English: Julian Assange at New Media Days 09 in Copenhagen. (Photo credit: Wikipedia)

The week’s already on with the pre FOMC trades in the Yen keeping it afloat at 94 levels even as the Dollar spiked further. It is a bit unexpected for Dollar to move up before yields start the upward climb again for the Tapering has rounded the bend and facing Global Financial Markets as much or more than the domestic fronts. A busy Tuesday with Housing data releases from May with Housing Starts and Building permits data tomorrow pushes a verdict on to Fed watchers looking for answers to the Tapering calendar while lauding the recovery data along. Mid week, Julian Assange fate will also be known after he completes a year in the Ecuador embassy in London

Last week’s PPI/inflation data was almost encouraging but inventories of crude and Oil could continue higher this week as EIA reported last week at almost 3 B Tons of crude and gas(oline) and retail outlook remain only mildly positive for June. Meanwhile Carney’s Canadian sojourn seems to have left a good appetite in Canadian stocks and bonds.

The US Wealth report showed instead the median of wealth per household falling to 1/6th its levels even as the number crossed into all time highs to ‘complete’ the recovery last week. That means most American households are poorer on the average irregardless of the Economic cycle and the crash as the trend has continued since tax structures changed back in the 80s.

The crisis impact continues to be limited to Americans driving less to work on average and US home prices, though already inviting flippers are much lower than benchmarks shot in China which also reports home prices this week even as FDI continues unabated in China, awaiting it to complete the turn into  domestic consumption led growth Economy.

Last week marked a flight of 54 bln from us Treasuries as Japan exited over $330 Bln in bonds, while Foreign portfolios bought into US worth $12.7 Bln while the selling down of US bonds led $37 b out of the US in purchase of foreign securities. Thursday’s auction yields were 2.21% 10 Y ields have since droped to near 2.1 levels today while European yields were much higher thrugh the week, the Euro instead climbing higher through the week to start today at 1.34 levels.

The landmark annual June meet of Hedgehogs starts today in Monaco, a watershed for the Global shadow banking community, taking a call again on Europe, Japan and perhaps even more of China again.

India trade data in the meantime managed to look even stevens with a $24 B score for Exports despite the continuing contraction in Trade with Europe except Netherlands and the Rupee marked a new range around 58 levels dissuading the Central Bank from further rate cuts as Global Oil prices stabilised around 105 levels for Brent. The Non oil imports stretched the deficit in April May 2013 for a change as oil imports stayed par for the course at around $16 B

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The week’s continuing month long Global FX turn seemed ominous for the big banks, Citi coming under fire from one of the rare remaining bears (analyst Mr Peabody) as Emerging Markets in Asia led a decline to pump the Dollar and Brazil, India and Mexico currencies caused the Tuesday portfolio of the bank to be as much as $8 Billion in the red.

However, if Citi has indeed not sold, Wednesday was a very good comeback for the currencies esp the Indian Rupee and the Brazilian Reais and this may just be hot air with final portfolio losses probably one third of the amount ( One ventures that, and by the end of June, the Dollar would have defeated these machinations if  Oil trends down again ).

Most other financials have pared their losses /exposure in Emerging Market debt and only HSBC will be under fire in the same markets though, it might have been even bearish on some of the currencies mentioned led by the Turkish Lira as strategy foiling EM currencies and global equities unfolded Monday, accelerated by continuing firm calendarising of QE withdrawals (tapering).

On the other side of the argument, as the Euro posts some good recovery data and UK also balances itself in May performance with Carney in the seat, The US might keep liquidity rolling till the original 2015 based solely on the plan for low rates, which banks have advised against indirectly by citing their bad performance in expanding credit and net interest margins. US 10 Y yield has stabilised around 2.17% after a respite because of the especially pessimistic World Bank Report posted yesterday.

