Moody’s may cut Canadian banks |  |
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Posted: 26 Oct 2012 01:32 PM PDT
The euro briefly spiked above the European high to 1.2956 on the IMF headlines and a squeeze but quickly fell back to 1.2939. USD/CAD nudged up against parity but wasn’t able to break through despite a swoon in stocks and the bank downgrades. AUD/USD caught a bid in the early going and squeezed higher on a break of 1.0360. Offers around 1.04. Have a great weekend.    |
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Posted: 26 Oct 2012 12:56 PM PDT
If you’re not, you will be after some G&R.
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Posted: 26 Oct 2012 12:41 PM PDT
 First time in net negative territory since May.  |
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Posted: 26 Oct 2012 12:31 PM PDT
AUD/USD climbing back toward the highs of the day and EUR/USD to 1.2939.
The S&P 500 is up 4 points to a session high at 1416 after trading as low as 1403.  |
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Posted: 26 Oct 2012 11:56 AM PDT
Update: Moody’s says concerns about Canadian banks stem from high consumer debt and elevated housing prices.They see 2-3% GDP growth in 2013 but downside risks have increased. Looks like Moody’s doesn’t want to be left behind on another housing crisis.  |
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Posted: 26 Oct 2012 11:48 AM PDT
The FT cites ‘three people close to the situation’ who say it will be announced Tuesday.
"There were several options on the table but UBS has decided on the most radical one," one person familiar with the plan said.The layoffs will amount to almost one sixth of employees. No one is going to shed a tear for Swiss investment bankers but, wow, that’s a lot of jobs.  |
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Posted: 26 Oct 2012 11:41 AM PDT
Crude took out some important levels this week but psychological support at $85 has held so far. On the week, WTI was down $3.77.
The techs look awfully negative but I struggle to envision oil at $77 again.  Still, I never fight the techs.  |
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Posted: 26 Oct 2012 10:58 AM PDT
The market was dumping bonds after the break of the 200-day moving average last week and had been resilient even as stocks slumped but today 10-year note yields are threatening to break 1.75%.
 If support breaks, look for further pressure on USD/JPY. Shortly after the open of the market next week, Japan releases September retail sales. I have been reading some corporate commentary saying consumer demand in Japan has been dismal so there is downside rise to the -1.5% exp.  |
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Posted: 26 Oct 2012 10:18 AM PDT
Some positive developments this week on the NZD/JPY charts. The gains were larger on all the yen crosses were until today’s retracement.
 This pair has rebounded from uptrend support and broken above the September high. The next step will be a weekly close above 65.70 but overall, the picture is positive. The latest BOJ chatter is about a 20T asset purchase, about double what the market is expecting. The resilience of the New Zealand dollar in spite of yesterday’s dovish comments from new RBNZ governor Wheeler were also encouraging.  |
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Posted: 26 Oct 2012 09:46 AM PDT
I’m not sure the the market is quite done for the week yet but there’s a good chance it is.
Jamie is done for the week and I just spilled a bowl of soup on my keyboard — I need some tunes. It was a solid week for the Aussie, so how about a great band from Sydney that played in Montreal this week.  |
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Posted: 26 Oct 2012 09:10 AM PDT
WASHINGTON (MNI) – The following is the text of a statement by the
Federal Reserve Board Friday: The Federal Reserve Board on Friday announced a five-month delay in the implementation of the second phase of its program to simplify the administration of reserve requirements. The delay will allow for further development and testing of automated systems to ensure a smooth transition for affected institutions. The Board issued a final rule on April 4, 2012, amending its Regulation D to simplify the reserve administration program in two phases. The first phase, which took effect on July 12, 2012, discontinued as-of adjustments related to deposit report revisions and eliminated clearing balance requirements. The second phase of the amendments will introduce a common two-week maintenance period and a penalty-free band around reserve balance requirements to eliminate carryover and routine penalty waivers. The second phase of amendments was originally scheduled to take effect on January 24, 2013. The new effective date is June 27, 2013. The purpose of the simplification is to reduce administrative and operational costs for depository institutions, the Federal Reserve Board, and Federal Reserve Banks. The project does not affect the stance of monetary policy. ** MNI Washington Bureau: 202-371-2121 ** [TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,MK$$$$]  |
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Posted: 26 Oct 2012 08:57 AM PDT
According to a Wells Fargo survey (clicking the link is worth it for the picture alone).
