Posts Tagged ‘ECB’

Week of Dec 4 2015 Weekly Recap & The Week Ahead

Monday, December 7th, 2015

“Nothing created by the mind of man has ever equaled the stock market in terms of its sheer ability to frustrate people. Why is this? The answer is that the stock market frustrates because millions of traders and investors across the face of the U.S. and the world are trying to make money out of the market. Now when millions of people are trying to make money out of the market, you know right off the bat that it can’t be done. A majority of people are not fated to make money doing anything, much less beat the stock market. ‘It’s not fair’ you complain, ‘why can’t all those nice, well-meaning people make money with their trading and investing?’ There’s one simple fact that makes it difficult. And that fact is that throughout history there have always been a small number of financial winners and an army of financial losers. So when we state that the stock market is frustrating, we must qualify the statement by asking, ‘frustrating for whom?’ And the answer again is that the stock market is frustrating to the great majority of participant-losers but highly rewarding to the small minority of informed, hard-working, intelligent winners.” — Richard Russell

1. Puerto Rico Debt Payment Comes Due –Puerto Rico makes a $354M debt payment owed to creditors late last week, while a U.S. congressional hearing about the island’s fiscal crisis takes place in Washington. Analysts have warned that the debt owed by the Government Development Bank could be the first major payment skipped by the San Juan government as part of a strategy to preserve cash and force creditors to negotiate.
2. China’s Renminbi Is Approved by I.M.F. as a Main World CurrencyNYTimes, the IMF added the yuan to its Special Drawing Rights basket. Effective Oct. 1, 2016, the renminbi will officially be recognized as a reserve currency, meaning central banks will have an alternative for foreign exchange reserves. The yuan also meets criteria of being “freely usable,” or widely used for international payments and in foreign exchange markets, boosting China’s influence in the global economy. The move will help pave the way for broader use of the renminbi in trade and finance, securing China’s standing as a global economic power. Just four other currencies — the dollar, the euro, the pound and the yen — have the I.M.F. designation.
3. ECB Cuts Deposit Rate, Launches Fresh Stimulus — ECB President Mario Draghi said the bank would cut the deposit rate to -0.30% from -0.20%. Mr. Draghi noted the success of the bank’s existing QE program, and said it would be extended until March 2017 or “beyond if necessary.” The Frankfurt-based ECB will also extend quantitative easing by six months until at least March 2017 at the current rate of 60 billion euros a month and broaden the assets purchased to include local and regional debt, ECB President Mario Draghi said last Thursday.
4. FOMC Chairwoman Eager to Raise Rates — Fed Chair Janet Yellen said she’s “looking forward” to the first interest rate hike in nearly 10-years. She stated data since the Oct. gathering have been “consistent” with improving labor market, which should lead to 2% inflation.
5. American Association of Individual Investor (AAII) bullish sentiment — courtesy of BIG, In this week’s report, bullish sentiment dropped from 32.36% down to 29.49% for the first sub 30% reading in bullish sentiment since the early October lows. The latest survey shows investors are increasingly less willing to take a stand on the market in one way or the other.

The week ahead — Economic data from Econoday.com:

Week of June 5 2015 Weekly Recap & The Week Ahead

Monday, June 8th, 2015

“The four most expensive words in the English language, “This time it’s different”” – Sir John Templeton.

1. The Reserve Bank of India Cut Interest Rates — the Reserve Bank of India cut interest rates for the third time this year, lowering its key repo rate by 25 bps to 7.25%, in a move that appears at odds with recent data showing the country’s economy has become one of the fastest-growing in the world. Data on Friday showed India’s output expansion accelerated to 7.5% last quarter, outpacing China in terms of growth.
2. HP sets November 1 spinoff date, partners with Arista — Hewlett-Packard (NYSE:HPQ) co-chief executive Meg Whitman said the separation of HP and Hewlett-Packard Enterprise would be effective November 1. Last October, HP announced it would split into two listed companies, separating its printer unit from its hardware and services operations. HP has also announced a partnership with fast-growing data center switch vendor Arista (NYSE:ANET).
3. Global Bond Yields Fly Higher — bond yields across global markets continued their sell-off into last week as a six-week-long bond rout rumbled on. ECB President Mario Draghi said asset prices tend to be more volatile in a low interest rate environment and policymakers were prepared to look through the sharp rise in yields. With the ECB seeing no reason to adjust its stance on monetary policy, German 10-year Bund yields rose to fresh 2015 highs today at 0.95% (up from near zero in mid-April). U.S. 10-year yield +3 bps to 2.4%.
4. Greece Delays $339 mil Debt Payment — Greece formally requested a deferral of June 5 ‘s payment due to the IMF after insisting it would make the payment. All parties in the negotiations continued to express optimism, but leftist members of the ruling Greek party were indignant at concessions.
5. Bullish Sentiment Increases Slightly — courtesy of BIG, bullish sentiment increased from 27.0% up to 27.34%. This represents the 13th straight week where bullish sentiment has come in below its bull market average of 38.5%. That is the longest streak of below average bullish sentiment since August 2012 when bullish sentiment was below average for 20 consecutive weeks.

