The Weekend Wrapup 9.10.11

Americas:

• Obama’s first reelection speech failed to impress the markets as the Dow slipped 2.2% from last week while the S&P and the NASDAQ fell 1.7% and 2.4% respectively. Concerns over Europe exacerbated the decline, forcing Bond yields lower (currently at their lowest since God knows when) and pushing the Dollar to a 6-month high. Index futures however point to a worse opening on Monday.

• The US trade deficit surprisingly shrank over 13% with exports currently at record highs. Non-manufacturing ISM numbers also surprised to the upside, great news as far as future growth is concerned and it gives credence to those arguing that the US isn’t in a recession. Whether this will be sustained is the question though.

• Canadian and LatAm indices also took a hit this week, with the Canadian benchmark down 1.7%, the BOVESPA down 1.3%, and Mexico down over 2%. On the rates side, Brazil lead the pack in cutting rates, a surprise move considering inflation figures over there has skyrocketed since 2010. They argued that risks coming from the rest of the world are more important than fighting inflation. This has also been a major concern of the central banks and word is the rest of LatAm might do the same.

Europe:

• European stocks were in the shitter as well with the FTSE down 0.7%, the CAC down 1.5%, and the DAX down 1.22%.

• Catching the world completely off-guard, Greece is reportedly having severe problems meeting its obligations and is now at the precipice of default. Wow, like, who knew this’ll happen? The ECB is currently in disarray after several high-level resignations and despite a landmark ruling from the German Supreme Court to aid the Eurozone, Merkel is already preparing German banks for the worst. Other countries are also working on their Plan B’s right now, so yeah, the shit just might hit the proverbial fan this time.

• The SNB’s bold move to stem the rise of the franc has been quite the success so far. The People’s Bank of China however is highly skeptical of it, comparing it to “quenching thirst by drinking poison.” No real attempts to test the SNB’s resolve can be seen though since the safe haven seekers have all moved to the Skandies. This should be an interesting short in the future given their illiquidity compared to other currencies.

Asia:

• Asian markets ended mixed with the ASX up 0.6%, the Taiex up 0.5%, Shanghai up 0.1%, the Hang Seng up 0.2%, while Singapore and the South Korea ended the week down 0.4% and 1.2% respectively.

• While the majority of their economic figures remain largely unchanged, China seems to have finally quelled the wrath of inflation, now at a 3 month low. While this is a little bearish for the RMB, they also indicated that the Yuan could be completely convertible over the next 4 years, a very bullish sign. Don’t hold your breath though, whether this is just talk or actual policy remains to be seen.

• South East Asian nations were also on a dovish mood this week, with the Philippines, Indonesia, Vietnam, and Malaysia backing off from their typical hawkish stances. Meanwhile, Japan, woefully inept in curtailing the Yen’s rise, has asked the g7 to discuss the problems with their currency. With their continued use of verbal threats to calm the market, this could mean that they’re in a bigger mess than expected. Figures coming out the region haven’t exactly been great so the next g7 meeting should be something to look into.

• Speaking of China and Japan, Fitch has warned that they are ready to downgrade the two giants within the next two years. Deteriorating bank asset quality was cited as the number one reason.

That’s enough for me today, here’s my clips of the week:

Haven’t seen a decent action movie in a while so here’s 3 of the best shootouts I could find.

Enjoy your weekend monkeys.

 

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People like Coldplay and voted for the Nazis, you can't trust people Jeremy

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