Posts from Wednesday Apr 25 2012

Other reactions to the FOMC

Just a quick run-through here.

Nomura: Read more

Bernanke and the wrong credibility issue

Ben Bernanke, March 2010:

That will sound awfully familiar to anyone who listened in to the presser earlier on Wednesday afternoon. Bernanke essentially reiterated the same idea in response to a question asking why he wouldn’t tolerate a period of catch-up inflation higher than two per cent if it would further reduce unemployment. Read more

The Closer


Apple shares gained the most in one day since November 2008, wiping on $50bn in market value – equivalent to the market capitalisation of Hewlett-Packard. The Nasdaq closed up 2.3 per cent, its biggest one-day gain year to date (Wall Street Journal). Read more

US Markets Live transcript 25 Apr 2012

Live markets commentary from 

New FOMC forecasts

Holy hawkish shift! Two of the FOMC members who previously forecasted that tightening wouldn’t begin until after 2014 have shifted their votes to that year.

Projections for inflation and growth have also been revised higher. It’s odd therefore, that the statement itself continues to use the late-2014 language — though this is probably just a reflection of the fact that Bernanke/Yellen/Dudley are 1) still more dove-ish than the median member, and 2) hold the cards. Just a guess. Read more

Hubris and other signs of trouble ‘down under’

Australia is rich in iron ore, coal and copper … and its stock of hubris seems to be growing.

After a recent trip to the “quarry in China’s backyard” SocGen’s Dylan Grice is even more worried about its economy than he was beforehand. It seems a book describing Australia’s economic success as “a miracle” was the catalyst (more on that below). In a note to clients Grice is recommending shorting the aussie dollar. And, if you’re lucky enough to be Australian, stockpiling gold. Read more

FOMC statement…

Full statement below. Short version: “expanding moderately”, rates on hold, and a Lacker dissent. Bolded para is a copy and paste job from the last statement. Zzzzz.

Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable. Read more

US Markets Live special, FOMC presser edition

Join us at 2:10pm EST (7:10pm in London) for our live coverage of today’s Fed presser.

We’ll do a quick recap of the statement and have a look at the new economic and fed funds projections before the presser begins at 2:15pm. Read more

Rank by correlation, European edition

As markets ponder France’s post-election future, and the Dutch deal with the collapse of their government, some analysts are wondering which countries even qualify as being in the “core” of Europe.

In so contemplating, Divyang Shah, Global Strategist at IFR Markets, has put together this table of the correlations between the daily changes in the 10-year benchmark bonds of various countries, year-to-date (click to expand): Read more

RoRo and the BoJ

The Bank of Japan’s monetary policy decision on Friday has been powerfully talked up by analysts and officials alike, with the bank under real political pressure to satisfy market expectations and announce new easing measures that target inflation and growth.

The BoJ surprised markets on February 14 when it announced an increase in its asset-purchasing programme to Y65tn from Y55tn, and an explicit inflation target of 1 per cent. But at its last policy meeting on April 10 it decided not to implement additional monetary easing. Read more

Markets Live transcript 25 Apr 2012

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York…


The UK is back in recession

This cheery note is from the Office for National Statistics (our emphasis):

GDP contracted by 0.2 per cent in the first quarter of 2012, the second successive period of negative economic growth. The fall in real GDP was driven primarily by weakness in the construction sector, where output is estimated to have fallen by 3 per cent between the two latestquarters.  But the dominant services sector of the economy grew only slowly while industrial production fell slightly. Read more

Saudi oil puzzle, continued

From the commodities research team at Goldman Sachs on Wednesday:

Saudi Arabian crude oil inventories built by 35.4 million barrels in the December-February period, adding 390 thousand b/d to world oil demand, according to data from the Joint Organisations Data Initiative (JODI). The strong build in Saudi inventories raises a number of questions, however. The foremost question being: why would Saudi Arabia increase its oil production to the highest level in over 30 years to simply put the crude oil into storage?

 Read more

Further reading

Elsewhere on Wednesday,

– Yves Smith on a paper about what financial reform missedRead more

The 6am Cut London

Apple reported a 94 per cent increase in profit. Net income rose to $39.2bn year over year in the fiscal second quarter, comfortably surpassing the consensus forecast of $36.9bn, says Bloomberg. Sales of iPhones beat analysts’ estimates in particular, in part supported by a fivefold increase of sales in Greater China, according to Reuters. Apple’s chief executive also hinted at a less aggressive approach to the smartphone patent wars, the FT reports. “I would highly prefer to settle rather than a battle,” Tim Cook said.

RBS is planning a one-for-10 consolidation of its shares. The proposal, which the bank has sent to investors ahead of May’s annual meeting, could take place in early June, according to the FT. “The RBS board might want the company to be a dynamic, healthy £3 share rather than an anaemic 23p,” one investor said. Read more

Overnight markets: up

Stock markets in Asia took heart from corporate earnings, with the MSCI Asia Pacific index rising 0.3 per cent, Reuters says. Rising speculation that the Bank of Japan will unveil more easing in its April 27 statement led the yen to weaken against the dollar, reports Bloomberg.

Asian markets
Nikkei 225 up 88.86 (+0.94%) at 9,556
Topix up 5.69 (+0.71%) at 809.63
Hang Seng up 16.62 (+0.08%) at 20,693 Read more