The week ahead — Economic data from Econoday.com:

Week of Nov 21 2014 Weekly Recap & The Week Ahead

Monday, November 24th, 2014

“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” — Bernard Baruch

1. Japan’s Economy Falls Into Surprise RecessionMarketWatch, a sales tax increase pushed Japan’s economy into a recession in the third quarter. Japan’s real GDP shrank 1.6% on an annualized basis as firms cut inventories and held back on capital investment. The figure marked the second quarter of contraction, after the economy shrank 7.3% in the April-June quarter after the national sales tax ticked up to 8% from 5% on April 1. Many economists consider two quarters of economic contraction to be a recession.
2. Intel Unveiled The Luxury Wearable Device for Fashion-Forward Women — via TheVerge, it features a 1.6″ OLED display, and delivers texts, e-mails, and Facebook (NASDAQ:FB)/Google (GOOG, GOOGL) notifications over AT&T’s (NYSE:T) 3G network independently of the user’s smartphone. Intel (NASDAQ:INTC) has priced the device at $495.
3. West African Mining Projects Take Hit From Ebola Crisis WSJ, the Ebola epidemic in west Africa has led mining companies in the region to put expansion plans on hold, delaying the roll-out of jobs meant for residents of the countries hardest hit by the virus. ArcelorMittal (NYSE:MT) has delayed a $1.7B expansion at its iron ore mine in Liberia, Rio Tinto (NYSE:RIO) has stopped work on a $20B iron ore mine in Guinea, and Sierra Leone-focused London Mining filed for bankruptcy last month.
4. Alibaba To Launch International Version of Taobao MarketplaceReuters, Jack Ma has announced that Alibaba will set up an international version of its e-commerce marketplace Taobao to serve buyers worldwide in multiple languages, including English and Chinese. Alibaba (NYSE:BABA) currently has an international e-commerce platform specializing in wholesale goods called Aliexpress but does not have an international offering for consumers to sell to each other.
5. China’s Central Bank Cuts Interest RatesWSJ, China cut lending rates for the first time in more than two years, in an acknowledgment that its piecemeal efforts to bolster its flagging growth have failed. The People’s Bank of China lowered one-year benchmark lending rates by 40 bps to 5.6% and reduced the one-year deposit rate by 25 bps to 2.75%. China’s economic growth slowed to a five-year low of 7.3% last quarter. The last time China cut lending rates was July 2012.
6. ECB Begins Buying Asset-Backed Securities Under Private QE — The European Central Bank (ECB) has started buying asset-backed securities,in a move to encourage banks to lend and revive the economy. The program is one plank in a strategy which ECB chief Mario Draghi hopes will increase its balance sheet by up to 1 trillion euros. It already buys covered bonds, a secure form of debt often backed by property. The ABS and covered bond programs will last for at least two years.

The week ahead — Economic data from Econoday.com:

Week Sept 7 2012 – Weekly Recap & The Week Ahead

Monday, September 10th, 2012

“The market can stay irrational longer than you can stay solvent.” John Maynard Keynes.

1. Spanish, Italian yields fall on Draghi bond comments — ECB President Mario Draghi indicated that the bank would be open to buying government bonds with a maturity of 2-3 years, telling the European Parliament that doing so wouldn’t contravene EU treaties.
2. Moody’s Changes Euro Zone Rating Outlook to ‘Negative’ NYTimes reported Moody’s Investors Service cut the European Union’s credit outlook to negative on Monday, reflecting the risks to Germany, France, Britain and the Netherlands, the four countries in the group with AAA ratings, which account for about 45 percent of the group’s budget revenue.
Moody’s also lowered the outlook on the union’s AAA long-term bond rating from stable.
3. DOJ accuses BP of “gross negligence” — the Department of Justice sharpened its rhetoric against BP (BP) and Transocean (RIG) over the Deepwater Horizon oil spill, accusing the companies of “gross negligence” in deciphering a key pressure test.
4. Spain plays game of chicken with ECB –knowing that the ECB is set to start bond purchases, Spain has begun a game of chicken: Finance Minister Luis de Guindos said the country isn’t so sure it will submit to a full-blown bailout if the terms are too harsh. Germany thought it had a deal – forcing Spain and Italy into Greek-like austerity in exchange for allowing the ECB to buy government debt.
5. Bank of England and the ECB left interest-rate unchanged — The BOE kept its interest rate unchanged at 0.5% and made no changed to its 375 billion pounds ($596.5 billion) asset-purchase program. The ECB kept its key lending rate at 0.75% as the ECB President Mario Draghi stated that ECB would engage in outright monetary transactions, or OMTs, to address “severe distortions” in government bond markets based on “unfounded fears”.
6. China unleashes $158B infrastructure stimulus — according to CNN, China is ramping up the stimulus as it seeks to boost its slowing growth, disclosing plans for 13 highway construction projects, nine sewage-treatment plants, seven waterway schemes, and five port and warehouse projects. That’s on top of the 25 subway projects China announced earlier this week, and takes total spending to 1T yuan ($158B).

The week ahead — Economic data from Econoday.com:

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