Soos Global Market Musings: November 2013

Friday, November 29, 2013

Morning Memo: Friday, November 29, 2013

ICYMI...Thanksgiving Day Morning Memo.
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"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...

Asia...mixed in quiet trading.
Japan...lower on profit taking after hitting a six-year high yesterday.
Japan...CPI up +0.9% in Oct, the fifth straight month of increases, showing some evidence of coming out of the 15 year old deflation! This was supported by a government survey earlier this week showing land prices rising in major urban areas in over 2/3 of the areas surveyed. Doubters, however, argue that inflation is rising due to higher cost of imports, esp energy, due to the weaker Yen.
Japan..Housing Starts in Oct. rose for the 14th straight month (+7.1% y/y), though at a slower pace than Sept (-0.7% m/m).
Japan...Industrial Production up 0.5% m/m, lower than expected (+2.0%)
China...tensions grow over disputed islands and airspace. China sent jets into the airspace today, on the heels of yesterday's flyby by US B-52s, as well as jets from Korea and Japan.
Thailand...protests continue and tensions remain high.
Europe...generally higher in early hours.
Eurozone...Eurostat's flash estimate of CPI rises in Nov +0.9% y/y vs +0.7% y/y in Oct.
Netherlands...loses AAA rating from S&P! Now AA+. S&P cited weak domestic growth and not enough export growth to make up for it.
Germany...Retail Sales underwhelms at -0.8% m/m, -0.2% y/y.
France...Consumer spending misses, falls 0.2% m/m in October.
Italy..youth unemployment at historic high! The overall unemployment rate for Italy remains at 12.5%, while the rate for 15-24yr-olds climbed to 41.2%, the highest in many years!
more later...

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Thursday, November 28, 2013

Morning Memo: Thursday, November 28, 2013: HAPPY THANKSGIVING!!!

"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...

HAPPY THANKSGIVING!!!!

Pre-Thanksgiving....on Wednesday, after the early morning data which included Jobless Claims (better than expected, though excused away due to seasonal adjustment factors) and Durable Goods (worse than expected, especially core capital goods orders), we had more positive news later in the morning in the form of Michigan Consumer Confidence and Chicago PMI (first time over 60 for two consecutive months since Dec'11), which collectively helped give equity markets a boost to the upside w/the Dow closing above 16,000, S&P over 1,800 and Nasdaq over 4,000.
Brazil..late Wednesday, Brazil's Central Bank raised rates by 50bp to 10%. That's the sixth consecutive rate hike, aimed at fighting inflation. The government meanwhile has been increasing fiscal spending to stimulate the economy. Pressure on inflation mounted w/a weaker Real, made worse by the US 'tapering talk' began earlier this year.
Thanksgiving Day in the US...markets closed.

Asia....a strong USD (over 102), weak YEN pushed the Nikkei to a six year high!
Japan..also helping equities, Retail Sales jumped 2.3% in October.
China...tensions remain high over disputed islands in the China Sea. US and Korea have flown aircraft in the airspace that China has recently declared to be its own.
China...announced a draft proposal on reforms to the coal industry, looking to limit production, and adjust tariffs in order to encourage higher quality imports. This is in response to falling coal prices and overproduction of poorer quality coal.
Thailand...the PM survives a no-confidence vote, while heated protests continue.
Eurozone....business sentiment higher for the seventh straight month in November.
Spain...final data out for Q3 shows Spain climbs out of recession in Q3, but just, by +0.1%. Also, Spain's CPI climbed in November, a counter indicator to the recent fears of deflation in Europe.
Italy..former PM Berlusconi was ousted from the Senate following months of turbulent dispute over his political positions after his tax fraud conviction last summer. Italy's borrowing costs are at the lowest level since April.
Germany...Unemployment Rate was unched, but the number of jobless claims rose by 10k, more than expected. And registered demand for labor eased.
Germany..Inflation rose in November driven by the service sector, countered by a decline in energy prices.

German Nov prelim. CPI rises 0.2% (-0.2 in Oct) m/m, 1.3% (+1.2%) y/y. Charted here against German PMI output prices pic.twitter.com/iMjWjochij
— Markit Economics (@MarkitEconomics) November 28, 2013

UK...the central bank's program to fund home buying will be cut back (given the recent signs of house prices rising and activity accelerating), and banks will be encouraged to lend more to small businesses.
more later....

Please continue to visit Soos Global Market Musings for updates.

Wednesday, November 27, 2013

Morning Memo: Wednesday, November 27, 2013 UPDATED

This is an update to our earlier post: Morning Memo: Wednesday, November 27, 2013

Please continue to visit Soos Global Market Musings for updates.

US..Jobless Claims better than expected, dropping to 316k vs 330k exp.
US..Durable Goods Orders fell 2% in October, largely due a pullback in aircraft orders. Sept was revised up to 4.1% fr 3.8%. Ex-transportation -0.1% vs +0.2% exp. but Sept was revised up to +0.2% vs -0.2% orig. Orders of nondefense capital goods ex-aircraft declined 1.2% in Oct following a decline of 1.4% in Sept. Shipments of core goods fell 0.2%, second month in a row. That will drag on Q4 GDP.
Germany...Merkel's conservative Christian Democrats came to a grand coalition deal w/rival left of center SPD, subject to an SPD referendum on the deal by mid Dec. The deal includes an introduction of a minimum wage, some liberalization of citizenship rights for German-born residents of foreign origin, spending on infrastructure, toll tax on foreign drivers, no new tax increases to fund spending, lowering of retirement age and additional pension money for retired mothers.
"CHITS" Charts In The Spotlight...check them out! http://stockcharts.com/public/1587236

Morning Memo: Wednesday, November 27, 2013

ICYMI...

