Thursday, November 21, 2013

Morning Memo: Thursday, November 21, 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...
  • Asia...lower across the board except for Japan!  Yesterday's release of the FOMC minutes from October, while admittedly old news, did reveal explicit discussion about Tapering beginning possibly in 'coming months'.  Despite recent public comments by Bernanke and Yellen that indicate still strong support for ongoing stimulus, the markets reacted negatively in the US, and subsequently across Asia, especially in EM countries where currencies and bond markets were hit hard.
  • Japan...the stronger USD vs Yen sent Nikkei higher as the weaker Yen will continue to help exporters, and as Japanese investors are still enamored with their own QE and stimulus program from the BOJ which ended its policy meeting today with reaffirmation of the Abenomics-ease agenda.  BOJ Gov Kuroda said that he'd do more if necessary to ensure continued economic recovery.  That sent the Yen down further and supported Japanese equities.
  • China..HSBC/Markit flash estimate of Manufacturing PMI for Nov fell to 50.4 fr 50.9 in Oct.  While still above 50 (indicating expansion), the lower reading fell short of expectations and dampened investor enthusiasm which has been running high since reform measures were announced last Friday.
  • Europe...HSBC/Markit flash estimates of PMI for the Eurozone disappoint, dropping in Nov to 51.5 from 51.9 in Oct, and below expectations.
  • France...HSBC/Markit flash estimates of PMI for France disappoint and raise fears of a return to recession.  The # came in at 48.5 for Nov, down fr 50.5 in Oct.
  • Germany...HSBC/Markit flash est PMI stronger than expected @ 54.5, a ten-month high.  The data showed big rise in export orders, though weakness in demand from the EU region.  Manufacturing employment continued to decline.
  • US....Budget Deal is rumored to be making progress!  The Congressional committee of Democrats and Republicans that has been meeting since October to try to find a budget compromise that would avoid another shutdown in January, is rumored to be making progress, not on a "grand bargain", but on a smaller deal that would include spending cuts and revenue raisers through fees.  Meantime, the Congressional Budget Office estimates that the next funding crisis could come by March or as late as June.  The debt ceiling was recently cancelled until Feb 8 at which point it will be re-established w/whatever debt has been raised until then.  A budget deal would be necessary to avoid another round of debt ceiling/default fears.  (From Politico yesterday)
  • Of interest:
    • Re the Eurozone and the recent pressure on Germany to stimulate domestic demand in order to reduce its current account surplus.
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