangshan, two hours east of Beijing, and Changchun, the capital of Jilin province which borders Heilongjiang.

Via EuroNews,

The World Health Organisation recommends daily levels of particulate matter with a diameter of 2.5 micrometers to be no more than twenty. Anything above 300 is considered dangerous. Levels around 1,000 were recorded in some parts of Harbin. All schools were shut and the airport was closed.

 

Harbin is home to some 11 million people and lies in the northeastern Heilongjiang province of China. Other parts of northeastern China also experienced severe smog.

 

Visibility has reduced to only around 10 metres causing traffic jams.

 

China’s leadership is concerned about air quality because it is a constant source of public anger.

 

The smog is expected to continue for the next 24 hours.

 

This is the freeway… (spot the cars)

 

Via CTV,

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/b8Yy6TEmqbk/story01.htm Tyler Durden

Just two weeks ago we discussed the dismal smog that had closed roads and ariports around Beijing during the recent holiday. The situation has got worse, far worse, since then. As Reuters reports (and the stunning images below show), choking smog all but shut down one of northeastern China’s largest cities on Monday, forcing schools to suspend classes, snarling traffic and closing the airport in the country’s first major air pollution crisis of the winter. An index measuring PM2.5, or particulate matter with a diameter of 2.5 micrometers (PM2.5), reached a reading of 1,000 in some parts of Harbin, the gritty capital of northeastern Heilongjiang province and home to some 11 million people. A level above 300 is considered hazardous! China’s leadership is concerned about air quality because it is a constant source of public anger.

 

Via Reuters,

Users of China’s popular Twitter-like Sina Weibo microblogging site reacted with both anger and bitter sarcasm over Harbin’s air pollution.

 

“After years of effort, the wise and hard-working people of Harbin have finally managed to skip both the middle-class society and the communist society stages, and have now entered a fairyland society!” wrote one user.

 

Other parts of northeastern China also experienced severe smog, including Tangshan, two hours east of Beijing, and Changchun, the capital of Jilin province which borders Heilongjiang.

Via EuroNews,

The World Health Organisation recommends daily levels of particulate matter with a diameter of 2.5 micrometers to be no more than twenty. Anything above 300 is considered dangerous. Levels around 1,000 were recorded in some parts of Harbin. All schools were shut and the airport was closed.

 

Harbin is home to some 11 million people and lies in the northeastern Heilongjiang province of China. Other parts of northeastern China also experienced severe smog.

 

Visibility has reduced to only around 10 metres causing traffic jams.

 

China’s leadership is concerned about air quality because it is a constant source of public anger.

 

The smog is expected to continue for the next 24 hours.

 

This is the freeway… (spot the cars)

 

Via CTV,

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/b8Yy6TEmqbk/story01.htm Tyler Durden

Thanks to a considerable downward revision of the magical NAR numbers, the existing home sales MoM ‘beat’ expectations for September but the two-month average shows the largest drop in sales since June 2012. From the “cylical peak” in July, of course extrapolated by any and all apologists as confirming the voyage to the moon, it seems, just as we noted, that “affordability” – long shunned by the bulls (because, like you know, interest rates are still low compare to the 1970s…) – has collapsed to five-year lows; worse, in fact, than we expected. With 33% of all transactions cash, it is little surprise that affordability has fallen to a five-year low as home price increases easily outpaced income growth.

 

 

 

From the NAR statement:

Affordability has fallen to a five-year low as home price increases easily outpaced income growth

 

…

 

Expected rising mortgage interest rates will further lower affordability in upcoming months.  Next month we may see some delays associated with the government shutdown.”

Just as we warned in June:

It also means that a buyer who could previously afford a $506K house with a $2,000 monthly budget at an interest rate of 2.5% will be able to afford only $316K if and when the average 30 Year fixed hits 6.5%: a 40% drop in affordability based on just a 4% increase in interest rates!

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PRWRvmNRyl8/story01.htm Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

What we can expect to happen generally happens, as the causal chain cannot be disrupted by wishful thinking.

If I go to Las Vegas and gamble with abandon, what do I expect to happen? If I wander alone through a tough part of town waving my iPhone around, what do I expect to happen? If I insist on hiking up a muddy rain forest trail in street clothes in the pouring rain, what do I expect to happen?

We all know what is likely to happen: In Las Vegas, we will lose our stake; in the tough part of town, our iPhone will be stolen, and on the tropical trail, we will get soaking wet.

These consequences are easily predictable. What we can expect to happen generally happens, as the causal chain cannot be disrupted by wishful thinking.

Yet when we re-elect the same politicos who have failed miserably for years, we somehow expect they will magically succeed in providing leadership the next time around. When we eat visibly unhealthy packaged junk food that is engineered to trigger our reward centers with massive doses of fat, salt and sugar, we somehow expect there will be no consequences of eating this "food."

