MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, June 20, 2013
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3:17 AM While the dollar rises following the FOMC's various statements and comments yesterday, commodities (DBC) sell off, with gold -3.3% (GLD) to 1,328.85 per ounce, well below the key support level of $1,349. Silver (SLV) -4.3%, Oil -1.8% (USO), copper -1.6% - also dragged down by the poor Chinese PMI print - palladium -1.6% and natural gas (GAZ) -0.8%. Comment!
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3:09 AM The dollar strengthens across the board following the Ben Bernanke Show yesterday. "Bernanke was more explicit than markets had expected. Rising U.S. yields will spur broad dollar buying. The dollar's direction is now set," says Credit Agricole's Yuji Saito. USD-JPY (FXY) +1.1%, USD-EUR +0.3%, USD-GBP (GBB) +0.3%, USD-AUD +0.6%. 1 Comment
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2:43 AM HSBC Chinese manufacturing PMI has fallen to a nine-month low of 48.3 in June from 49.2 in May and vs consensus of 49.4; manufacturing output index 48 vs 50.7. "Manufacturing sectors are weighed down by deteriorating external demand, moderating domestic demand and rising de-stocking," says HSBC. Beijing's preference for reform over stimulus will have a limited impact in the short term, so HSBC expects "slightly weaker growth in Q2." (PR) Comment!
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Wednesday, June 19, 2013
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4:15 PM Market recap: The more Bernanke talked, the more stocks fell and Treasury yields rose. While the chairman took pains to indicate the Fed isn't changing policy, the markets clearly see less stimulus ahead, sending the Dow down 200 and pushing 10-year Treasury yields to 15-month highs. High-yielding dividend stocks led decliners, with telecoms and utilities posting respective drops of 2.7% and 2.3%. 17 Comments
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2:41 PM Bernanke press conference: In a change to the Fed's exit policy (if it ever happens), the chairman says a majority on the FOMC expects the Fed will not sell MBS, and will instead let the paper mature or get paid off. He reiterates that the unemployment rate falling to 6.5% will not automatically trigger a rate hike. The Fed could begin tapering asset purchases later this year if its economic forecasts are correct. 4 Comments
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2:06 PM FOMC Economic Projections: 2013 GDP growth estimate is cut a hair to 2.3-2.6% from 2.3-2.8%, but is boosted in 2014 to 3-3.5% from 2.9-3.4%. The unemployment rate forecast for 2013 is trimmed to 7.2-7.3% from 7.3-7.5% and in 2014 to 6.5-6.8% from 6.7-7%. Core CPI expectations are cut to 1.2-1.3% this year from 1.5-1.6% and in 2014 to 1.5-1.8% from 1.7-2%. 14 out of 19 FOMC members see rate hikes beginning in 2015 (4 see hikes before then). 2 Comments
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2:01 PM FOMC Announcement: No changes to the $85B per month in asset purchases and the committee stands ready to increase or decrease the level as necessary. Downside risks to the economy and the labor market have diminished since the fall. 11 Comments
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9:15 AM Market preview: U.S. stock futures remain flat as investors look to be staying well out of the way until Ben Bernanke has his say later today. For those interested in something other than the "will they or won't they" tapering saga, Sprint is -3.4% as its acquisition process heads towards a Japanese endgame, while Adobe jumps 7.3% following earnings and Alcatel-Lucent climbs 4.8% on news of its revamp. Ongoing: Paris Air Show Comment!
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9:06 AM Bank of America (BAC), JPMorgan (JPM), Citigroup (C), and Wells Fargo (WFC) have failed to comply with parts of the $25B national mortgage settlement, according to Joseph Smith, the independent monitor appointed to oversee the process. "We still have work to do on the loan modification process," he says. His findings jibe with anecdotal reports and comes as the NY AG has signalled his intention to sue the banks over violations. 14 Comments
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8:46 AM Paris Air Show: Having just concluded a deal for 175 Boeing (BA) 737-800s, Ryanair (RYAAY) is veering towards choosing the 737 MAX over Airbus' A320neo jet in an order for 200 planes that would be worth $20B at list prices. Boeing has the advantage because of Airbus' backlog and because the MAX will offer 189 seats, nine more than the A320. What Ryanair CEO Michael O'Reilly would really like, though, is a narrow-body jet with 199 seats. 1 Comment
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6:18 AM Paris Air Show: Boeing (BA) has won an order for 30 of its next-generation 737 MAX aircraft from air-leasing firm CIT Group (CIT) in a deal worth $3B at list prices. The plane maker intends to bring the MAX into service in Q3 2017, a quarter earlier than planned, but still somewhat later than the rival Airbus A320neo. Meanwhile, Ryanair (RYAAY) has finalized an order for 175 Boeing 737-800 aircraft worth $15.6B at list prices. Korean Air has agreed to purchase five 747 aircraft and six 777 jets in an agreement valued at $3.6B at list prices. Comment!