As they struggle to save for retirement, a growing number of middle-class Americans plan to postpone their golden years until they are in their 80′s.Ok, if you’re working in your 80s, you’re never going to retire — it’s the nursing home or the graveyard. On a related note, the Chief Economist at Morgan Stanley said yesterday that expectations of entitlements (like Social Security) are “the most overvalued asset across the world’s advanced economies.” It’s only going to get much worse before it gets better. I better pace myself if I’m going to be writing on Forexlive for another 50 years.  |
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Posted: 26 Oct 2012 08:40 AM PDT
By Steven K. Beckner
(MNI) – Although no new monetary policy measures issued from it, this week’s Federal Open Market Committee meeting was something of a milestone. It was the last time Federal Reserve policymakers met before the Nov. 6 presidential election. And, depending on the outcome of that election, it could be the next to last FOMC meeting of the Obama administration and the first to take place under president-elect Mitt Romney. Following its final meeting of 2012 on Dec. 12-13, the FOMC isn’t scheduled to meet again until nine days after the inauguration of either a reelected President Barack Obama or a new president Romney. The election outcome could have important bearing on the leadership of the Fed in 2013 and beyond. In any case, the December meeting is not to be overlooked. It promises to be much more significant than December FOMC gatherings have traditionally been. That is because the second phase of the Fed’s Maturity Extension Program or “Operation Twist,” under which the Fed has been selling short-term and buying long-term Treasury securities to lower long-term interest rates, is due to expire on Dec. 31. At that time, monthly asset purchases will abruptly shrink from $85 billion to $40 billion — the amount of mortgage-backed securities the Fed is buying in its third round of “quantitative easing.” The FOMC will have to decide whether it needs to adjust the size of QE3 to offset the sudden drop-off of aggregate Fed asset purchases. San Francisco Fed President John Williams told MNI not long ago he does not expect any major “cliff effects” on yields when the Operation Twist purchases end, but indicated he’d be prepared to increase the size of QE3 and possibly move into Treasuries if there isn’t “substantial” improvement in labor markets. Others, notably Chicago Fed President Charles Evans, have been even more blunt in saying the Fed should augment QE3 to offset the end of Twist. The FOMC gave itself leeway to adjust QE3 in its Sept. 13 policy statement. “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.” Bernanke said the amount and the composition will be adjusted in response to changing economic conditions. “If the economy is weaker, we’ll do more,” he said in his post-FOMC press conference. The minutes of the September FOMC meeting emphasized that, by not announcing a predetermined amount of asset purchases over a set period of time as in QE1 and QE2, the FOMC is taking a “flexible approach” that will allow it “to tailor its policy response over time to incoming information.” Conceivably, the FOMC could wait until its January meeting to decide what to do, but it seems more likely a decision will be made at the Dec. 12-13 meeting, at which members will put together a fresh set of economic projections and Bernanke will hold another news conference. Whether the FOMC will judge that there has been sufficient improvement in the economy and in labor markets by the time of the December meeting is highly uncertain. The Commerce Department estimated Friday that expansion of the gross domestic product accelerated from 1.3% in the second quarter to 2.0% in the third quarter. And there have been signs that GDP has continued to grow by at least 2% in the fourth quarter. But the Fed regards 2% growth as the bare minimum needed to keep unemployment from rising. The FOMC’s “longer run” growth projection is 2.3% to 2.5%. And there has been insufficient job creation to make real inroads into high unemployment. More than three years after the formal end of the recession in June 2009, as determined by the National Bureau of Economic Research, the unemployment rate still stands far above the FOMC’s 5.2% to 6% “longer run” unemployment projection. Although private payrolls have risen by some 4.5 million over the past two and a half years, that is still only about half of the jobs lost during the recession. About 5 million workers have been unemployed for six months or more. The unemployment rate dipped three-tenths in September to a 44-month low of 7.8%, but not for the best of reasons. There was a 582,000 upsurge in the number of “part-time workers for economic reasons” — people who’d rather have a full-time job but couldn’t find one. Factoring in discouraged and involuntarily temporary and part-time workers, the “U-6″ unemployment rate stands at 14.7%. Non-farm payrolls still rose by 114,000 in September, but even with a 86,000 upward revision to prior months (mostly government jobs), payroll gains have averaged an anemic 106,000 per month over the past six months. That’s barely more than the minimum needed, at current rates of labor force participation, to absorb new entrants into the labor force. Not surprisingly, Bernanke has said, “The stagnation of the labor market in particular is a grave concern.” It would be surprising to see a lot of improvement — “substantial improvement” — in what little remains of this year, especially considering worries about the “fiscal cliff” which looms in January. Fed officials are also concerned about downside risks from Europe and China and so forth. So the FOMC may well decide in December to increase monthly QE3 purchases from $40 billion to something higher, with some of the extra perhaps going into Treasuries, to offset the expiration of Operation Twist and further insulate the economy against those headwinds. If the fiscal cliff of automatic tax hikes and spending cuts is not smoothly resolved and/or if the federal debt ceiling is not raised in a timely way, there could be major financial market disruption and budgetary contraction. The Congressional Budget Office and the International Monetary Fund have warned that could trigger a new recession, and Bernanke has said there is nothing the Fed could do to offset the impact. So the FOMC could decide in December that it needs to take out additional insurance, knowing it could always reduce QE3 purchases later once the fiscal impasse has been resolved. The other issue on the horizon is the leadership of the Fed. If Obama is reelected, it is expected that Bernanke would stay on and probably be reappointed to a third term, when his current term expires in early 2014 — assuming he wants it, which is not certain. Vice Chairman Janet Yellen could ultimately succeed Bernanke under a second Obama administration, On the other hand, a Romney victory might mean the end of Bernanke’s tenure. Romney himself has said he wants to replace Bernanke. However, cooler heads may prevail in that instance. Columbia University Professor Glenn Hubbard, Romney’s top economic advisor and a potential Bernanke successor, has told MNI that Bernanke should be considered for reappointment. Romney might want to listen to that advice, knowing a Bernanke exodus would likely hurt market confidence at a very inopportune time. In a possible scenario, one could imagine that, on an initial visit to the White House in a Romney administration, Bernanke might offer to resign immediately, but be told by Romney that he wants him to serve out his term. Bernanke has kept to himself his personal desires, although there have been unconfirmed reports that the former Princeton University Professor does not want a third term. It has been speculated that, under a Romney presidency, a reconstituted Fed would make a dramatic shift toward a tighter monetary policy. But it seems more likely there would be considerable continuity for the foreseeable future. ** MNI ** [TOPICS: M$U$$$,MFU$$$,MGU$$$,MT$$$$,MMUFE$,M$$BR$]  |
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Posted: 26 Oct 2012 08:37 AM PDT
On the week, stocks basically wiped out all the prior week’s gains and have been essentially flat for the past month.  |
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Posted: 26 Oct 2012 08:31 AM PDT
But everyone knows it’s coming.
