MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Monday, May 21
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8:23 PM Japan reports holding a net $3.19T in foreign assets at the end of 2011, hanging on to its position as the world's top creditor nation. The position marks a rise from 2010, which may also dampen expectations on China overtaking the Japanese as the number one creditor anytime soon. 22 Comments
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8:04 PM Japanese utilities plan to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants. Starting in June rates for some power plants will be four to six times higher during the peak hours of 1 p.m. and 4 p.m. than those for night time hours. 7 Comments
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6:15 PM Russia objects to findings that show the country's oil production fell sharply from 10.37M bbl/day in December to 9.92M in March, sending it below Saudi Arabia in world rankings. Russia has been pumping hundreds of thousands of bbl/day more than Saudi Arabia and believes it can increase output Y/Y, Russia's Energy Ministry claims its own data show. Comment!
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5:06 PM France and Germany fail to move the ball forward on the prospect of eurobond issuance at a meeting of their respective finmins today ahead of a EU leader summit on Wednesday. The Germans remain adamant against such a move, and it remains to be seen if Hollande, along with Monti and Rajoy, can shift the center of EU power out of Berlin. 6 Comments
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4:43 PM Spain's banks are likely to have property-related losses in the €216-€260B range, says the IIF, which used the experience of Ireland's banks as a benchmark. The lenders have thus far reserved about €110Bm, and will generate more this year, but could need €50-60B in assistance from the government. 1 Comment
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4:32 PM The Iran premium in the price of a barrel of oil may have dropped to as low as $5 in the spot market, as worries about global demand trump concerns about supply disruption, Capital Economics says. There’s a “good chance” this week’s meeting between Iran and Western officials will raise the possibility that EU sanctions could be withdrawn, it says, a prospect the markets haven't considered. 2 Comments
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3:35 PM Even a eurozone-wide deposit guarantee scheme may not stem the Club Med bank run, Matt king, as depositor fear is less bank failure risk and more redenomination risk. Slow-motion up until now, "the risks are skewed towards larger outflows occurring considerably more rapidly." Comment!
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3:22 PM "Spain is the battleground," says Michael Platt, pretty much writing off Greece. "A euro in a Spanish bank is not worth as much as a euro in a German bank," he points out, explaining why the slow-motion bank run will continue. The range of outcomes - from utter disaster to the EU printing it all away - is so wide, he suggests owning still-cheap volatility, whether it be in rates, currencies, or stocks. (complete video a must watch) 7 Comments
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3:10 PM Sinopec (SNP +0.4%) and South African national oil company PetroSA will build a refinery in South Africa that could process 400K bbl/day of oil and cost $9B-$10B to construct. China has become Africa's biggest trading partner, and the new refinery could play a role in furthering its ambition to expand global resource trading by being a destination for crude oil. Comment!
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3:00 PM The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act." 23 Comments
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1:17 PM Toronto could be the next gambling mecca after officials in Ontario started the process of clearing a path for the development of a hotel-casino complex. MGM Resorts (MGM +2.1%) and Caesars Entertainment (CZR +0.1%) are already meeting with city officials, while Las Vegas Sands (LVS +2.1%) reportedly sent execs to the city on a scouting mission. 2 Comments
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1:09 PM Sirius XM (SIRI +2.4%) announces a deal with Audi (VLKAY.PK) that gives customers who purchase a 2013 model year vehicle a 4-year subscription to SiriusXM Traffic. The promotion is in addition to an existing perk where Audi buyers in North America receive a 3-month subscription to SiriusXM's basic service. Comment!
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1:03 PM It begins: The ECB should announce its intention to buy unlimited amounts of sovereign debt in the event of a Greek exit from EMU, argues Polish finmin Rostowski. It is a moot point, he says, whether this is against EU or ECB statutes. As Trichet said last year, when normal policy instruments fail, the ECB has the right to remedy the situation. Comment!
