Asia, Europe and US equity markets made gains after China managed to meet y/y Q1 GDP growth expectations China Stats Bureau tossed water on any attempt by traders to run and gun the Asian markets when it said, traders can no longer expect double digit growth; Q1 GDP slow down is also due to govt reform efforts, such as cutting overcapacity. After the Asian session, China’s government said Wednesday that it will reduce the share of deposits that some rural commercial banks need to hold as cash at the central bank, without saying how much the level would change.A statement posted on the website of the State Council, China’s cabinet, said that the cut in the reserve requirement at rural banks is aimed at stimulating growth in some parts of the country. The cut will apply to banks that “meet certain standards,” the statement said, without elaborating.
The positive market action has been supported in the US session by some satisfactory industrial production data, while the Nasdaq has been propped up by Yahoo’s earnings gains and INTCs forecast after hours yesterday.
We continue to see a buy down in Italian bond spreads. Conversely, and perversely the worse things get in Italy the more the ECB/ESM have been willing to buy the bond futures markets down in Spain and Italy as they are both too big to fail or bail. On a big rebound day in equity in Europe you would expect bonds to come off , not rally. We have very strange buying out of Belgium again this month of UST per the TIC, and China boycotting USTs again- that trade surplus has to go somewhere. Gold has absolutely been hammered on the TIC reports which were at crisis levels the last several months, despite reports of much greater gold demand from China and stronger economic growth overnight, and for the Troll Yellen’s speech today.
The March industrial production report beat expectations and the prior February gain was doubled in revisions. More importantly, capacity utilization rebounded much higher, to 79.2% from 78.4% in February, putting utilization at its highest level since the very beginning of 2008. This is only 0.9 percentage points below the long-run (1972-2013) utilization average. Unfortunately mfg is a small part of the USE anymore thanks to shipping so many factories overseas by the SP500.
Both permits and housing starts missed expectations in March data out earlier this morning. The February housing starts were revised slightly higher and the March starts still showed growth from the revised Feb data. Analysts highlight the slowdown in multi-family starts after a spike higher at the end of 2014. Housing stocks are ignoring the report and are gaining in line with broader equity markets.
The Chinese Q1 GDP data fired risk appetite in the FX markets, and weakening the greenback.EUR/USD moved gradually higher before jumping to 1.3850 in the European session. The pair is back around 1.3810 presently. The weakening yen has run into resistance around 102.30, where USD/JPY has been stalled since early this morning.
Shares of Bank of America are down more than 3% this morning as investors struggle to parse the caveats in the bank’s first quarter earnings. The firm reported a headline loss of $0.05, well below expectations, but this was after $6.0 billion in litigation expense ($0.40) related to the FHFA legal settlement and reserves for mortgage-related matters. Much like JPMorgan and WFC last week, BoA’s consumer residential mortgage originations were horrible, down 65% y/y.
Yahoo gained around 8% in the premarket, extending the after-hour gains seen yesterday evening, however the name has given up some territory mid-morning to trade +6%. While Yahoo’s metrics were modestly positive, it was the Alibaba disclosures ahead of the Chinese firm’s IPO that really juiced YHOO. Alibaba made $1.4 billion in profit for its fourth quarter, more than double the amount it made during the same period a year earlier. Intel met expectations and modestly boosted its FY14 margin outlook. Shares of INTC are flat to positive in morning trading.
Shares ofTexas Instruments TXN -1.24% and other chipmakers fell sharply on Wednesday as Wall Street reacted to downbeat reports from two companies that appear to signal slower-than-anticipated growth in the semiconductor market. Linear Technology LLTC shed 5% in the early going after the maker of analog semiconductors reported weaker-than-expected revenue. ASML Holding which manufactures equipment for making semiconductors, also spooked chip investors by cutting its outlook, suggesting lower demand from chip makers. ASML shares were down more than 5%. The sell-off appeared to hit TI, a major player in the analog chip market, the hardest. TI shares were down more than 2%. Also in the red in the moring were shares of Broadcom Corp.BRCM + , Intel Corp. INTC and Advanced Micro Devices AMD -and SanDisk Corp. SNDK , before rebounding . The Philadelphia Semiconductor Index gave up 1.5%, even as the Nasdaq Composite Index COMP was up.