Another no holds barred celebration of the recessionary data followed new RBA policy confirmation  of last week as Australian indicators continue to favor serial rate cuts to save consumption and Chinese trade data was subdued

The Euro has to strengthen to targets of 1.35 and even 1.4 later for this year thus limiting dollars upside as the Yen continued a climb back as interest rate management by BOJ Chief Koruda drowned out the shorts and the Yen at 94.3 with the Euro at 1.32 push Dollar down in the direction of gold’s move two months back. Italian ields have firmed to just under 15 in the latest treasury action but to keep things non technical, Consumer inflation reports from the region were unexceptionally optimistic. Employment Data for each European state was also positive thought he Spanish and Euro Club data overall has not changed for the better yet.

The other big bank under fire was Bank of America as its $8.5 B settlement for the Fannie Mae portfolio (Countrywide) still hangs fire in appeals court, BofA Lawyers admitting an increased risk of bankruptcy for the $100Bln plus exposure till the settlement was upheld in Appeals. RBS lost 6% in Morning trading on the FTSE as Stephen Hester was finally forced out of one of two European banks braving regulators with heavy compensation packages. AIG is leading the charge against Countrywide Financial’s in appeals looking to grow the settlement case as BofA seemed to have gotten off too easy and had been ready to pay as much as $50 Bln and will shutdown Countrywide if required as it originally threatened before settlement season.

South East Asia is finally hitting circuit breakers on the verge of a crisis though participation by foreign investors continues to dominate local markets and currencies and local consumption would not be affected by this slide, not only because of Oil but because of healthier local Economies. BI (Indonesia) in the meantime has set in motion a novel attempt to shore up local rupiah through rate hikes, a n examle also used by the Real not so successfully near its Economic lows last year.  Fitch in the meantime upgraded India’s outlook to stable.

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This television commercial, first aired during Super Bowl XVIII, launched the original Macintosh. (Photo credit: Wikipedia)

Business Lyme – Apple Lyme – Lyme of Lymes

Even as Apple considers itself part of a lucky tribe creating investors that bought bonds for pennies in interest and conducted its WWDC safely with Jonathan Ive releasing a new range of Android savvy new OS and new generation iMacs,  iPhones and iPads, one is forced to pen this because one is not sure it would keep its significance except as a ponzi scheme for the sponsoring tribe of investors who were taken for their interest in Apple instead in the six days of trading seen in the debt. As of now I am unable to devote more time to the technological prowess either of Google or Apple and the future of the Cloud and Google and Apple but it seems the tax amendments to bring global cash from US Corps back to the USA is also likely to end up in winded up honors for representation in a gridlocked Congress. As FT Fast reports, Apple cost its sponsor investors $1.5B in 6 days, more than $300 mln in the 3 year issue, and another $300 mln in the 10 year issue as well

Just a note thus to remind my readers and me, that this was an important event in once history Apple’s corporate redux in borrowing at the lowest rate available only to find its just less than $20 bln of bonds raised, trading at much higher yields in the week after, showing again that my colleagues at the big banks are facing more investigations and scars on their body of work are showing too often before Apple ventures with its remaining 5 tranches of debt or that of any other corporate trying to make do with investor hubris at this turnabout in market trend.

Trading Lymes – Economic lymes and Currency lymes

Investors are also looking to define their market exits to get more cash back into their portfolios and probably looking at higher yields for debt investments still in HY(Junk) and investment grade markets as US yields rush to catch back the “significant” return for financial markets including banks which continue to suffer from decreasing NIMs for liquidity reasons despite the rising US yields.