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12:51 PM Hedge funds and P-E firms have accumulated almost €60B to acquire loans from European banks that are looking to consolidate their ops, a PWC survey shows. Investors, most of whom are from the U.S., are particularly interested in loans backed by commercial real estate. 1 Comment
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12:19 PM Greece's Democratic Alliance Party, which took 2.6% of the vote in the May 6 election, accepts New Democracy's invitation to form a new pro-European front for the poll in June. It seems that there was a major burying of hatchets for the deal to be done. 1 Comment
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12:17 PM ArcelorMittal (MT) suspends a $1.5B expansion plan (in the middle of construction) in Brazil, citing a lack of demand not just in that country, but across the globe. An earlier report has Chinese buyers refusing shipments of iron ore and coking coal as overcapacity there has steel mills cutting output. 1 Comment
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12:10 PM Asset managers unloaded euros at the fastest pace since November, says UBS, noting its clients were especially keen to sell the euro/Swiss franc cross. The CHF 1.20 level held, but the bank expects a Greek exit to "provide a stern test" for the SNB. 1 Comment
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11:57 AM Bangladesh has struck its first oil, in two gas fields in the northeastern Sylhet region, according to the chairman of the state-run Petrobangla oil company. The oil found was said to be light, low-sulphur quality, estimated at 153M bbl. Comment!
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11:41 AM Europe closes mixed, with the periphery well off their lows of the session, but continuing to yield ground. Stoxx 50 +0.3%, Germany +1%, France +0.5%, Italy -0.4%, Spain -0.6%, U.K. +0.7%. Euro -0.1% to $1.2765. Comment!
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11:25 AM Amidst slow sales and mass overcapacity, no European automaker wants to be the first to shut a plant. Unlike in the U.S., EU automakers were under no pressure to restructure in exchange for bailout money. Four years later, all but the luxury brands are under pressure, with 30% rebates in Germany and Italy an all-time high. GM has lost money in Europe for 12 consecutive years. 1 Comment
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9:47 AM The Court of the Bank of England commissions three independent reviews into its "performance and current capabilities," covering the provision of emergency liquidity during the financial crisis in 2008/9, the Bank’s framework for providing liquidity to the banking system as a whole, and the MPC's forecasting capability. (PR) Comment!
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9:44 AM McDonald's (MCD +0.4%) starts its biggest recruiting plan ever in China as it looks to hire 70K workers and open 220-225 new stores in the nation. While the company's food prices in China remain elevated, workers will earn in some cases less than 10 yuan ($1.58) an hour. 7 Comments
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9:34 AM Oil production in Saudi Arabia rose to 9.923M bbl/day in March, from 9.853M bbl/day in February, overtaking Russia (9.920M) as the world's largest producer for the first time in six years. The U.S., at 5.889M, ranks third. (database since 2002) 9 Comments
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9:08 AM Another meek rally attempt gives way in Europe, the Stoxx 50 -0.5% after being up around 0.75% 2 hours ago. Leading the way are Madrid and Milan, each off 1.6%. Frankfurt +0.5%. S&P 500 futures are well off their highs, +0.4%. Comment!
