Posted by Darren Hutchinson on Mon, Aug 30, 2010 @ 06:52 AM
In our world, the Bank Holiday weekend was dominated by actual concrete policy actions coming from Japan. In line with what has been reported in a variety of media, liquidity operations have been increased in both duration and size. Elsewhere, further
noises about the ECB extending their liquidity operations. Given European Bank’s financing challenges in the next 18-months, Trichet’s expected announcement of an extension of weekly, monthly and 3-monthly operations is both necessary and significant. Munchau was in Monday’s FT with another very bearish article on the future of the Eurozone, this time doubting the wider sustainability of Germany’s recent monster numbers. As ever, the effects of deficit reduction dominate the UK papers. This week sees the beginning of the “star chambers” of fiscal consolidation, where departments will present their plans for cutting as much as 40% of their budgets. Also starting to see a trickle of M&A activity. Not widespread but accentuates the divide between micro-outperformance and concerns over the macro outlook.
Japan
The developments widely mooted in the past fortnight’s press were those outlined by the BoJ on Monday. To summarise:
BoJ expanding the existing fund supply from Y20trn to Y30trn and extending the maturity of liquidity operations from 3 to 6 months. The vote was 8-1, with one dissenter (Suda).
At the later press conference, reasons why Suda dissented were made elaborated on. Essentially she saw downside risks developing from further easing such as distorting market mechanisms and planting the “seed for a bubble”.
We’ve had more comments throughout the morning in line with the usual comments from Japanese officials (watching the Yen closely, co-ordination occurring between the BoJ and MoF).
Over to the government on the fiscal-side tomorrow (on Friday they said they would outline measures on Tuesday). The expectation here is that they will draw on $10.78bn reserve fund (put aside for emergencies such as earthquake). The suggestion over the weekend was that the Government would consider a supplementary budget bill to use a Y800bn surplus from the previous year.
“BOJ Takes Easing Action; Extends Duration of Low Interest-Rate Loans, WSJ, http://online.wsj.com/article/BT-CO-20100829-704828.html .
Europe, ECB
With the media refocusing itself towards the capital position of Irish banks in recent weeks, some good (if not unexpected) news on the extension of ECB liquidity provisions.
“Jean-Claude Trichet, president, is expected on Thursday to announce that at least until the start of 2011 banks’ demands for weekly, monthly and – probably – three-month liquidity will continue to be met in full”.
“ECB likely to extend emergency bank support”, FT, http://www.ft.com/cms/s/0/bf25c964-b385-11df-81aa-00144feabdc0.html .
Germany, how sustainable is the recovery?
Munchau once again sounding negative on European prospects – German growth predicated on exports which will decline if US and China slow. Nominal wages are not adjusting, leading to intra-EU imbalances. German growth will be “toxic, and quite possibly self-defeating in the long-run.”
“Germany’s rebound is no cause for cheer”, FT, http://www.ft.com/cms/s/0/2becafc4-b398-11df-81aa-00144feabdc0.html .
UK, growth revisions
British Chamber of Commerce upgrades its short-term growth forecasts (raising short-term economic growth forecasts; 2010 from 1.3% to 1.7%, 2011 from 2.0% to 2.2%. However, the body warned that the pace of UK economic growth will slow over the medium term as the effects of fiscal consolidation is more fully felt.
“UK Growth Set to Slow, Business Group Cautions”, WSJ, http://online.wsj.com/article/SB10001424052748703618504575459411833388140.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews .
UK, Danny Alexander, politics
Danny Alexander was gave an interview in the left-leaning Observer over the weekend. Biggest takeaway was the dashing of rumours about taxation coming down over the life of the parliament: “I think the tax burden is necessary as a significant contribution to getting the country’s finances in order. So it will have to stay at that level for some time”.
Interview’s background also has more descriptions of dissent from core Lib Dems over the extent of cuts. Developing theme,
“Treasury secretary Danny Alexander defends budget cuts as coalition comes under fire”, The Observer, http://www.guardian.co.uk/politics/2010/aug/29/danny-alexander-cuts-first-interview .
M&A, IPOs
A couple of signs of life in the Equity markets is the central theme in The Economists “Waiting for a wave” piece (The sub-header “A flurry of deals makes bankers salivate).
Quite a bit of momentum in the Tech sector – Intel have added to their $7.68bn purchase of McAfee by buying Infineon’s wireless chip in $1.4bn business.
“Intel to buy Infineon’s wireless chip business”, FT, http://www.ft.com/cms/s/2/51b83e10-b3bd-11df-81aa-00144feabdc0.html .
The article also sees signs of life from PE. On this theme the FT reports that Nokia and Siemens are considering private equity talks (deal worth up to $1bn).
“Nokia and Siemens consider private equity talks”, FT, http://www.ft.com/cms/s/0/d05740e8-b38d-11df-81aa-00144feabdc0.html .