Canadian gold companies Yamana Gold Inc. and Agnico-Eagle Mines Ltd. said they have reached agreement to buy Osisko Mining Corp. for C$3.9 billion ($3.6 billion), in what could prove be one of the largest mining deals so far this year.The joint offer consists of around C$1 billion in cash, C$2.3 billion worth of Yamana and Agnico-Eagle shares, and the creation of a company, New Osisko, with an implied value of about C$575 million, the companies said.The offer represents an 11% premium to a rival, hostile bid for Osisko from mining giant Goldcorp Inc.Following the completion of the transaction, Osisko shareholders would own about 14% of Yamana and around 17% of Agnico-Eagle, the companies said.The deal would give Yamana and Agnico-Eagle control of Osisko’s flagship Canadian Malartic gold mine in northern Quebec. Investors will receive shares in New Osisko, which will hold a small portfolio of Osisko’s assets and liabilities.
Yellen was giving her speech as talking up the USE as this report went to print. Gold always gets hammered when the FED , FOMC chair person speaks. It’s like an occult ritual with these satanic and perverse market riggers. Really its beyond shameless into the area of criminality. Yellen belongs behind bars along with her algorithmic husband for ‘rigging’ markets along with Dudley, Bernanke and Sir Alan Greenspan. The FED deserves no impunity and has none from a moral perspective. Everything they do benefits the FED and the Federal/Pentagon govt at the expense of the working class. Here is what the evil Zionist troll had to say today.
The Federal Reserve will likely not begin raising interest rates until the second half of 2015 as it waits for confirmation that its forecasts for stronger U.S. economic growth bear out, Atlanta Fed President Dennis Lockhart said.“My base case outlook is that we will see growth reconverge at around 3%,” Mr. Lockhart told reporters during a press briefing. “On the basis of that forecast, with its implications for inflation and continuing progress in terms of employment,” he said, the Fed would begin raising interest rates, which have been at effectively zero since Dec. 2008, in the “latter half of 2015.” Separately, resident FED Hawk Fisher said he was ‘comfortable’ with lowflation (low on paper, 5 % in reality).
Credit Suisse sees Q1 profit lower due to weak investment banking, private banking/wealth management saw improvement. CSGN.CH: Reports Q1 Net profit CHF859M v CHF1.16Be, Pretax profit CHF1.4B v CHF1.63Be, Rev CHF6.47B (core) v CHF6.83Be . Russia Foreign Min Lavrov said he is still planning to attend Geneva talks tomorrow despite recent escalation in Ukraine situation UK’s Tesco saw its FY13 statutory profit decline, Rev ex-VAT slightly higher y/y to £63.6B. UK LFL ex fuel/VAT -1.4%. Retailer Burberry, reports H2 Rev £1.30B v £1.29Be; SSS +12% (in line with their expectations). Like most other companies expects a material negative currency impact. France’s Danone had Q1 Rev slower than expectations at €5.06B v €5.15Be. LFL organic growth was in line +2.2%, and had a nearly 9% negative impact from currency.
EU Military chiefs have said the Ukraine crisis is a “wake-up call” for EU countries’ defense spending, as the US backed Ukraine’s use of violence in eastern regions against dissidents and protesters.EU countries are to expand their Russia and Ukraine blacklists and to send a small team of security experts to Kiev.The decision, by foreign ministers in Luxembourg on Monday (14 April), came after pro-Russian separatists seized local government buildings, erected barricades in nine cities in east and south Ukraine in recent days.US and EU diplomats had previously said the heavily-armed separatists are Russian forces in disguise something Russia has denied. The EU’s Luxembourg communique was less black and white, referring instead to “actions undertaken by armed individuals”, after Finland vetoed a reference to Russia’s responsibility. Russian reports of course have the CIA Brennan meeting with the Coup Regime and reliable reports of an entire floor of the Kiev govt given to military special ops people from the USA to wage war, illegal in Eastern Ukraine.
Polish FM Radek Sikroski said the additional sanctions move would cover “entities” – Russian firms – while Ireland’s Eamon Gilmore said it would cover extra “individuals as well as entities”.The ministers agreed to add four names to another blacklist of 18 Ukrainian officials. But this move is designed to help Ukraine claw back stolen state funds rather than to hold back Russia.