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8:52 AM "If the Chancellor rules out something today, the probability increases that she will agree to it tomorrow," writes a German newspaper over the debate about issuing euro bonds. Merkel has consistently held against such paper, but French President Hollande has promised to make the issue part of his package of crisis responses. 1 Comment
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7:45 AM Ambrose Evans-Pritchard again takes on the shibboleths that a Greek withdrawal from EMU would force its expulsion from the EU, and that it would be a disaster for the country. Once the boil is "lanced," capital will return, not just from Greeks, but Chinese, Russian, and especially German. The danger is the rest Club Med looking on in envy and deciding to do the same. 1 Comment
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7:36 AM India's rupee falls more than 1% to an all-time low, now requiring 55 of them to buy one greenback. The central bank is in a tough spot as inflation remains high while the economy slows. The slide in the rupee - at least some of which has to do with the "risk off" tone of markets - won't help the inflation picture. 3 Comments
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7:27 AM Spain's Q2 GDP is likely to print as poorly as Q1 - down 0.3% - tips finmin de Guindos, who's had a look at the data. Madrid (along with Milan) is again the outlier in Europe, -0.9% amidst mostly green markets on the continent. Recession notwithstanding, Spanish bond yields continue their rise, +3 bps to 6.30%. 2 Comments
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7:19 AM The Bank of Greece "adamantly" denies a published Sunday report alleging plans to restrict deposit withdrawals and impose capital controls. Curious. The date of the BoG press release is the 19th, Sunday was the 20th. 2 Comments
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7:14 AM Chinese buyers for iron ore and coking coal are attempting to defer orders and defaulting on contracts, according to reports from traders, as the country is filled to the brim with the stuff and the nation's steel mills are cutting output amidst heavy overcapacity. (see also) 7 Comments
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7:06 AM Are competitors pouncing on General Motors' (GM) nervousness over the high costs of advertising? While last week Ford said it will remain a friend of Facebook after GM bailed out, now Hyundai (HYMLF.PK) announces that it will be an advertiser for the 2013 Super Bowl - a mega event that GM is curiously passing on. Comment!
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6:46 AM Formula One's $2.5B IPO is set to be priced before the end of June. The motor racing company - majority owned by CVC Capital Partners - will list on the Singapore stock exchange. Comment!
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5:13 AM Samsung (SSNLF.PK) is concerned the "worrying" weakness in Chinese consumer spending is hurting tech spending, and expects the market for tech goods in China to grow by only 7% this year, down from 10% last year. Comment!
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5:03 AM Switzerland is seeing "enormous" investment inflows as eurozone concerns prompt a flight to safer assets. According to NZZ am Sonntag, Swiss financial market inflows were as much as four times higher than normal on some days during the past week. Comment!
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4:56 AM "The question isn't will the UK be downgraded, but when?," says Richard Hodges, one of London's most respected bond fund managers. "The ratings agencies haven't moved partly because they have bigger fish to fry. But as this crisis plays out it is inevitable that they will downgrade the U.K., with its huge current account deficit, by 2013 at the latest." Comment!
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4:54 AM A one-chart explanation for why the eurozone will have to increase its firewall, via ZeroHedge. Comment!
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4:35 AM JPMorgan (JPM) is the biggest buyer of European home-loan bonds, and investors are worried the bank is planning to pull back from the market following its CIO disaster. The European mortgage-bond market could see significant volatility, as JPM's investments are nearly 9% of the size of the Dutch and U.K. mortgage-bond markets it’s been focusing on. Comment!
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1:18 AM Thailand's economy grew 0.3% in Q1, surprising economists who had expected a 0.5% decline and following a revised 8.9% contraction in Q4. The growth came as the country recovered from last year's floods, with factories resuming production and domestic consumption picking up. Comment!
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1:11 AM As part of its capital market reforms, China will work to speed up approvals of foreign institutional investors looking to buy into its domestic securities. Last month, Chinese regulators raised the investment quota for its Qualified Foreign Institutional Investor program by $50B to $80B. Comment!
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1:08 AM Premier Wen Jiabao's pledge on Chinese growth "will be a support for the market when we see clear signs of it," says portfolio manager Shintaro Takeuchi. In the meantime, speculation about increased stimulus is providing only a modest boost to stocks as eurozone concerns continue. Japan +0.4%. Hong Kong -0.2%. China +0.3%. India +0.5%. Comment!
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12:59 AM China may announce stimulus actions in the near future, reports the China Securities Journal, which is published by the official Xinhua News Agency. The report follows weekend comments by Premier Wen Jiabao in which he called for "putting stabilizing growth in a more important position," with no mention of inflation. 3 Comments
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