Thursday, December 19, 2013

Morning Memo: Thursday, December 19, 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...after yesterday's Fed announcement that Tapering will begin in January, the USD rallied to the highest level this year, which sent the Yen to a five-year low, and the Nikkei up to a six year high! The rest of Asia acted in kind, seemingly pleased with the slow start to tapering and with the Fed's assurance that rates will remain low for a long time.
  • India and Indonesia....among the few markets that initially responded to the taper-fest by selling off, as their currencies fell in reaction.
  • China...also among the markets that sold off, seemingly more concerned that the central bank did not add liquidity into local markets despite short rates climbing.
  • EM..overall, the post-taper-announcement reaction in EM countries was nothing like the 'taper-tantrum' of last spring's initial 'taper-talk'.  Why?  See the FT's piece:

  • Europe...opens to a strong start.  
  • EZ...Current Account Surplus hits record high.
  • Germany...Q3 real wages falls at sharpest rate since '09
  • Italy....Nov real wages rises 1.3%, slightly slower than Oct's 1.4% (Editorial note:  so German wages are falling, Italy's are rising, adding to the uncompetitiveness of Italy???  Just a thought....)  
  • Gold...continuing to get pummeled as the USD soars.
  •  more later....
  • LATER:
    • Initial Claims...379k, higher than expected 333k!    Continuing Claims 2884k, higher than exp 2760k.
    • Existing Home Sales 4.9mm vs exp 5.0mm.
    • Philly Fed higher than expected @ 7.0 vs 5.0 exp.
    • Leading Indicators better than expected at 0.8% vs 0.6% exp.  Quoting 
        Since eight of the 10 components of the index are known prior to the release, the differences between the actual leading indicators index and the consensus estimate are generally small. 

      In this case, the consensus expected weaker durable goods orders in November whereas the Conference Board believes nondefense orders of capital excluding aircraft will rebound after two consecutive months of contractions.  The durables data will be released the week of December 20.

      In general, the index shows that the economic situation is accelerating. That confirms the Fed's view that it could ease back on asset purchases without harming the economy.

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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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