Around the world in other devolutions of investor confidence, Aussie is enjoying its depreciation earlier we hoped ranged to 95 cents but rappelling on after weak housing data. Carney started this week in London as BoE chief, and while market speculation is ramant, he is not looking like a sucker for extra liquidity esp as we think there are no negative edges in that economy right now, the Pound receding from term highs at 1.55. The UK is not printing 100 year bonds at this time and the 10 year bonds stoked up to a 2.365% yield from the 1.7% last time as more wonder about things other than injection of liquidity

India data / rupee

Indian CPI and Industrial production remained uninspiring at 9.1% and 2.4% (should we have just that flip the switch here? only i woud not think 2.4% CPI is any effective growth prospect for producers at all) but the RBI stepped in to ssave the honor of the Rupee from 58.98 at its low, closing around the mean day move for Asian currencies instead at 58.5

Israel data / Dealtax

Israeli Trade Data confirmed a 10% contraction in both exports and imports probably because of business conditions in its neighbours and the Big Brother is watching scheme backfired but not for the Reuters reporter on whom fame has come calling. On the Israel situation, though the CBI said differently, it seems to be start of a big scare as exports make 40% of their GDP and the 9% appreciation in the currency is not helping.

Apparently a yearbook entry for the state of israel is th return of innovation as google bought up Waze and the yearbook entry will note how investors were all overseas and cost the state all excet $55 m in taxes. Go figure. None of the 40% exports to our nowledge include patents or intellectual services though Haifa remains a big iBM center

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Unfortunately, with India inc again adding only probably less than 10% of its External Borrowing Capacity in debt, the Rupee and the equity markets have consequently snagged on the  Asian free fall, and now pro bably rupee has a trading target of 4-5% in this move to achieve the new 2014 equilibrium. While the stabiity is currently lacking it is primarily because for the Rupee it is not a daily volatility that is germaine to the currency markets and the trading range is much smaller than the other asian markets while it is still not picked upa s foil to the ultimate managed currency the Yuan which is a precipitating event of greed in the “Currency Wars” mechanism

Having said that, if one were to herewith propose a new rupee exchange with its limited degrees of freedom, the government cannot and should not bother about stepping in till even 65 levels and find meanwhile a longer run solution to the CAD, while the markets will take the Rupee down to 65 and fundamentally destroy the entropy required for recovery to resume in the aftermath and while it may be a jurassic/triassic notion of yore , destory the eigenvalues of Purchasing power parity much before the global market engagement is  increased   to a true equilibrium.

Mumbo jumbo apart 58.50 should hold because of the stability of governance and the defeat of inflation but if it is whirled through the week, it will tip to 60-61 levels and thence may not ever return to anywhere near Friday exchange levels because the fifth of GDP that is exports will straddle the rupee for the remaining term of FY14 for Global trade agreements for the year

Graph of the Gross Domestic Product GDP (at Purchasing Power Parity-PPP), per capita, as a function of per capita Toes. Year 2004. Data available online at http://www.iea.org (Photo credit: Wikipedia)

On the equities front, today’s event of correlation in moves actually mirrors the hidden correlation in capital moving out primarily from debt and in probably a stabilised form of market prediction from JP Morgan asking that the recovery bottom has not happened and will happen till now. While the RBi therefore is discouraged from rate action next Monday, it has put in motion a cascade of rate cuts which it must follow through and avoid running into damage control esp as Fixed income Markets will continue yielding lower on higher demand despite FIIs leaving Indian debt in the first pike exit of QE linked withdrawal from Asia as the lowest volatile investment and thus unlikely to produce ’abnormal profits equated with Asia’. The PPP map of the world in the meantime as reproduced here from a long left to be updated web provider of images shows the fast losing relevance of this indicator and probaby needs a trading measure to it to harness its gains.

Oilcos were destroyed by nearly 10% and continue to try to close out the move as crude may not continue its decline from 105 downwards desite the main trend continuing so

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Global Village (Photo credit: Bilal //iRza بلال ميرزا)