Escalating violence in Eastern Ukraine could be a blow to Russia’s economy, with 0 percent growth a possibility according to the Russian Finance Minister Anton Siluanov.The economy of Crimea could expand by 6-7 percent annually through 2017, says Russia’s business advocate Boris Titov. Most of the growth is expected to come from tourism, agriculture and manufacturing.
Meanwhile, ministers gave partial support to a joint British-Polish-Swedish proposal to send an EU police-training mission to Ukraine.Sikorski said the mission “got the green light” and “will go in June”. But the Luxembourg communique referred only to sending a small team of EU diplomats to Kiev in the next few days to prepare for “a possible … mission, with a view to a decision on further EU action at its next meeting”.Ireland’s Gilmore added the mission will only be deployed “if it becomes necessary”.
Looking ahead to a high-level meeting in Geneva on Thursday, the ministers also tasked EU foreign affairs chief Catherine Ashton with delivering a far-reaching set of demands to Russian foreign minister Sergei Lavrov.Ashton is to urge Russia to: “repudiate” the actions of the Ukraine separatists; voice “strong support” for Ukraine’s territorial integrity; “call back its troops” from the Ukrainian border; and “immediately withdraw the mandate” of the Russian senate for a broader Ukraine invasion.
The ministers noted the European Commission has almost completed work on what the EU calls “tier three” sanctions – measures designed to hurt the Russian energy, financial, and arms sectors.French FM Laurent Fabius said EU leaders might call a summit next week to implement the measures if the Geneva talks fail.Britain’s William Hague indicated the EU is still undecided on what would trigger the step. “The situation can develop in many ways, so it [the trigger] is not laid down in any more detailed way,” he told press.He added that it is “very hard to believe” that Russia will come round to the EU’s demands in Geneva given its recent actions.The White House said: “The President emphasized that all irregular forces in the country need to lay down their arms, and he urged President Putin to use his influence with these armed, pro-Russian groups to convince them to depart the buildings they have seized.”But the Kremlin noted in its statement on the call that the new wave of violence is “the result of the Kiev authorities’ unwillingness and inability to take into account the interests of the Russian and Russian-speaking population”.He met the same day in Moscow with Sergei Aksyonov who led the separatist movement in Crimea prior to its annexation by Russia – to formally appoint him as “acting governor” of the territory.
Ukrainian soldiers have retaken an airbase in the Eastern city of Kramatorsk, following the opening of what the Ukrainian government describes as ‘counter-terrorism’ operations against pro-Russian protesters in Eastern Ukraine. Reports have varied from no deaths, with several severely wounded to 4 deaths to 11 deaths.
NATO Secretary General Anders Fogh Rasmussen said yesterday, “Russia should stop being part of the problem and start being part of the solution.” UK Foreign Secretary William Hague has claimed that Russia has “violated the fundamental principles of sovereignty, territorial integrity and the right of every democratic country to choose its own future. If we do not defend those principles in Ukraine, including over Crimea, they will be threatened elsewhere in Europe and around the world.” This is sheer and satanic hypocrisy as the UK/US funded the overthrow of the legitimate govt through violence, and this present govt is not elected.
Russian President Vladimir Putin has told UN Secretary General Ban Ki-Moon in a phone call that “the Russian side expects a clear condemnation from the UN and the international community of these anti-constitutional actions” in Ukraine. Russian Prime Minister Dmitry Medvedev said, “Blood has once again been spilt in Ukraine. The country is on the brink of civil war.”
Separately, FAZ reports that, according to a new Allensbach poll, only 15% of Germans believe that Russian-German relations are in good order compared with 76% who believe that they are damaged. A separate article in the paper reports that RWE yesterday became the first European energy company to deliver gas to Ukraine, after Moscow increased gas charges by 80%.
Cyprus Foreign Minister Ioannis Kasoulides told a German newspaper Wednesday that economic sanctions against Russia by Europe would destroy the Cypriot economy, adding that every EU state should decide separately whether they want to cut ties with Moscow.
The European Parliament yesterday gave the green light to a number of key measures needed to set up a banking union in the eurozone. MEPs approved the Single Resolution Mechanism (SRM) for eurozone banks, new EU-wide rules for the winding down of failed banks – the Bank Recovery and Resolution Directive – and upgraded rules to protect deposits up to €100,000. The rules now need final approval from EU finance ministers.
