Wednesday, October 23, 2013

Morning Memo: Wednesday, October 23, 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...

  • lower after opening higher on the heels of yesterday's US uptick.  The softer than expected US jobs data yesterday, instead of raising fears about earnings and slow growth, initially heightened expectations for a significant delay in any Fed tapering.  That euphoria helped open Asian markets higher, but a softer USDollar vs many Asian currencies began to raise concerns especially in export dependent countries that their stronger currencies would hurt exporters, so equity markets turned down.
  • of the mainland stock exchanges, ChiNext, seemingly modeled after the US NASDAQ exchange for small tech related companies, has been up close to 80% this year, until this week in which it's lost over 7% since Monday.  (Editorial quip:  Not hard to find uses for the word "bubble" in China....).
  • China...Central Bank appears to be withholding liquidity from overnight interbank lending market, seen as possible replay of last Spring when overnight funding rates surged and was viewed as a tightening, 'anti-bubble' move by the Central Bank.  One explanation for the possible turnaround in markets broadly in the Asia session.
  • Australia....CPI higher than expected, 2.2% vs 1.8% exp.  While still within the RBA's 2-3% target range, the data did cause AUD to trade higher.
  • ECB...released its parameters for stress-testing banks, meant to start in Nov '13 and take one year.  Bank shares in Europe have reacted negatively on the thought that more capital will be required under this program.
  • UK...Bank of England minutes from last meeting show unanimous vote in favor of keeping rates and QE unched.  Notes faster decline in unemployment pace (the key metric that the BoE has cited as a policy determinant).  
  • Editorial note:  before getting too excited about improving labor market conditions, make note of this chart from The Economist which might provide some sobriety:

  •'t reported Q3 growth at positive 0.1% q/q, first q/q growth in two years!
  • stocks will likely continue to be in focus following yesterday's introduction of new tablets and phablets from several companies, all in a race to capture market share in that space.
  • 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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