McDonalds sales in our eyes beat everyone playing hookey at the employment Situation Report quarters, even as the  Fed tried to pull more wool over the recovery’s eyes, calling the return of household wealth to (admittedly) its highest at over $70 T as a complete recovery leaving analysts lingering over the adequacy of 1% inflation or 2% inflation before rognsticating there will be QE by the end of 2013. As of now however, yields are still more than 32% higher from a yeaar ago just on the 10 year bond and the selldown is continuing with ca comfortable cover ratio ofrom the buyers at the smaller auctions by the Fed, showing the fiscal health that could back the bilious scare of backing off the liquidity but one should not forget the Fed will not be disposing off any of the QE securities so they will expire on the Fed account and the inflation at 1% is not encouraging enough to carry. Addedly, as commentators found on Friday, Jobs additions ahead of the marginal addition to employable population did not mean enough was happening to contain the cyclical unemployment though the number of unemployed for more than 27 weeks ( 6 months +1 week) is a 1 Billion or nearly 20% lower at 4.5B

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If you are still looking for Diabetes treatment led moves in the Pharma industry, the revolution has moved on, though Pfizer and Novartis seem not so surprisingly to have missed the bus again. Merck’s (US: MRK) melanoma success rate hit 30% on its anti colon cancer drug that will compete with Bristol myers Squibb’s novolumab, both companies up 4% and 3% in pre open as Markets look to wipe out Frday’s fracas like closing. Pfizer’s (US:PFE) drug Xalkori targets Lung Cancer but seems to have more boutiques coming into orbit directly ahead and is worth just 450 mln to PFE Meanwhile intel is thrashing around with news of a new chip to bring it bak into high tech acceptance range

European ships finally sailed on the high seas again in May with end of month PMI data almost rocketing ( seems like it) to near 47 levels across Spain, Itaaly, France and Germany(49.4) to take the European index to above 48, an improvement that augurs well for the Euro, while Japanese data was sluggish letting Koruda pick up the slack leading yen back to almost below 100 as China offered up another sub 50 PMI ahead of May auto sales data which edmunds informs us looks like Ford has run up another 15% and GM and Chrysler have followed with 5% and more in gains over last May even as imort prices seem to be the only positive inflation reading as global markets ooking at positive European data changed course after open struck London like QE was never sailing again. Low inflation may stagger the fed’s targets for tapering the QE juggernaut sufficiently as a 2% let down in unemployment is still unlikely and looks only half the improvement Fed has promised . Inflation hit a poor 1.2% last week’s reporting leaving a big gap even as the banks’ warnings about the persistent low rates hurting profits and struggling NIMs are unlikely to be shored up by the currently jumping US bond yields, Banks seem to be toke up on assets on the short side and instead of earning from the term structure finally trying to move up their NIMs are likely to continue to get hurt in lending spreads thru 2013 as a corollary to all the capital increases and easy liquidity of the last 4 years Draghi will go ahead with a cut in forecasts later this week

Goldman Sachs did pay a token fine for a trader running amok on the CME last year but other banks seem headed to a great Q2 performance with HAMP reinstated by the US Government for another 18 months till the end of 2013 and evident from the rosy uptick in trading and mortgage lending thru the first two months of the quarter. Maybe consumer credit data later in the month will reflect the truth as the week has more retailers like Dollar General and coffeemaker JW Smuckers reporting the quarter while WALGREENS joins others in giving the current situation updates for Q2.

Ben Bernanke and Janet Yellen did not ruffle many feathers in their speeches on Sunday at Princeton and Shanghai. US will be introucing a liquidity measure later this year even as the TBTF Act gets drowned by the big move by Gang of 8 on immigraton reform this month( look for senator schumer’s pensmanship and more about the South Border with Mexico and Amnesty ). The TBTF Act looks to add a equity only 15% capital limitation for the Big Banks with more than $500 B in assets. Also if Federer does not lose to David Ferrer he may look to one more Grand Slam Final though a resurgent Nadal is likely hitting a snag with in form Djokovic next after Nishikori and Gasquet/Wawrinka. Maria Kirilenko meanwhile is facing Victoria Azarenka another strong ‘newcomer’ in her half of the ladies’ line up