Housing Market Missive...Crisis Redux???

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
"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...

Asia...markets mixed, with little follow-through to yesterday's close of the Nasdaq above its 13yr high (4,000). Nikkei down, but off of earlier lows as the Yen weakened.
China/Japan/US...tensions mount as the US flew B52 bombers through airspace it considers international but which China declared to be in its new air defense zone.
Thailand...protests expand beyond Bangkok, while central bank surprises with a 25bp rate cut to try to boost economic growth.
China...up on cont'd hopes for real reform as the Bank of China head, Zhou Xiaochuan, assured markets of reforms to come.
Indonesia...Rupiah sinks to a four year low.
Europe...markets higher, focusing more on yesterday's Nasdaq close, and German consumer confidence that came out today at a four year high!
UK..higher on Q3 GDP in line at +0.8%, showing stronger household spending but weaker exports.
US...full day today. Closed tomorrow. Early close Friday.
Happy Thanksgiving!!
more later...

Please continue to visit Soos Global Market Musings for updates.

Tuesday, November 26, 2013

Housing Market Missive...Crisis Redux???

A friend just sent me an article that talked about how large private equity firms are buying homes in large numbers for the purpose of renting them out, and in many cases, securitizing the rental income flows. He asked for my thoughts, which are cut/pasted below, fyi….

Much of the popular data, at the headline level, leads many people to believe that the housing market has been in a massive recovery for a long time! I’ve doubted it, and once you dig deep you find some telling facts. For example, first-time-home-buyers, which means the historic mainstay of housing demand, usually young couples who are just starting out in life, buying their first home, have been dropping in numbers on a grand scale! Also, housing affordability has dropped, only partly because rates have gone up in the past six months since ‘tapering’ talk began, but more because the whole housing frenzy in this country leading up to the ’08 collapse was fueled by very low-interest-rate floating mortgages. Now, mortgages are mostly coming in the form of fixed rate long term mortgages which are much more expensive and come with tighter lending standards. So traditional housing demand has gone away. The latest housing data showed a big increase in people buying condos instead of homes, probably because condos are cheaper and usually require less overhead than a home.

So a bigger and bigger part of the housing market has been going to the professional investors who are buying en masse in order to either flip or to rent.

In some parts of the country, there are serious supply/demand imbalances, especially in the West. Lots of the supply has been taken up by the professional buyers, and lots of the supply came in the form of foreclosures or short-sales which was low-hanging fruit that has been picked, and builders have been slow to build new inventory. So even though housing prices have gone up, the supply is still relatively limited when compared to new-household formation. With big growth in new-household formation, one might expect more new construction to be forthcoming, but as stated above, some of the demand for housing has gone away (to condos or to rent).

Optimists would argue that with the now higher housing prices, more supply will come onto the market as sellers will spring up now that they’re able to sell their homes ‘above water’.

Pessimists argue that the housing situation has only gotten marginally better, or less bad, but that it’s not reflective of a genuine sustainable demand. Rather it’s based on the investor/professionals who are only buying for rental income. That’s pessimistic because it presumably means that fewer Americans are buying homes, and therefore the usual multiplier spending effect that comes with home purchasing is likely to go away or at least be quite diminished!

I’m a bit in the pessimistic camp. I think the American dream of owning a home and seeing that home as being a primary savings vehicle has been very dented. I think a whole new generation of young people are not looking at home ownership the way I did when I was their age. As such, they’ll likely choose to rent instead of buy. And the professionals who own these properties, will either benefit from the rental income returns, or will start to unload those investments and then we’ll see a big pick up in supply, and then a further drop in home values!

Housing crisis redux???

We’ll see….

Please continue to visit Soos Global Market Musings for updates.

Morning Memo: Tuesday, November 26, 2013 UPDATED

This is an update to our earlier post Morning Memo: Tuesday, November 26, 2013

The following article points out some interesting trends in earnings and revenue growth, and raises some caution re Q4 and '14 earnings expectations. fyi...

Earnings growth vs Revenue growth: analysts expect growth of 8.1% and 0.6% respectively for Q4 http://t.co/q3TIDrRMqd
— Alpha Now (@Alpha_Now) November 26, 2013

U.S. housing permits breach 1 million mark, highest in 5-1/2 years http://t.co/fNegT8uBzQ
— MacroScope (@MacroScope) November 26, 2013

Case-Shiller: September home prices up 13.3% year-over-year; 13 of 20 cities post higher prices YOY. http://t.co/LaH9ZAmNbe
— CNBC (@CNBC) November 26, 2013

Consumer confidence misses expectations in November: http://t.co/EU82Sg9SX9
— CNBC (@CNBC) November 26, 2013

"CHITS" Charts In The Spotlight...check them out! http://t.co/APTYRMjd4v
— Ed L (@SoosGlobal) November 26, 2013

Please continue to visit Soos Global Market Musings for updates.