“Sanofi Unveils Genzyme ‘Bear Hug’”, WSJ, http://online.wsj.com/article/SB10001424052748703618504575459603064628876.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews .
Really highlights a couple of points –companies have a lot of cash on their balance sheets (US corporates $2trn by some estimates) and that the micro situation of many companies is decidedly more positive than the overriding negativity on the macro outlook.
France, deficits
Continued negativity on France in the weekend press. The debate over pension reforms is set to commence with strikes from Trade Unions.
WSJ article revisits the problem of “optimistic” growth forecasts, especially in the context of reduced spending. A couple of weeks ago, France cut its 2011 growth forecast to 2% from 2.5%. The article is more negative on the likelihood of achieving this level, quoting a Natixis researcher who put the figure at 1%.
“Does the French Government Really Believe its Own Economic Forecasts”, WSJ, http://online.wsj.com/article/SB10001424052748703618504575459383837894628.html?mod=WSJEUROPE_hpp_MIDDLETopStories .
Eastern Europe, Core European Banks
Mixed article in The Economist about foreign-currency denominated debts in Eastern Europe (“A Glow from the East”). Couple of interesting assertions: “the chances that Latvia’s bad debts could overwhelm Sweden’s banks, say, or that souring loans in Hungary might cripple Austrian lenders seem rather low.” However, foreign currency denominated loans may weigh on credit availability and erode capital buffers, impinging local growth. Outright banning of FX-loans may crystalise losses: “In the short term such measures may further damp the supply of credit to economies that sorely need it.”
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Posted by Darren Hutchinson on Fri, Aug 27, 2010 @ 03:55 AM
Britain's economy grew faster than originally estimated in the second quarter of this year, hitting its fastest rate of growth in more than nine years, official data showed on Friday.
The Office for National Statistics said the economy grew by 1.2 percent in the three months to June, up from its preliminary estimate of 1.1 percent, after construction output proved stronger than first thought. Analysts had expected no revision.
On the year, the economy grew 1.7 percent in the second quarter -- 0.1 percentage points higher than the ONS's first estimate and economists' forecasts.
The economy grew 0.3 percent in the first three months of the year.
The figures provide further evidence that Britain's economic recovery accelerated sharply during the first half of the year but economists are concerned that a weakening global economy and looming UK government spending cuts will sap growth in 2011.
Revised construction output figures were published earlier in the month and the ONS had said these could add 0.1 percentage points to GDP.
Household expenditure rose 0.7 percent on the quarter and 1.0 percent on the year, the ONS said. That was the biggest quarterly rise since Q1 2008 and comes after a 0.1 percent fall in the first quarter.
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Posted by Darren Hutchinson on Fri, Aug 27, 2010 @ 03:42 AM
Finally some respite. The economic picture in the US has been horrific of late with figures missing analysts estimates by anywhere from a shade to a country mile, and with increasing certainty. Jobless claims came as some relief however, if I may continue the boxing analogy from yesterday’s update, this was a punch that didn’t land as opposed to anything beneficial. Continuing claims have risen to the highest level since November of last year and the fear is that the slowdown that the US is going through at the moment will only generate more unemployment.
As a result of this equity markets slumped with the Dow finally closing below the 10,000 mark and the dollar slightly stronger on risk aversion. No large movements were expected yesterday given the large amount of tier 1 data due today.
It will be the tale of 2 GDPs today with growth data from the US and the UK. We’ll start with the UK measure and for once it is likely that the measure will be brushed off by the market as they focus on bigger fish. Today’s announcement is the 2nd estimate of Q2 GDP and is expected at 1.1%.
The market’s focus will however be on the US today. Growth has been sliding in the US over the past few months and GDP slipped from 5.0% in December to an estimated 1.4% today. The Federal reserve stepped into the breach in a bid to get spending going again two weeks ago with its QE-lite measure but as yet this has been unsuccessful with the S&P down 4% since the announcement. The question is will we see the Fed extend into QE full-bore? I think no, and today will be a very red day.
Ben Bernanke or ‘Helicopter Ben’ as he has come to be known is due to speak at 15.00 from the Fed symposium in Jackson Hole. We will be looking for clues as to whether the factions within the Fed committee have come together to decide on a meaningful response. In the meantime , risk will firmly be ‘off’ and we would expect markets to be skewed to the downside. That said, we doubt we will see much movement before the US announcement as traders will be keeping a very tight leash on things until the fog is lifted.
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Posted by Darren Hutchinson on Thu, Aug 26, 2010 @ 05:33 AM
If the markets were a boxing match, the US economy would be seeing stars and cartoon birds flying round its head as economic blow after economic blow rains down on its unprotected body. The referee is thinking about calling the fight off and the bookies are no longer taking bets. It’s over.
US data releases missing estimates are now the norm unfortunately.