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4:52 AM The Bank of England's Monetary Policy Committee again voted unanimously to keep interest rates at 0.5% at a meeting earlier this month and 6-3 against more quantitative easing, the minutes show. As in the last few months, outgoing Governor Mervyn King was among those wanting the bank to increase the program by another £25B to £400B. This was King's last vote before he cedes the reigns to Mark Carney in July. The pound drops against the dollar and is now -0.1% at $1.5624. (PR) Comment!
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4:34 AM Verizon (VZ) is interested in acquiring Canadian peer Wind Mobile, the U.S company has said. Verizon has reportedly held talks for Wind, which is a relatively new entry into the Canadian market and is struggling. VimpelCom (VIP), Wind's largest owner, wants around $500M, although Verizon may then have to pump in another $1-2B for spectrum purchases, network upgrades and consolidation costs. RBC analyst Drew McReynolds is not sure the deal makes sense. 7 Comments
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4:22 AM European shares (FEZ) mostly fall as investors adjust their positions ahead of the Fed, although there does seem to be increasing confidence that the FOMC won't signal the end of its QE program today. "There is a lot of slack in the economy and there is no inflation pressure," says Standard Chartered's Ned Rumpeltin. EU Stoxx 50 -0.1%, London -0.7%, Paris -0.6%, Frankfurt -0.7%, Madrid +0.5%, Milan flat. Comment!
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4:11 AM Japanese shares (DXJ) buck the trend in Asia and rise 1.8% after exports jump a better-than-expected 10.1%, with Sony and SoftBank rising on corporate news (I, II). Stocks elsewhere in the region fall as investors stay cautious ahead of the FOMC monetary policy announcement later. Hong Kong -1.1%, China -0.7%, India -0.3%. Comment!
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3:28 AM As broadly expected, Alcatel-Lucent (ALU) intends to cut costs by €1B and sell another €1B of assets within two years as it looks to become cash-flow positive by 2015, at which point the telecom-equipment company will look to slash its debt by €2B by selling shares or through further asset sales. The changes are part of a recovery program called the "Shift Plan," which also includes Alcatel-Lucent focusing on IP networking and ultra-broadband access. Alcatel-Lucent is hiring a COO as well, while CFO Paul Tufano will leave. Shares are +6.7% in Paris. (PR) 11 Comments
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3:12 AM The WSJ carries an expose of how traders manipulate the spot market for oil, with Halis Bektas from Switzerland, for example, admitting that he will sell a small amount of oil at a loss to drive down the benchmark price and then buy shiploads at the lower cost. McGraw Hill Financial (MHFI) unit Platts, which sets the benchmark by relying on information that traders provide about their deals, said that it's not aware of such manipulation and that its staff are trained to ignore unusual pricing. Comment!
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1:35 AM The weak yen helped Japanese exports grow at the fastest rate since 2010 in May, with sales abroad jumping 10.1% on year vs +3.8% in April and consensus of +6.5%. However, volume dropped 4.8%, hurt by the economic situation in China and the EU. Imports climbed 10% vs +9.5% a month earlier and forecasts of +10.8%. Japan generated a trade deficit for the 11th consecutive month as the figure widened 13% on month to ¥993.9B ($10.4B). (PR) Comment!
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Tuesday, June 18, 2013
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4:15 PM Market recap: Stocks cap a two-day rally to wipe out last week's losses, as investors seem confident Bernanke will assure everyone at his press conference tomorrow that the Fed is in no rush to taper its bond-buying program. The Dow's 138-point gain marked a sixth straight day of triple-digit moves; the small-cap Russell 2000 closed at an all-time high. The dollar rose vs. the yen; Treasury prices inched up. 6 Comments
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9:15 AM Market preview: U.S. stock futures and European shares are flat-to-higher after U.S. CPI comes in slightly below expectations and as the FOMC meets on the first day of a two-day policy meeting. The S&P Mini is flat. "Today should be quiet, as people are only asking about tomorrow," says economic strategist Andrew Wilkinson. Sony is +4.25% after Dan Loeb ups the ante over a spin-off for the company's entertainment division. Ongoing: Paris Air Show Comment!
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