Thursday, October 17, 2013

Morning Memo: Thursday, October 17, 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!!

5:00am ET...

  • US:  OPEN FOR BUSINESS!  Congress approved, and the President signed the bill that re-opens the US government and raises the debt ceiling.  Critics of the deal note that we might face this whole thing all over again in a few months, but for now, there a global sigh of relief that US default on payments was averted.  US Treasuries rallied on the news.
  • Asia...traded up initially on the news of a US deal, but ended mixed.  Nikkei was strong on weaker Yen.  EM currencies and equity markets mostly ralliedChina was weaker ahead of tomorrow's GDP data.  More broadly, activity and reaction was underwhelming as many market participants are now focused on the economic damage that the 16-day US shutdown will have caused, and on the Jan/Feb new deadlines on budget and debt ceiling that will be faced.
  • China's global credit rating agency, Dagong, lowered their credit rating on the US from "A" to "A-".  This caused an immediate rally in Gold and fall in the USD.
  • Korea..the Won hit new highs vs the USD, continuing its rally which has been fueled by foreign inflows into Korean equities, seen likely to benefit from a delayed US tapering.
  • Europe...US debt deal rally fades fast.  Seems like a "buy on the rumor (ie: expectations of a deal) sell on the news (ie: deal done)".  Also, China's Dagong downgrading of US pushing Euro up, USD down, equities lower.
  • UK...retail sales better than expected.  
  • survey of investor expectations on when the BOE will raise rates shows move towards 'sooner':   

  • more later...
  • Later:
    • Jobless Claims...worse than expected @ 358k vs 335k exp.

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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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