Yesterday’s durable goods orders slumped to 0.3% vs. and expected 3.0%. Most of this was down to a whopping 75.9% increase in airline orders as Boeing is said to have done good business at the summer air shows. Unfortunately these planes take around 2 years to build and that’s if the buyer doesn’t cancel them like has happened before.
We knew that existing home sales had shot lower the day previous so it was with a feeling of déjà vu that we saw new home sales fall to a record low. Despite this the US dollar managed to stay relatively weak against GBP and EUR. Equity markets also dipped lower with the Dow Jones trading once again below the key 10,000 level before completely reversing and actually finishing positive for the day.
Overnight this has buoyed risky assets in Asia and Australia with the Nikkei 225 0.69% higher and the ASX in Sydney up 0.83%. The movement into risky assets has allowed the yen to slacken away from its 15 year highs against the US dollar ahead of the Federal Reserve symposium due on Friday.
The pound was quiet yesterday although it did fall slightly against the EUR as German IFO showed an increase in business confidence against expectations. This is a direct result of the 2.2% GDP release that we saw towards the end of last week in Germany and the belief that this growth can continue.
Following on from that German business confidence measure, we have seen consumer confidence also rise in the industrial heart of the EU; GFK consumer confidence rising to 4.1 from an expected 4.0. We also have EU M3 money supply at 09.00 and US initial jobless claims at 13.30
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Posted by Darren Hutchinson on Wed, Aug 25, 2010 @ 04:07 AM
Home sales of existing properties in the US fell to a 15 year low yesterday heightening the belief that the US economy is heading further towards a double-dip recession. The figure fell by 27% in the month of July against an expected fall of around 13%.
The release caused traders to exit risky positions in search of favourable ‘haven’ plays and while the stock markets fell the Japanese yen rallied to a fresh 15 year high. The government in Japan seem trapped at the moment and in an emergency press conference yesterday morning they reiterated their desire to monitor the situation. The market decided to try and force their hand as a result pushing USDJPY below the 84 handle. But this isn’t just a housing thing; retail sales, consumer confidence, export data, all have been poor recently and have contributed to the market’s view.
This is the currency world’s perfect storm; stock markets are falling and market commentators (including this one) see a down leg for equities in Q3, the Federal Reserve is split over how to deal with a slowdown in the American economy with a US GDP reading due Friday which is bound to show that growth is continuing to falter, and a Japanese government trapped like a rabbit in the headlights.
Things get little better in Europe as Ireland has had its sovereign debt rating downgraded by Standard and Poor’s. The Irish have called the decision ‘flawed’ while S&P said “a further downgrade is possible if the fiscal cost of supporting the banking sector rises further, or if other adverse economic developments weaken the government’s ability to meet its medium-term fiscal objectives,” Irish assets were pummeled yesterday with the ISEQ, the main stock exchange, down around 6% and the yield on Irish debt hitting a 10 year high against its German counterpart. The euro weakened as a result of this back into the 1.22s against the pound but has found some overnight strength.
The UK government is attempting some spin this morning after a report from the Institute for Fiscal Studies that the tax and spend decisions made in Osborne’s budget in June were regressive and have affected the poor much more than the rich. This will mainly be due to the increase in VAT due in January but also as a result of benefit cuts due in the October spending review. There is no UK data due however.
We do however have yet more volatile data from the US and EU today. Starting in Germany at 09.00 we have German IFO and we will get closer to understanding exactly the sentiment in the industrial heart of Europe. Staying with the US housing market we also get mortgage data at 12.30 and sales of new homes at 13.30; both are expected to fall.
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Posted by Darren Hutchinson on Fri, Aug 13, 2010 @ 03:50 AM
DJ JAPAN DPJ GROUP WANTS TO SUBMIT FX ACTION REQUEST TO FIN MIN -LAWMAKER
Euro/$ off the post German GDP highs as more debate over the burden of bad assets being borne by Euro zone states a move which - if passed would cause euro zone state debts to baloon and put more pressure on the weaker Euro zone states fiscal positions .
Eur/$ drifting again on the back of this - also yesterdays greek data was pretty weak unemployment rose 8.5 - 12.5 % GDP was very weak and Ireland had to pay up for 6mth money as concerns grow over their banking system...
$/Yen still underpinned and headlines like the above likely to kepp us in cat n mouse mode 86.20/40 exporter offers in the wings still stifling the rallies for the moment - I guess the signal would be when these orders arent around anymore...
