MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, June 20, 2013
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3:09 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%. 2 Comments
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Wednesday, June 19, 2013
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2:49 PM Bernanke press conference: Should projections hold, Bernanke sees QE ending "around mid-year" 2014 and the unemployment rate being about 7% at that time. Responding to a question, he says the FOMC stands ready to quickly adjust - i.e. fire purchases back up - should it prove to have made a mistaken forecast. Stocks (SPY -0.5%) and Treasurys (TLT -1.2%) are at session lows. 16 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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2:30 PM More on the FOMC announcement: In addition to the now-customary dissent by the Kansas City Fed chief was a dissent by St. Louis' Jim Bullard. Whereas Esther George is concerned over too high a level of monetary accommodation, Bullard apparently feels just the opposite. He believes the FOMC "should signal more strongly its willingness to defend its inflation goal in light of recent low inflation readings." Bernanke's press conference is about to get underway. Comment!
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2:13 PM Bond prices (TLT -0.7%) slip following the more upbeat assessment of the economy from the FOMC. Higher growth and lower unemployment projections spell maybe a quicker schedule for tapering and eventual tightening, but materially lower inflation expectations say the opposite. Stocks give up a bit of ground as well, the S&P 500 (SPY -0.3%). The dollar (UUP +0.3%) pops higher across the board. 3 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. 12 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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7:48 AM "Why would they rush to taper now," says UBS' Drew Matus (also formerly a Fed economist), noting unemployment is nowhere near low enough and inflation is at a half-century low. A Bloomberg survey of economists has the FOMC waiting until its late-October meeting before commencing the taper and slashing purchases to $65B/month from $85B. 5 Comments
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7:29 AM Obama "essentially fired Ben Bernanke on the spot," says ex-Fed Governor Larry Meyer, commenting on the President's remarks during an interview yesterday (he's stayed a lot longer than he was supposed to). Meyer also notes the "tepid" testimonial from the President following that line. "It's time to really now focus on who the next chairman might be." 36 Comments
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2:52 AM The SEC plans to alter the somewhat cozy relationship it has with Wall Street and force companies to admit wrongdoing in some settlements or face the risk of going to court instead. That's not to say that the agency will abandon the "no admit, no deny" approach, new Chairwoman Mary Jo White said yesterday, but it does mark her first big policy change. It comes after the likes of Judge Jed Rakoff rejected the SEC's $285M deal with Citigroup because of the "no admit, no deny" clause in the deal. 1 Comment
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Tuesday, June 18, 2013
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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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8:36 AM More on Housing Starts: Total starts were up 6.8% from April, up 28.6% from a year ago. Single family starts in were about flat M/M. Total building permits of 974K fell 3.1% M/M, and gained 20.8% Y/Y. Single family permits rise 1.3% M/M. (full report) 6 Comments
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8:30 AM May Consumer Price Index: +0.1%;vs. +0.2% expected, -0.4% prior. Core CPI +0.2%; in-line with expectations, +0.1% prior. 5 Comments
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8:15 AM More on ICSC Retail Sales: The retail sector put in a mixed week with department stores, electronics store chains ([[RSH[[, BBY), and drug stores (CVS, WAG, RAD]]) strong for the period, but sales at dollar stores (DG, DLTR, FIVE, FDO) and wholesale clubs (COST, PSMT) notably weak. After last week's drop in sales cut into forward progress, the year-over-year gain in retail chain store sales stands 2.5% higher after threatening a 3% pace earlier in the year. Comment!
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7:46 AM The FOMC will be able to chew on inflation data for May when it meets today, with the reading due out this morning. Economists expect that CPI rose 0.2% on month after sliding 0.4% in April, driven up by slightly higher food and gasoline costs. "Inflation is low in the U.S. at the moment, giving the Fed more room to wait for improvement in employment before it starts tapering," say analysts at Danske Daily. Comment!
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