Korea, Turkey, Thailand and Indonesia started the fundamental loop of lacking strength even as the noise around QE remains the important mainstay of market debates as muted inflation means more to add to th bucket of woe as a flash crash awaits on the pr announcement of QE withdrawal before 2013 is over. RBA will follow up with a 25 bp rate cut after one in April to match the momentum from a strengthening dollar even as US and Japan look ahead to a weaker dollar and Yen data with inflaton just 1% in Korea and near zero in Turkey as Turkey fell 8% on ongoing protests against Erdogan’s government in Istanbul’s own Taksim square while China has just about procured its first Dreamliner(787) probably headed to its own research units to explore their next manufacturing unit next

Chrysler reported a 11% jump to 166k units at 8 am, the big three all reporting a jump in polished Trucks for the home and hearth in May again an ISM fr manufacturing looking to reawaken the recovery before rest of the data. US Trade data ater in the week is not expected to be any sunnier having peaked at a ow deficit of $37-38 Bln last few months and stocks seem bound to retreat thru the week fter a big Monday Bang before the good news from the Jobs Friday

God’s recovery is unlikely the story this month but its off its lows

Pfizer (Photo credit: Walt Jabsco)

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English: Scatter graph of the People’s Republic of China’s GDP between years 1952 to 2005, based on publicly available nominal GDP data published by the People’s Republic of China and compiled by Hitotsubashi University (Japan) and confirmed by economic indicator statistics from the World Bank. (Photo credit: Wikipedia)

Though Thursday Morning’s curtain raiser on Q2 GDP performance for the US could dampen the hearts of a few on the street worried by various Fed utterances after Q1 GDP reported a lower 2.4% on the second estimate, the month of May has mainly gone by without accident, Dow closing at 16354 on Thursday and the S&P 500 also quoting  positive territory.

After another round of auctions of Short Treasuries and 5 yr Bonds on Thursday, however, US Bond yields were firm, the 30 year yield at 3.29% and the 10-y yield at 2.12%. Also the Euro had finally come back in the week from 1.28 levels to cross 1.30 yesterday and the Yen seems to have bottomed out after a flurry of JGB buying triggered by Minister Amari and Governor Koruda was stopped by Japanese Financial institutions confirming their stable mood and going lighter on their Japanese bond holdings.

Friday’s inflation data is likely to remind Fed watchers that despite comments from  Rosengren and others, Rosengren’s optimism on inflation remaining below 2% particularly in point, the Fed is unlikely to get its desired 3 month segueway to “Fed Tapering”. To boot, you hav to understand that thru April the Fed Committee was optimistic on US data as the rest of us, only because many had not considered the probability of inflation falling precipitously lower as it did. As retail sales yesterday refused to get closer to a healthy growth more Fed members are likely to realise that Ben Bernanke would also prefer a basic minimum on inflation before starting any action reducing Fed purchases consequently. As is already evident, any such Fed program for withdrawing what it now considers excess liquidity cannot be dictated by market worries over it but also cannot kick off if the inflation falls below its target of 2% by a long way as it is likely to confirm on Friday. The weekend is , a little cynically, already looking good for Asia as the Yen uses this weakness in the Dollar in an already estabished downward trend for its currency, it was able to resume from around 100.7 levels.

Brazil’s troubles with stagflation triggered off extreme measures of austerity yesterday too as growth continues to be tepid in Brazil, Latam and even most of the emerging world in wait of improving trends by the end of 2013. China’s 7% plus growth is enough and Canada and Australia seem to be more at risk of the continuing pressure on growth even as India gets ready to report a likely last muted series of data in Q4  GDP and Banking and Financial services growth emulates the coming uptick in growth as business investment in the Economy is stabilised

Sony is up in morning trades in Tokyo, though Japanese comeback  off Abenomics was conspicuous by its absence in economic data and April data led by inflation spiralled to a further -0.7% after household spending growth was muted at 1.5% and Industrial production barely credible at 1.7% bringing forth fears raised by Koruda on lack of monetary transmission being completed by banks because of low revailing rates, but that edifice again may still give a chance to Abenomics as peremptory JGB buying is outwitted as trade and exports of auto and electronics to neighbour China recover.