Cable stalling on retail supply into 1.5665/85 and the cross still heavy as the Euro zone concerns continue to weigh on eur/crosses
Data ahead
10.00 EU Trade Balance Last -3.0 Bio Exp 1.4 Bio
10.00 EU GDP Last 0.2% Exp 0.8%
13.30 US CPI Last -0.1% M/m 1.1% Y/Y Exp 0.3% M/M 1.3% Y/Y
13.30 US Core CPI Last 0.2% M/M 0.9% Y/Y Exp 0.1% M/M 0.9% Y/Y
13.30 US NSA CPI Index Last 217.965 Exp 218.10
13.30 US Retail Sales Last -0.5 Exp 0.6
13.30 US Retail Sales Ex Autos Last -0.1 Exp 0.3
13.30 US Core Retail Sales Last 0.2 Exp 0.2
14.55 US University of Michigan Consumer Sentiment Last 67.8 Exp 69.5
15.00 US Business Inventories Last 0.1 Exp 0.2
16.30 US Hoenig speaking
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Posted by Darren Hutchinson on Wed, Aug 11, 2010 @ 05:52 AM
The August Inflation Report was broadly in line with expectations. The MPC lowered its GDP forecast, reflecting the recent weakening in surveys of household and business confidence, the perception that credit conditions are not easing as quickly as had been expected, and the additional fiscal consolidation measures announced in the emergency Budget. As a result, the medium-term outlook for inflation was a little weaker than that in May.
Even so, the VAT hike planned for January means that the MPC now expects inflation to stay above target for most of the next 18 months. The projected persistence in above-target inflation has led to concern on the MPC that inflation expectations might rise, which Governor King noted would be "costly" to reverse. The latter explains why the projected undershoot of the inflation target in the medium term has yet to prompt further policy loosening.
click here to open an acounnt
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Posted by Darren Hutchinson on Thu, Aug 05, 2010 @ 05:58 AM
12.45 EU ECB monetary policy decision Last 1.0 Exp 1.0
13.30 US Initial Claims Last 457K Exp 450K
13.30 EU ECB Press conference - Trichet Speaking
16.00 US San Fran Fed Hosts meeting on Mortgage Disclosure act / Yellen Speaking
Real money sellers of $/cad taking out the June lows of 1.0140 here - break here next point of note is 1.0100/10 the May lows beyond there Parity.
Street chatter of Royal Dutch Shell looking at Cdn oil/gas co. Encana (market cap C$23 billion). So a potentially large EUR/CAD sell trade out there , but dependant once again on the cash component - some people believe this trade will face opposition from the Canadian Government.
Eur/$ drifting lower as we consolidate into payrolls still prefer to buy dips 1.3100/05 1.3050 should be ok levels - near term focus on ECB press conference and Initial claims data in the US - Barcap expects 450K vs 457K last week.
Cable similarly off the best levels small retail interests at 1.5800 and 1.5750/55. MPC no surprises expected today with the main focus on next weeks inflation report. Eur/£ looks 0.8265/15 near term trade the break for 20/25 points or so.
$/yen of the lows as latent bids and a s/t squeeze higher in US yields take us off the lows 86.40/45 and 86.85 pockets of supply
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Posted by Darren Hutchinson on Wed, Aug 04, 2010 @ 08:59 AM
Role description
piagi FX is looking to expand its sales and dealing desk with a highly motivated and enthusiastic FX sales graduate. This is a very exciting opportunity for an individual with a keen interest in the financial markets to move to one of the most innovative and fastest growing foreign exchange companies globally.
This is a highly rewarding position for the right candidates and an excellent career opportunity.
Key responsibilities
- Developing new business through proactive telemarketing at financial controller / director level (ie B2B sales). This is a challenging and rewarding role where you will play a vital part in securing and winning new business.
- Identifying, researching and exploring prospective clients.
- Performing initial introductory and follow up consultation calls to establish client needs.
- Obtain examples of previous currency transactions in order to complete currency audits.
- Arrange and perform sales presentations dealing with our brokerage solutions.
- Provide the dealing team with a smooth handover prior to engagement of services.
Skills and experience required
- Excellent communication skills
- Telesales or cold calling experience (desirable)
- FX experience (desirable) as you will receive full training
- An understanding of the financial markets and/or macro economics
Remuneration package
Competitive salary commensurate with experience
To apply
Please send a covering letter together with your CV to careers@piagi.com
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Posted by Darren Hutchinson on Wed, Aug 04, 2010 @ 06:58 AM
Role description
piagi FX is a leading foreign exchange specialist who works with both corporate and private clients. The company has a fresh and friendly approach to business and is currently looking for an Administrators to join the Payments Team. The successful applicant will be enthusiastic personable, organised with an excellent telephone manner and great attention to detail.
Key accountabilties
The candidate will be repsonsible for:
- Filing bank statements
- Logging funds in and maintaining records
- Dealing with all incoming funds into our company accounts
- Answering client queries by phone and email
- Client services and corresponding with our various Banking Institutions
Remuneration package
Competitive salary commensurate with experience and an excellent package including discretionary bonus
To apply
Please send a covering letter together with your resume/CV to careers@piagi.com
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