After a wild week and an over-exuberant reaction to Europe’s plan to contain the debt crisis, the markets have now had 5 days to digest and reflect on the structures. The articles out over the weekend were mixed at best and strongly negative at worst with most stating more details were needed. From Monday of last week, my own grading of the EFSF expansion had an incomplete on it for the same reasons.
How are the markets reacting? Clearly, the simplest success measure of the “plan to end all plans” or PTEAP from last week is the 10yr yield on … …READ MORE
Tag Archives: China
Party Thursday, Hangover Monday
Senate wants to devalue
Yesterday, the US Senate passed legislation that allows US companies to seek duties to compensate against countries with “misaligned currencies.” US Senator Chuck Schumer stated, ““To those who say it’ll cause a trade war, we are in a trade war…We have our clocks cleaned every day and lose jobs every day because of unfair Chinese practices. To those who say China will retaliate, China has got far more to lose in this than we do.”
Instead of evaluating whether a currency was manipulated, the US Treasury is now charged with the task of identifying “misaligned” currencies. Then, the bill says … …READ MORE
Upcoming EM central bank meetings support risk
In a surprise move today, the Bank Indonesia cut its overnight reference interest rate 25 basis points to 6.5%. Indonesian stocks ended the day up 2.3% and the rupiah weakened around 0.5% to 8,965. Bank Indonesian Governor Darmin Nasution stated, “If the global economy is slowing, inflationary pressures will be declining….Many countries may shift their policy focus from maintaining low inflation to supporting economic growth.”
Over the last quarter, there have been interest rate cuts by Brazil, Russia and Turkey that have supported Nasution comments, supported economic growth and supported global equity markets. Markets should begin to expect more of … …READ MORE
Upcoming EM central bank meetings support risk
In a surprise move today, the Bank Indonesia cut its overnight reference interest rate 25 basis points to 6.5%. Indonesian stocks ended the day up 2.3% and the rupiah weakened around 0.5% to 8,965. Bank Indonesian Governor Darmin Nasution stated, “If the global economy is slowing, inflationary pressures will be declining….Many countries may shift their policy focus from maintaining low inflation to supporting economic growth.”
Over the last quarter, there have been interest rate cuts by Brazil, Russia and Turkey that have supported Nasution comments, supported economic growth and supported global equity markets. Markets should begin to expect more of … …READ MORE
China, India, Greece and Ben….oh my!
Global equity markets had big movers overnight, but not all in the same direction.
China was down 1.5% as that nation extended their reserve requirements to include client margin accounts. This has some estimating that $140 billion more will have to be held as requirements over the next 6 mths. This means that the tightening of Chinese monetary conditions is not yet done and could see additional steps to reign in lending and therefore reduce inflation.
Next up, India took steps to ease a political crisis that had engulfed the nation. Opposition leader Hanzarre was on a 13 day fast … …READ MORE
Obama’s Plan and the Economy
Ahead of the World Bank/IMF meetings in DC this weekend, the IMF warned the United States on their fiscal deficit and requested an austerity plan to deal with the red ink. Carlo Cottarelli, head of the IMF’s fiscal affairs department, urged the U.S. to move soon in agreeing to a plan to contain the country’s public debt, which in 2010 rose to more than 90% of gross domestic product, or the economy’s total output according to Dow Jones. Adding insult to injury, he said “If I look at fiscal fundamentals, I see the situation in Europe improving faster than in … …READ MORE
Trading the Chinese Data
Today, the Chinese released their GDP, CPI and PPI. Yesterday, it was leaked that the December CPI fell to 4.6% from 5.1%. This turned out to be accurate. Here’s the data from the National Bureau of Statistics:
2010 real GDP +10.3% vs 2009 revised +9.2%
2010 CPI +3.3%; 2009 -0.7%
2010 total fixed-asset investment +23.8%; 2009 +30.1%
2010 urban fixed-asset investment +24.5%; 2009 +30.5%
2010 inflation-adjusted total fixed-asset investment +19.5%
2010 industrial output +15.7%; 2009 +11.0%
2010 retail sales +18.4%; 2009 +15.5%
2010 inflation-adjusted retail sales +14.8%
2010 PPI +5.5%; 2009 -5.4%
The interesting aspect is the FX price action. … …READ MORE
3things You Need to Know Today
1. China’s President Hu Jintao visits the United States. This is an official state visit and there will be an official state dinner as President Hu comes to Washington D.C. and then travels to Chicago. Yesterday, he answered submitted written questions from both the WSJ and WaPo. WSJ question 4: What do you think will be the U.S. dollar’s future role in the world? How do you see the issue of making the RMB an international currency? Some think that RMB appreciation may curb China’s inflation, what’s your view on that?
Here are the salient bullets on the currency:
• … …READ MORE
Posted in Front Page Also tagged currency, EFSF, Euro Zone, Federal Reserve, inflation, UK, US Leave a comment
US next in line to bailout out Europe?
Today, Japanese Finance Minister Noda said that Japan would use its existing euro foreign exchange reserves to buy a large portion of the bonds issued by the European Financial Stability Fund. “There is a plan for the euro zone to jointly issue a large amount of bonds late this month to raise funds to assist Ireland. It’s appropriate for Japan to make a contribution as a leading nation to increase trust in the deal. We want to buy more than 20 percent.”
Japan joins China in pledging to buy European debt to quell the uncertainty surrounding the sovereign debt and … …READ MORE
Posted in Front Page Also tagged European debt crisis, Japan, obama, Portugal, Sarkozy, Spain Leave a comment
5 things you need to know today:
1. There’s a way, just a ? of the will: There are a couple of early articles out broaching the topic of whether firms will begin hiring. The WSJ takes the path of how much money is on the sidelines for large corporations and how this may be used to increase employment. Bloomberg tacks with a focus on small firms improving sales, but how they are staying lean by using temporary help longer rather than adding full time employees. Without job growth, the US economy slides into perdition in the 2nd half of this year.
2. China eases restrictions for … …READ MORE
Posted in Front Page Also tagged Austan Goolsbee, congress, currency, debt ceiling, obama, Republicans, small firms, US employment Leave a comment