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In 1935, Cret designed the Seal of the Board of Governors of the Federal Reserve System. (Photo credit: Wikipedia)

Using a discussion of QE globally to raise the spectre of withdrawal

Let me lead with the worries of stripping of QE liquidity by Ben Bernanke fueled in Asia today by Minister Amari’s remarks in the Abenomics government. Amari did remark on Monday, rather precipitately that he thought the 102 levels quite enough for the Yen to last. Though his remarks were not welcomed and the then sudden rally of the Yen stopped midday after he was suitably disparaged by colleagues. However, BoJ commentary this week cheering on Abenomics was miconstrued with innocent remarks regarding the ultimate exit from QE simultaneously with the US and the central bank buying back 75% of its 30 year bond issue to comeback after Bernanke’s testimony was anyway put to a razor test to discover any hidden bombs leading a global unwinding in equities triggered across Asia and europe. The BoJ in the meantime did unleash critical liquidity immediately on Thursday to quell the noise as yields on the 10 year benchmark used to price retail mortgages climbed from 0.3% last month to 1.0% in morning trades. The global losses are in situ being repaired by a rally in the Dow that started about 90 minutes back. You can probably guess that Economics minister was again taken seriously today when he said he thought the Nikkei had risen too fast, the Nikkei closing down 7% before the rush of bond money restabilised expectations of continued government support

New home Sales in the meantime were all the bull they could muster at 454k and the morning shakedown test that had the Dow starting near the 15180 mark in the first few seconds of trading. However as Oil reaches its low of the day at $92 and seems to have a lot of downtrend in the price readings, China’s manufacturing PMI weakness and worries of an early QE exit are likely to fade before markets close for the week. Though the policy speak and actions (in case of BoJ) have effectively quelled it, there is still a risk to equities off any real recovery esp in the insipid retail sales and consumption data is instead pledged as a threat of a QE exit as in 2010. The commodities cycle’s continuing downward consolidation however makes a sustained recovery more likely and real earnings may beat backt he chances of price cross into an asset bubble except perhaps in a long term lock for euro zone bonds

J P Morgan acting on new gold lows

In a true mark of greatness, JP Morgan is picking up the other side of the gold trades as April and May saw a lot of investors offloading their Gold holdings including investor George Soros

Bernanke’s testimony to the Joint Economic Committee (Chair: Rep Brady, Vice Chair:Amy Klobuchar)

Bernanke’s testimony again though unequivocal had enough direct answers to the Joint Economic Committee’s questions on the ultimate exit from QE to scare global markets and/or confirm the opinion that QE could in fact even be increased till the cyclical unemployment gains of another 2% were achieved by the Fed. Bernanke promised that he would be just starting reducing purchases of Agency MBS the month good economic data was incoming and even suggested rather bluntly in various responses that he had already shown that there was actually no need to ever sell the Fed’s large holdings of Treasury Securities and Agency MBS particularly as they could expire at their own pace and thus reduce the Balance sheet of the Fed at an appropriate pace. Earlier Dudley had reiterated that it needed at least 3-4 months to plan any such unwinding of QE purchases of Agency MBS on Monday. On Tuesday, Bullard had also drowned the spectre of receding QE with the hope of increasing QE being a real option in the light of flailing Economic data. Meanwhile Jack Lew’s statement on the risks to the stability of the Fiscal plan in the oversight council seemed routine and should not raise any new concerns either with their being agreement that enough regulation had been committed on the Banking Industry to take care of the risks

Key concerns raised by Bernanke yesterday that affect the long term US recovery remain centered around issues of structural unemployment with 8 million part time workers also seeking full time employment and the 12 million unemployed including a large amount of those unemployed for more than 6 months who were not being welcomed back by employers. Bernanke also underlined that the interest paid to banks on reserves were required to make tools available for guidance of interest rates to the banking system. Again Bernanke also cited the forward guidance of low interest rates as a key policy feature/tool in light of continuing low interest rates.

