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***Notes/Observations
from around the world***
-
Euro Zone Fin Mins to meet later today to decide what terms of a Greek
restructuring they are willing to accept
-
IIF Chief Dalara: Banks have made 'maximum offer' in Greek debt talks
-
EU ambassadors said to have agreed to impose Iran oil embargo
-
European equity indices opened the session mostly lower and are currently
trading mixed, amid the lower government bond yields being seen in most
European markets. Overall equity markets continue to focus on the talks related
to private sector involvement (PSI) in the bailout of Greece. So far on the
session, Italy's FTSE MIB has outperformed on gains in the banking sector,
while the DAX has underperformed amid losses in shares of Bayer.
Speakers:
-
Bank of Spain (BOS) commented in its monthly economic review that the Spanish
economy would take a hit from a "significant" drop in government and
household spending, partially due to strict austerity policies, only offset to
some extent by a positive contribution from foreign demand.. The central bank
now Q4 GDP Q/Q: -0.3% v 0.0% prior quarter and Y/Y: +0.3% v +0.8% prior
quarter. Overall the BOS forecasted 2012 GDP -1.5%
-
EU ambassadors were said to have agreed to impose Iran oil embargo with the grace
period to end on 1st Jul (as expected) and to review the embargo by May 1st.
The EU to make a specific statement on Greece over embargo
-
EU was said to be near deal on ESM voting procedure with the proposal to set
aside ESM cap to cover loan risk to address Finland's concerns as it could cut
ESM capacity
-
Hungary PM's Chief of Staff Varga commented that the country would proposed
'flexible' solutions to EU objections on its central bank law and that the
planned Jan 24th meeting between PM Orban and EU's Barroso was 'important'. He
noted that he would be surprised if EU/IMF objected to flat tax and that
reports on €17-20B loan were not far from reality
-
EU's Barnier commented that the Financial Transaction Tax (Tobin Tax) was
feasible and the Vickers reforms was compatible to EU rules. Single market
needed a single rule book
And
that there was no plot to undermine the City of London
-
France Debt Agency (AFT) Chief Mills commented that central banks, emerging
sovereign funds purchased French debt at auctions held last week. He noted that
about 33% of France's debt was held by those in France, 33% by EU holders and
33% by non-European holders.
-
ECB has removed 3.2K debt instruments from a list of assets against which it
would lend with instruments included certain types of bank debt, as these
instruments might not meet the central banks' requirements. The move was
unlikely to present liquidity problems for banks, as the ECB eased requirements
at the start of Jan and added more than 10K new instruments.
Currencies:
-
The Euro entered the session on a cautious note as the Euro Zone Fin Mins were
set to meet later today to decide what terms of a Greek restructuring they were
willing to accept. Negotiating a debt swap with Greece creditors made their
'maximum' offer, leaving it to the EU and the IMF to decide whether to accept
the deal. The question remained whether
Greece would apply a collective action clause, which can force creditors into a
write-off. Nonetheless dealers noted that the net Euro short positions hit its
fourth consecutive weekly high and helped the EUR/USD recoup its initial losses
exhibited during the Asian session. The pair stayed above the 1.29 hendle
throughout the European morning.
Political/ In the
Papers:
-
It was revealed in the Sunday Telegraph that more than 218K jobseekers were
taken off Jobseeker's Allowance, categorized as attending courses and then
classed as officially "employed".
The Employment Minister Grayling stated that he will correct the
'disgraceful' practice. According to a source in the Job centre, the courses
are generally 'completely useless' and usually did not assist in employment; as
they tend only help in reducing the unemployment figures.
-
Telegraph's Ambrose Evans-Pritchard said Italy and Spain are pushing for more
action from the ECB, as their economies are headed towards double dip
recessions. The Foreign Minister Garcia-Margallo said the ECB should do
quantitative easing (QE), and suggested that the European Investment Bank be
used to support the debt crisis. The recommendation by ECB President Draghi to
give the unused reserves from the EFSF to the ESM could face opposition in
Germany's Bundestag.
-
The UK think-tank Resolution Foundation sees millions of families unlikely to
see earnings return to pre-recession levels until at least 2020, while the
income of the wealthy continue to increase over the same period. The disparity
in future spending power is due to the incomes of the lower middle class seen
to rise more slowly than the rich, and decreased spending power decreased by
petrol and food costs. The middle also have to deal with prolonged wage squeeze
with real wages declining by 4.2% y/y, and warned that the most significant
cuts to tax credits have yet to come in affect.
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Today's Economic News:
Our
day trading
strategies today will depend on the news, and this morning we
expect to see light volume heading into the always-anticipated FOMC Meeting as
well as the end of the week’s WEF meetings
which will be sure to steal some of the spotlight from the markets. We the
State of the Union Address tomorrow, Tuesday evening, which will also be giving
the markets a possible reason to be trading lightly this morning.
We
notice there is very little economic news on the calendar this morning so we’ve
outlined the CAD News at 830am Leading Index which will be likely targeted
around crude oil futures for day traders today.
The
biggest thing to focus on this morning is getting your week off to the right
start, not forcing trades, and making sure we wait for the market’s personality
to be at its best when we do decide to participate in the markets this morning.
We
will be having members-only after 1130am EST today.
Please SHARE this resource with
friends, they want to learn this too!
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