We sit in front of digital devices all day and eliminate physical fitness from our schools, yet we expect there will be no consequences from this inactivity.

We create trillions of dollars from thin air and borrow trillions of additional dollars into existence, yet we expect there will be no consequences from this unprecedented monetary and credit expansion.

We borrow a third of all government expenditures, yet we expect there will be no consequences from this monumental dependence on public debt to maintain the Status Quo.

We buy the cheapest quality goods, yet complain about the poor quality.

We pursue a plan of borrowing our way to prosperity, yet we are flummoxed that prosperity is elusive.

We push everyone with any assets into risky asset bubbles with zero-interest rates, yet we are surprised when asset bubbles pop.

What do you expect to happen? The causal chain cannot be disrupted by wishful thinking. Bubbles will pop, and increasingly leveraged, fragile systems will crash. Hoping causal consequences will magically vanish is a strategy doomed to catastrophe.
 

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

That the US is set to have its third consecutive quarter with revenue declines (followed by the fourth in a few months, when all the misses will be blamed on – what else – the Tea Party), is by now well-known and greeted by stocks which have given up on any fundamentals (that this happens even as “one-time” restructuring charges which actually recur every quarter, such as JPM’s most recent $9 billion in fees, are added back to non-GAAP EPS, and make EPS increase is just as well-known). But it is not so much the US we focus on in this blurb, but Europe, where for some mindboggling reason the consensus has rapidly shifted in recent months, toward a prevailing sentiment of recovery. So here is a quick datapoint from Deutsche putting the European “recovery” in context.

You read that right: of 17 companies on the DJStoxx600 reporting so far in Q3, 13 have missed.

Welcome to the [European] recovery, indeed.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4XhyU0vUINM/story01.htm Tyler Durden

That the US is set to have its third consecutive quarter with revenue declines (followed by the fourth in a few months, when all the misses will be blamed on – what else – the Tea Party), is by now well-known and greeted by stocks which have given up on any fundamentals (that this happens even as “one-time” restructuring charges which actually recur every quarter, such as JPM’s most recent $9 billion in fees, are added back to non-GAAP EPS, and make EPS increase is just as well-known). But it is not so much the US we focus on in this blurb, but Europe, where for some mindboggling reason the consensus has rapidly shifted in recent months, toward a prevailing sentiment of recovery. So here is a quick datapoint from Deutsche putting the European “recovery” in context.

You read that right: of 17 companies on the DJStoxx600 reporting so far in Q3, 13 have missed.

Welcome to the [European] recovery, indeed.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4XhyU0vUINM/story01.htm Tyler Durden

Last week, the main area of focus was the political situation in the US where Democrats and Republicans finally agreed upon a short term fix to reopen the government and extend the debt ceiling. The conclusion of this saw equity markets rally to all time highs in Europe and the US, with the USD continuing to slide as markets turn their attention to the Fed’s QE programme and push back expectations of when the central bank will begin to pull back on asset purchases.

With the government now reopen, attention will turn to the numerous data releases that were delayed but will now take place over the next two weeks, including the jobs report which is due on Tuesday. The release of this report will once again be used to help predict when the Fed will begin to taper QE however, recent comments from Fed members have suggested that October is likely to be too soon trim bond buying due to the lack of key macroeconomic data and the unknown economic impact as a result of the government closing for 16 days. Most recently, Fed’s Evans suggested it is not yet time to remove monetary accommodation and said he sees tapering postponed after the shutdown. Expectations on Tuesday are for an increase of 180K jobs for the month of September and the number will be used to evaluate the momentum of the economy prior to the shutdown of the government.

However next month’s report could be perceived as more important as it appears tapering is off the table this month, and the report will be an assessment of the damage done from the closure of numerous government departments.

Elsewhere next week, approximately 25% of companies in the S&P 500 are due to report their earnings, including McDonald’s, Microsoft, Caterpillar, Amazon and the best performing company in the index this year, Netflix. Subscriber additions will be one of the key figures for Netflix, with growth expected from Q2 due to seasonality, however there is not expected to be large growth from the same quarter in 2012. As a guide, of the approximately 100 companies in the S&P 500 to have reported this quarter, 69% have topped earnings expectations while only 53% have beaten revenue expectations, compared to four-year averages of 73% and 59% respectively.

In fixed income markets, supply dries up in the Eurozone this week following last week’s EUR 14.4bln of mostly shortdated supply, with only a EUR 2bln German Buxl auction on Wednesday. Not only is supply notably lower in the Eurozone but there are also numerous payments as France pays EUR 37bln in coupons and principals at the end of the week and Austria is due to pay out over EUR 13bln on Monday, which could support core fixed-income throughout the week. Furthermore, there is also a lack of conventional supply out of the US although the US Treasury is to issue USD 7bln in 30y TIPS on Thursday, as well as detailing next week’s supply in 2-, 5- and 7-year notes.

