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***Notes/Observations
from around the world***
-
Japan expected to announce its first trade deficit since 1980 on Wednesday
-
Coupon issue sends Greek debt negotiations back to square one
-
India cuts is Cash Reserve Ratio by 50bps to 5.50% (not expected); leaves key
rate unchanged
-
Major European PMI data improves with several readings back above the pivotal
50 level
-
Greek sovereign debt negotiations appear to have hit an impasse over the
interest rate on the bonds set to replace existing ones but Greece remains
optimistic that a deal can be achieved
-
European equity indices opened the session lower, led by weakness in Spanish
and German equities. The equity weakness comes amid the lingering Greek private
sector involvement (PSI) talks and disappointing corporate earnings.
Speakers:
-
UK Treasury commented on the Dec public finance data and noted that UK debt
over £1.0T shows the unsustainable level of spending over the past few years
and was critical to act decisively with the deficit
-
India Central Bank (RBI) Gov Subbarao commented that past interest rate
tightening was one reason for slower economic growth but also contribute by
global and local sentiment. The RBI would meet the 10 largest banks to discuss
bad loans and issue guidelines for hedging. He noted that the State Govt might
borrow INR250B more
-
BOJ Gov Shirakawa commented at his post rate decision press conference that the
BOJ Board agreed that the timing of Japanese economic recovery was delayed and
would fully watch the risk of JPY currency appreciation. He added that the
central bank must pay more attention to impact of strong JPY currency on the
domestic economy. He reiterated the view that the European debt crisis remained
biggest risk to Japan and that concrete plan to strengthen European firewalls
had yet to be implemented. He did not believe that Japan's trade deficit would
continue as a trend as the deficit was mainly due to post-quake energy costs.
Concerns over global funding has eased somewhat but the Volker rule would
negatively affect USD funding
-
IMF Chief Lagarde commented in the German press that she saw financing needs of
€1 trillion over the next two years as the size needs to be 'very clear and
high'. She was determined to be positive on the euro and more work needed to be
done. Greece PSI must be substantial and the European fiscal compact needed to
be put in place
-
Greece's privatization agency forecasted 2012
revenue of € 4.7B from state asset compared to its € 9.3B target set in
the budget
Currencies:
-
The European PMI data came in a touch better than expectations and this helped
the Euro maintain a firming footing in the early part of the session and offset
from the initial lack of progress on Greek debt discussions. Overall dealers
suspected Euro short-covering as the evident excuse. Despite the coupon issue
remaining outstanding the Greek Fin Min Venizelos stated that Greece did
receive the 'green light' from Eurogroup on the PSI discussions. The trading
was choppy overall in a 60+ pip range with EUR/USD testing 1.3063 at one point
after the PMI data before retreating back under 1.30 handle. The pair was at
1.3015 ahead of the NY morning.
Political/
In the Papers:
-
A report in the financial press noted that a growing number of analysts,
economists and politicians are worried that Portugal will need a second bailout
in 2013 when its €9 billion in debt comes due. Currently, the country is
covered for 2012 as long as it follows the bailout plan. The IMF may require
Portugal to present its financing plans before releasing more aid.
-
According to Ernst & Young, there were 88 corporate profit warnings in the
fourth quarter compared to 51 in the prior quarter. This was the largest
quarter-on-quarter increase in 10 years. The profit warnings were led by retail
and technology companies. Last year, the software and computer services sector
issued 31 warnings, which was the highest number since 2008.
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Today's Economic News:
Our
day trading
strategies today will depend on the news, and this morning we
have a little of the same from Monday morning.
Today is marked by two main news events lingering in the
background. First we have the beginning
of the FOMC Meetings, which occur 8 times a year and are considered a top
priority for longer term traders on a macro-economical level. The meeting begins today for the FOMC and
tomorrow we will hear what they were talking about at this meeting, so this
news won’t be released until tomorrow, but the fact that the meeting is
underway will have traders looking for releases from the press for any
information that can get their hands on.
The
second thing today is the State of the Union Address which is the biggest
formal speech the President of the US will make all year, as he outlines the
plan for 2012 and paints the expectations of our country during a time when
people are thinking double-dip recession in the midst of falling jobless claims
but stagnant jobs and wages. We can only
assume that the President will be touching on some major speaking points
tonight and because of that trading will be assumedly light in anticipation of
that at 9pm EST this evening.
We
do have some minor news to consider on our calendar today. We begin the day with a minor Retail Sales Report
from Canada at 830am EST, followed by the Open of the US markets at 930am EST and
1000am EST we have Richmond Fed Manufacturing Index.
If
you recal we spend a lot of time watching manufacturing indexes looking for
clues to help us day trade crude oil futures and euro currency futures and
today’s news at 1000am EST isnt that major but its another ‘finger on the pulse’
of this industry that is so important.
Take a look at the upward movement in this index which looks very similar
to that of New York and Philly which we saw last week. This is a good sign for crude oil futures price
moving higher if this trend continues, and signals more job growth which we
will use to translate news reports we get later in the week.
We
will finish today a little earlier than normal we assume. With the State of Union on later tonight and
the FOMC meeting underway we assume trading will begin and end light on the
morning, and as always we will answer ALL the questions after 1130am EST this
morning with our members.
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friends, they want to learn this too!
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