Morning Memo: Wednesday, September 18, 2013

(NOTE:  "Morning Memo" will not be published tomorrow & Friday)
"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!!
5:15am ET...

• Tapering time!  The FOMC meeting ends today w/announcement by the Fed at 2:00 ET.  Ahead of this, markets are mixed with little in the way of bold moves.  
• Nikkei...one of the few markets up over 1% on comments by PM Abe that were bullish about his stimulus programs and the prospects for growth in Japan.
• Asia holidays...note that South Korea was closed today, and several other markets will be closed tomorrow and/or Friday, leaving some markets to have to wait until next week to respond to today's FOMC decision on tapering.
• China....Fitch, the credit rating agency, issued a report citing leverage levels in China continuing to grow at nearly double the pace of GDP!   The report notes that near term this appears manageable, it is a meaningful risk medium/longer term. A chart from the FT's fastFT:
  
• China...home prices rises continue to rise, double digits in major cities, despite gov't efforts to cool what could be a housing bubble. 
• Thailand, Laos, Cambodia, Vietnam...ANZ research, cited in FT's fastFT,notes that these nations are benefiting from higher wage growth in China which is pushing certain industries to relocate to these nations in search of cheaper labor.  Their growth has become increasingly correlated w/the G3 and less totally reliant on China.  From the report: 
  
• UK...BoE minutes show unanimous 9-0 vote in favor of keeping policy unched (rates @ 0.5%, bond-buying @ Sterling 375B), implying no rate moves higher until unemployment falls to the 7% target, likely in 2016.
• US..Housing Starts and Permits worse than expected.  From calculatedriskblog.com:
• more later...
• Fed decision:  NO TAPER!!  With language nearly identical to previous releases, the Fed basically says  they'll continue to monitor data for evidence that the economy can run on its own before they begin tapering.  They lowered their GDP forecast for 2013, but raised it for 2014.  And of particular note, they cited recent tightening of conditions since tapering talk began (in the form of market induced hikes in interest rates) as a threat to continued improvement in the housing market and overall economic recovery.  Immediate market reaction:  Equities (the DJIA) went from d0wn 35 to up 90, USD fell, Gold rallied, Oil rallied and 10yr Tsy yields fell 11 bps!!

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