The Reformed Broker has some jarring commentary on the bond bubble. There’s going to be such a brutal bond investor slaughter at some point over the next decade that the streets of Boston’s mutual fund district will run red with blood, the skies will be shot through with the lightning and thunder of unexpected capital losses and those who manage to survive will envy the dead.  |
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Posted: 26 Oct 2012 08:30 AM PDT
US DATA: ADP reminds that their Oct pvt employment report, due Nov 1, will be
compiled by Moodys and features a new methodology and an expanded level of detail by company size and industry.  |
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Posted: 26 Oct 2012 08:05 AM PDT
If we get much above 0.8035/40 looks like we could set off the mother of all short-squeezes.
That’ll teach you to buy GBP… As Sean Lee once said: It’s never too late to sell cable.   |
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Posted: 26 Oct 2012 08:04 AM PDT
Stocks are beginning to come unhinged. The S&P 500 is down 6 points to 1407.
USD/CAD hasn’t traded at parity since early August.  Parity is always a big number for USD/CAD but it’s not particularly notable on the chart. The orderboard shows some offers at 0.9980, 1.0000/1.0010 and better volume at 1.0060, which I think we could see relatively soon, especially if 1400/1398 breaks in the S&P 500. Canada just reported an April-Aug deficit of $6.2B compared to $9B a year ago but it’s not a factor for the market.  |
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Posted: 26 Oct 2012 08:00 AM PDT
BERLIN (MNI) – Germany wants Greece to stay in the Eurozone but
sees the need for Athens to step up reform efforts, Finance Minister Wolfgang Schaeuble said in a television interview to be aired next Tuesday. “We want Greece to be able to remain in the Eurozone,” Schaeuble told ZDF public television. “But Greece has a lot to do. That has not been decided yet.” The minister said he doubted Greece had met all of its obligations under the fiscal consolidation and reform program agreed under the EU-IMF bailout program. “These doubts have to be cleared up,” he said. Deputy Finance Minister Steffen Kampeter said earlier this week that Germany expected Greece would not meet the fiscal consolidation goals agreed with the EU and the IMF. Any changes to the Greek program have to be approved by the German Bundestag, the lower house of parliament, he said. A senior member of Chancellor Angela Merkel’s center-right CDU/CSU-FDP government coalition said in a newspaper interview published Friday that Greece might get more time to meet its goals. “We might be willing to discuss a modest delay for achieving the deficit goals,” FDP parliamentary leader Rainer Bruederle told the regional daily Rheinische Post. A Finance Ministry spokeswoman said earlier today that talks between Greece and the troika of the European Commission, the ECB and the IMF have not been completed yet. “According to our knowledge the talks are still underway,” ministry spokeswoman Silke Bruns said at a regular press conference here. Thus, it was still not clear if Eurozone finance ministers will be able make any decisions regarding further aid for Greece at their next Eurogroup meeting on November 12, she said. –Berlin bureau: +49-30-22 62 05 80; email: twidder@mni-news.com [TOPICS: M$X$$$,MGX$$$,M$$CR$,M$G$$$,M$Y$$$,MT$$$$]  |
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Posted: 26 Oct 2012 07:41 AM PDT
Across-the-board head fake after Fink and the IMF headlines.
Cable looks vulnerable to a reversal on the hourly chart after failing at the 1.6145 intraday high. An hourly close below 1.6093 would be especially bearish.  Demand said to stretch down to 1.6080 with better bids at 1.6060. Looking at the bigger picture, cable got an outsized bounce from the GDP numbers but there are still a series of lower highs and lower lows since mid-September. Unless 1.6178 breaks, the near term pressure will be to the downside.  |
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