Monday, Oct 21

• US Existing Home Sales (Sep): consensus -3.3%mom, previous +1.7%mom
• Japan Trade Balance (Sep): consensus JPY-918.6bn, previous JPY-962.8bn
• Mexico Retail Sales (Aug): previous +1.3%yoy
• Also interesting: Taiwan Export Orders (Sep), Hong Kong CPI (Sep)

Tuesday, Oct 22

• US Non-Farm Payrolls (Sep): Consensus 180K, previous 169K
• US Unemployment Rate (Sep): Consensus 7.3%, previous 7.3%
• US Richmond Survey (Oct): previous flat
• Switzerland Trade Balance (Sep): previous CHF+1.86bn
• Argentina Trade Balance (Sep): Consensus $+800mn, previous $+568mn

Wednesday, Oct 23

• Canada MPC: consensus has policy rate unchanged at 1%.The BoC’s policy stance should remain very much on hold.
• UK MPC minutes (Oct)
• Euro Area Consumer Confidence (Oct, Flash): consensus -14.5, previous -14.9
• US FHFA House Price Index (Aug): consensus +0.8%mom, previous +1.0%mom
• South Africa CPI (Sep): Consensus +5.90%yoy, previous +6.40%yoy
• Australia CPI (Q3): Consensus +1.8%yoy, previous +2.4%yoy
• Taiwan IP (Sep): consensus +0.1%yoy, previous -0.7%yoy
• Also interesting: Singapore CPI (Sep), New Zealand Trade Balance (Sep)

Thursday, Oct 24

• Sweden MPC: Consensus have policy rate unchanged at 1%
• Norway MPC: Consensus have deposit rate unchanged at 1.50%
• Philippines MPC: Consensus have policy rate unchanged at 3.50%yoy
• UK CB Carney speaks in London
• Euro Area PMIs (Oct, Flash)
• US Initial Jobless Claims (Oct 18): consensus 340K, previous 358K
• US New Home Sales (Sep): Consensus 1.0%mom, previous +7.9%mom
• US Kansas Fed Survey (Oct)
• Mexico Real GDP (Aug): Previous +1.69%yoy
• Also interesting: Spain Unemployment Rate (Q3), Honk Kong Trade Balance (Sep), Mexico Inflation (15 Oct)

Friday, Oct 25

• Mexico MPC: Consensus expects a cut of 25bps in policy rate to 3.50%yoy. In addition, there is a probability of a more assertive 50bps cut-and-hold particularly if Thursday’s 1H October inflation prints significantly below expectations
• Euro Area ECB Asmussen speaks in Milan
• US Core Capital Goods Orders (Sep): consensus +0.7%, previous +1.5%
• US Durable Goods Orders (Sep): consensus +2.0%, previous +0.1%
• US Michigan Consumer Sentiment (Oct, final): consensus 75.0, previous 75.2
• Japan core CPI (Sep): consensus +0.7%yoy, previous +0.8%yoy. Together with a series of food price hikes from October, we expect inflation to creep up further in the coming months.
• Germany IFO Business Survey (Oct): consensus 108.0, previous 107.7
• UK GDP (Q3): previous +0.7%qoq
• Brazil CA Balance (Sep): Consensus $-2.9bn, previous $-5.5bn
• Mexico Trade Balance (Sep): previous $-0.23bn
• Also interesting: Philippines Trade Balance (Aug), Thailand Trade Balance (18 Oct), South Korea GDP (Q3), Singapore IP (Sep), Sweden Business and Consumer Surveys (Oct), Brazil FDI Inflows (Sep)

Key Issues in the Week Ahead:

TOP ISSUES FOR THE WEEK AHEAD US DATA OUT OF SHUTDOWN

On Tuesday, we finally get the long-awaited update on the US employment situation in September. We expect a strong reading of
240,000 net new jobs, well above the 148,000 average posted over the June-August period and consensus (180,000). We also expect the unemployment rate to fall to 7.1%. Such strong readings would again ignite a debate on an imminent start of US tapering, but given that the full impact of the recent shutdown may take some further time to emerge, we continue to see tapering in Q1 next year.

FLASH PMIS TO SUGGEST WEAK RECOVERY

PMIs have recently shown mixed results, with some weakness apparent in manufacturing. This week’s flash PMIs in Germany, France and the euro area (out Wednesday) are likely to show similarly mixed results. For manufacturing, we expect onlya marginal improvement in line with consensus, while for services we expect a slight drop, in contrast to consensus which sees unchanged conditions. Overall, this should be in line with the expectations for a weak, uneven and fragile recovery in the euro area.

Source: Goldman, RanSquawk, SocGen

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VWiG10Nug8o/story01.htm Tyler Durden