According to a new OpinionWay/Le Figaro poll, French President François Hollande would not make it to the second round of a presidential election if the vote took place now. Former President Nicolas Sarkozy would finish ahead in the first round, with 29% of votes, followed by Front National leader Marine Le Pen on 25%.
NRC Handelsblad reports that the Dutch Senate yesterday passed legislation that will make it possible for Dutch citizens to trigger a non-binding referendum on the EU Treaties or other EU-related issues, provided that at least 300,000 signatures are collected.
The Portuguese government said yesterday it will cut spending and continue to lower the number of public sector workers to meet its deficit targets. The government’s estimate of the required spending cuts has fallen from more than €2bn to €1.4bn.
A study by Spain’s second biggest bank BBVA says unemployment will take over a decade to recover to pre-crisis levels, as workers in the country earn 20 – 40 percent less than those in leading European countries.
MEPs yesterday approved the upgraded Markets in Financial Instruments Directive (MiFID II), which will introduce stricter rules on the trading of financial instruments. The new Directive needs formal approval from EU member states, and is scheduled to come into force in 2016.
The National Bank of Ukraine dropped its currency’s de facto peg to the dollar in February. It no longer throws its depleted reserves at trying to support the hryvnia. But it clearly hasn’t given up on the beaten and bruised currency entirely.In a statement on its website Tuesday, the day after a particularly ugly slide in the hryvnia prompted it to jack up interest rates by three percentage points, the central bank said it had temporarily barred 14 local banks from the interbank FX market.The decision is aimed at limiting the “destabilizing effect on of the hryvnia exchange rate,” it said, urging banks to “make sound managerial decisions” about how they behave in the market.The barred banks are thought to be small and local. Analysts reckon this is more of a band-aid for the currency than a magic cure-all pill. The market is close to impossible to navigate now anyway.“Given that you’ll find more liquidity in the Sahara, I am not sure the net impact is going to be all that significant,” said Peter Kinsella, a currencies strategist at Commerzbank.“The [central bank] wants to restrict FX deals to only certain banks and therefore get an idea of what the actual FX flows are and to prevent banks from manipulating the exchange rate as a means of showing more weakness than is actually justified,” Mr. Kinsella added.The currency has weakened by around 35% against the dollar since the start of the year after political tensions with Russia resulted in a reluctance by foreigners to invest in the country and an abrupt urge by locals to get out.Forecasting what comes next “is a puzzling exercise,” said a Moscow-based analyst who preferred not to be named, adding that the central bank’s next steps are very hard to predict.For now, greater support is coming from the interest-rate rise, and from signs of forthcoming help from the International Monetary Fund. The dollar rushed as high as 13 against the Ukrainian currency Monday, but it is nowdown at 11.80. That still marks a grim drop for the hryvnia, but accentuating the positive, it’s an improvement.The IMF’s executive board should approve a bailout program for the country by early May, as IMF Managing Director Christine Lagarde said on April 10.
After a slight slowdown last year, Peru’s economy is rebounding, leading to forecasts that it could be a star performer in Latin America this year. Peru’s government said Tuesday that gross domestic product expanded 5.72% in February, led by strong gains in mining, fishing, banking, and construction.