Though Bernanke easily met expectations in responses to other members including Ms Sanchez, Toomey and Senator Lee, their comments impressed on the real state of the US economy. The trio added to the Fed’s plate , original economic platitudes critical to any discussion of future outlook showcasing the new highs in real estate prices in California and rents exceeding ownership costs, QE just bringing forward future economic activity than adding new legs ( Toomey) and Senator’s Lee’s insistence on how deleveraging was achieved in a QE liquidity led US recovery

However the improved affordability from the price crash of 2008 still has not removed questions of a sset bubble even at the new low prices which seem to be jumping in an investor led frenzy esp in the West. Existing Home Sales reported ajust a point lower at 4.97 million early in the afternoon

A promise of a better Corporate Q2 despite ‘bouncing’ credit

Ford came back on Monday with good news increasing production in the USA by 200,000 on top of its near capacity 2.8 million production in 2012 entirely in new shifts and reduced downtimes across plants in the midwest from down in Kansas to north in Detroit. Unbelievable but the stodgy yet gleaming F150(Silverado at GM/Chevrolet) is leading growth year/year with a 20% jump in the first four months. Overall Ford sales have jumped 13% till April 2013 with 18% jump in April data itself despite the plateaued consumer credit data

Toll Brothers repeated their results in February with New Home orders up 50% to 1753 and the 30% jump in sales in the quarter bringing value realised up by 57% on price increases of more than $26000 per home. Their outlook for 2013 is up 33% in no of units at 4400(seekingalpha (10Q extract)) near the top end in the tough premium markets, including Washington. The year/year gains in the industry remain around 30% and turnaround time from listing to sale is down from 62 to 46 days even as the proportion of first time buyers hits a three year low at less than a quarter of the buyers(cnbc.com Diana Olick) underlining fears raised the the JEC session yesterday

Meanwhile Target and Lowe led fears over retail coming up stumped this year with earnings falling short of expectations in the May reports itself. Target also reduced its 2013 EPS outlook on Wednesday (Reuters Insider/Bloomberg Tv) as it is about to miss comp sales peg in the coming months too

Saks for sale was more of a boost for the New York Post than for the landmark retailer as networks flagged the potential Goldman Sachs deal for the good times promised before the confusion from Bernanke’s testimony skidded markets and Amari reiterated that with stocks falling so much, Yen would raise an equivalent amount raising the irrational worries of investos the way a politician almost always can and does.

The Yuan’s strength, what mirage of hope is holding that up!!

China PMI flashes marks of a tough changeover for big brother but with growth at 7.7% in Q1, one has to agree there is nothing to stop this machine from toughening up the road for everyone else. Trade refuses to pick up as surpluses continue to dominate China’s monthly trade reports and statistics , however suspect do not seem to be behind the continued exports scores without industrial imports and thus a better economic outlook for Brazil and Aussie among others. While the Aussie has ‘recovered’ weaker 97 level below parity from 1.06 in April, the Yuan is on way to its promised 2-3% appreciation per year at 6.14 to the Dollar

Mitsubishi, now did that ever make cars?

Dan Loeb scores a soft big hug from Sony and the deal perks look increasingly low margin Asia business this week with Sony CEO mustering up the courage to openly acknowledge the plan to sell 20% of product heavy Sony before expecting a reprieve from customers(Reuters Insider) Sony ‘s plan. According to the WSJ, Sony already listed its Bank in 2007 and thus the idea of taking 20% of its entertainment business to IPO could not really be a foreign idea.

