Thursday, August 15, 2013

Morning Memo: Thursday, August 15, 2013

"Morning Memo" begins below this "NOTE for  NEWCOMERS" to "Morning Memo"...... Each morning, we post a short bullet-point list of noteworthy events, data, etc that find their way into the assessment of global markets.  It's far from complete and is not meant to be an exhaustive reconciliation of all things that could possibly impact stocks, bonds, currencies and commodities!  Rather, it's best viewed as a cryptic memo of "highlights", noteworthy items that took place in Asia, European and US hours.....and color-coded 'Red' for seemingly negative impact on equity markets, 'Green' for positive.
This will also serve as a useful review mechanism, as scrolling through the series of "Morning Memo" posts over time ought to summarily highlight what generally drove price action.  

We hope you find this useful and informative....and as always, that you'll share feedback!!
5:30am, ET....
  • Asia lower, led by Nikkei, off over 2%, on comments by the Finance Minister that PM Abe was in fact NOT considering a corporate tax rate cut, as had been rumored in recent days and that rallied the Nikkei 4%.  The Yen strengthened on the comments and markets headed lower.
  •'t upgraded economic outlook, citing an end to deflation is approaching.
  • Weak US market yesterday weighed on markets in Asia, hurt further by Cisco's earnings announcement that fell short and came along w/big layoffs (4,000 jobs) and a picture of the global economy that is "challenging and inconsistent".
  • Egypt unrest, violence and deaths have raised market angst, pushing oil prices higher. 
  • Indonesia...central bank leaves rates unched @ 6.5%, despite recent signs of upticks in inflation and weak Rupiah.  Most expectations were for another rate hike following June's hike.  GDP @ 5.8% is lowest since '09.  (editorial note:  prime example of EM country facing policy dilemma: slow growth, weakening currency, raising inflation. Policy response in June was to attack inflation and weak fx.  Today's non-move, may be evidence of focus on growth. Dilemma persists here and elsewhere in EM).
  • European markets down at the open.
  • Bond yields have risen in recent days w/10yr Bunds piercing the 1.80% level, and US 10s @ 2.7%. These were earlier levels.  Post US data, yields climbed further, rising close to 10bps to 2.80%!!
  • UK Retail Sales much stronger than expected in July.  Sterling rallies.
  • US..Jobless Claims fall 15k to 320k a bigger drop than expected, CPI in line @ 0.2% and ex-food & energy also @ 0.2%, and NY Empire State mftg index drops to 8.2 fr 9.4, though expectations were for 6.0.  Collectively the data shows still benign inflation environment with leveling off factory activity and improving job situation, keeping alive the notion that Fed "tapering" will begin in September or not long after that.  Stock futures responded negatively to the data.
  • more later....

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
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