“We find that the New Zealand dollar can help predict sheep prices, the Australian and Canadian dollar can predict coking coal, while the Canadian dollar also has predictive power over the Bank of Canada metals index.” -Deutsche Bank strategists http://on.wsj.com/P37Qan
Argentine inflation eased last month as the surge in consumer prices following January’s currency devaluation appeared to have run its course toward the end of the first quarter. http://on.wsj.com/P4NHk9
There’s a debate heating up at the European Central Bank, writes Mohamed El-Erian in a Bloomberg View column: “Whether the bank should engage in its own version of quantitative easing, the extraordinary bond-buying that central banks in the U.S. and U.K. have employed in their efforts to boost growth and avoid crippling deflation. Although consensus is shifting in favor of the ECB making such additional policy moves within a few weeks, it’s unclear whether they will be fully effective.”http://www.bloombergview.com/articles/2014-04-15/what-draghi-can-t-promise
Empty seats on the Fed’s board of governors pose a constitutional crisis because they potentially give regional bank presidents a policymaking majority, writes Peter Conti-Brown in Politico Magazine. “The Reserve Banks’ representatives can now, if they act in concert, take control of the nation’s monetary policy. The public has no say on their appointment. Neither does the president. Nor the Senate.” http://www.politico.com/magazine/story/2014/04/federal-reserve-constitutional-crisis-105663.html
As far as the rest of the trading day we have
11:30 (US) Fed’s Lockhart gives closing remarks on Financial Markets
12:15 (US) Fed’s Yellen speaks to Economic Club of New York
13:25 (US) Fed’s Fisher speaks on the Economy in Austin, Texas
14:00 (US) Fed Beige Book
20:30 (JP) BOJ Gov Kuroda speaks at Branch Managers’ Meeting
(US) Mar Housing Starts: 946K v 970Ke; Building Permits: 990K v 1.010Me
(US) Mar Industrial Production M/M: 0.7% v 0.5%e; Capacity Utilization: 79.2% v 78.7%e; Manufacturing Production: 0.5% v 0.6%e
(US) DOE Crude: +10M v +1.5Me; Gasoline: -155M v -1.5Me; Distillate: -1.3M v 0Me
(CA) Bank of Canada (BOC) left Interest Rates unchanged at 1.00%, as expected
(CA) Canada Feb Int’l Securities Transactions: C$6.1B v C$3.0Be
(BR) Brazil Apr Prelim IGP-M Inflation (2nd Preview): 0.8% v 0.8%e
(ZA) South Africa Feb Retail Sales M/M: -0.2% v -0.5%e; Y/Y: 2.2% v 3.8%e
(BR) Brazil Feb Economic Activity Index M/M: 0.2% v 0.3%e; Y/Y: 4.0% v 3.9%e
(PL) Poland Mar CPI Core M/M: 0.3% v 0.3%e; Y/Y: 1.1% v 1.0%e
(PL) Poland Mar Average Gross Wages M/M: 4.2% v 3.2%e; Y/Y: 4.8% v 3.9%e
(PL) Poland Mar Employment M/M: 0.1% v 0.1%e; Y/Y: 0.5% v 0.4%e
(JP) Japan Feb Final Industrial Production M/M: -2.3% v -2.3% prelim; Y/Y: 7.0% v 6.9% prelim; Capacity Utilization M/M: -2.6% v 5.9% prelim
(CZ) Czech Mar PPI Industrial M/M: -0.2% v 0.0%e; Y/Y: -0.8% v -0.6%e
(CZ) Czech Feb Export Price Index Y/Y: 4.4% v 4.7% prior; Import Price Index Y/Y: 2.9% v 2.9% prior
(AT) Austria Mar CPI M/M: 0.9% v 0.2% prior; Y/Y: 1.6% v 1.5% prior
(EU) ECB €0.0M borrowed in overnight loan facility vs. €0.0M prior; €24.9B parked in deposit facility vs. €21.5B prior -
(EU) ECB calls for bids in 7-day USD Liquidity Tender (Note: it has been 29 weeks without an allotment (last was back on Sept 18th)
(NO) Norway Mar Trade Balance (NOK): 31.4B v 33.1B prior
(IT) Italy Feb Total Trade Balance: €2.6B v €2.5Be; Trade Balance EU: €1.3B v €1.3B prior
(EU) Euro Zone Feb Current Account (Seasonally Adj): €21.9B v €25.3B prior; Current Account NSA (unadj): €13.9B v €6.4B prior
(ES) Spain Feb Trade Balance: -€1.6B v -€2.8B prior
(UK) Mar Jobless Claims Change: -30.4K (17 straight month of improvement) v -30.0Ke; Claimant Count Rate: 3.4% v 3.4%e; (lowest since Jan 2009)
(UK) Feb Average Weekly Earnings 3M/Y: 1.7% v 1.8%e; Weekly Earnings ex bonus 3M/Y: 1.4% v 1.7%e
(UK) Feb ILO Unemployment Rate: 6.9% v 7.1%e; Employment Change 3M/3M: +239K v +90Ke prior
(EU) Euro Zone Mar CPI M/M: 0.9% v 1.0%e; Y/Y: 0.5% (lowest since Nov 2009 v 0.5%e; CPI Core Y/Y: 0.7% v 0.8%e
(CH) Swiss Apr Credit Suisse ZEW Expectations Survey: 7 v 19 prior
(IT) Italy Feb Current Account Balance: +€0.3B v -€1.3B prior
Major Stock Indexes
12:06 PM EDT 4/16/2014
11:55 AM EDT 4/16/2014