More event led transformation could lead deals to Asia heavies as Samsung leads the charts of outperformers alongside Honda and Toyoda and Canon, Mitsubishi and many others search for relevance. Mitsubishi motors in the meantime is reducing Capital to wipe out losses and resume dividends at the end of a 10 year long reorg. The Mitsubishi group is now better known in the US agan in the West for its biggest Japanese Bank – MUFJ that owns Morgan Stanley stock as well. Wild gyrations on the Nikkei were more than matched by Mitsubishi’s jump of 25% in the week folloed bya double digit fall to 162 Yen today

America’s future meanwhile loves new real estate investments with corporate cash even as Apple was pulled up for international tax adventures by the IRS. Lori Lerner in an aside ina business heavy week pleaded the fifth on charges leveled gainst her Cincinnati offices by the IRS and the DoJ. From ring shaped spaceships in California (Apple Campus 2) to 95 ft Spherical biosphere cacti in Seattle are signalling Tech tax tribulations a new cash option?(ft.com: subscription required) lori lerner headed the office for deciding exempt status for voluntary organisations for the last three years Land buys and premier landscaping by Amazon and Apple are however not just requirements of Silicon Valley character or diversification investment but also a contribution to society considered palatable by big American institutional investors in a prelude to the frenzy seen led by ISS against JP Morgan to an equal distraction/nuisance value

Ratings agencies prove their quest for opacity missing the agency MBS market now ready to bite in 5..4..3..2..1?

At least a quarter of the current stock of MBS should be investment grade(Ft.com: subscription required) and that has turned off quite a few bankers as rating agencies follow up on the pre 2007 habit of indiscriminate AAA ticketing of tranches with an equally indiscriminate junk rating of perfectly fine MBS tranches to cover up for lost ground, not that us bankers and traders ever took them seriously to start now

UK survives Q1 growth scare to plunge headlong into Q2 gloom with retail sales negative on Monday..

European PMI reports closed May flash data at around a respectable 47, with France pulling up above 45 but remained in the contraction zone even as retail sales and employment data reported negative growth in UK on Monday but looked pretty scaled up on lower bases in Spain and Italy among others. April’s warning from Germany and weak retail data reported two weeks back set the stage for continuing successful French and italian central bank auctions as Germany enters election mode. The euro club reported double the monthly trade surplus at EUR 26 B in the Current Account yesterday and German Bund yields went up on cue to 1.4% in Wednesday’s 10 Y auction. Dutch data continues to lag the euro club most precipitously and the expected GDP data blues followed true to form with investors letting Spanish yields up to 3% in the corresponding Spanish Central Bank auction within hours of the bund auctions caught up in the day’s flurry of correction trades masking false japanese short exits and the said worries on QE withdrawal

However the Euro is likely to continue to trade up at least till the Sterling finds renewed support from improving data and then on to 1.35 levels and even 1.40 before 2013 is over

The Dollar ready for a slide soon after it is already at 84

Aussie and Canada seem to be the unfortunate ones caught int he global crisis of confidence as resource rich economies whose trade reductions have caused tremendous grief to consumers and the recent currency depreciation is a welcome respite. However with interest rates powering up in the global selldown of US and Japanese government issues should perk up other currencies sooner than later as the longevity of the QE infusion sinks in (pun not intended)

Sucker’s bets, Seeking alpha and the season of transcripts coming to an end

Detroit ready to report a Chapter IX event in 6 months (Reuters insider)

Whats driving dropping euro zone yields and how much is that appetite

Well, as Confucius said and Canton and Malabar/Malacca felt at various points in history, may you live in interesting times ( courtesy Bernstein’s tome on “The Splendid Exchange” and a Coursera.org offering by Prof Jeff Borland on “Generating the wealth of nations”

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- US -

Ford comes back with good news for US economic data with increasing production

From ring shaped spaceships in California (Apple Campus 2) to 95 ft Spherical biosphere cacti in Seattle signalling Tech tax tribulations a new cash option?(ft.com: subscription required)

From minutes to April data signals requiring bigger liquidity boosts for Ben? (Really we listened and did not see the confidence required to get out of QE in the JT ECONOMIC COMMITTEE with Brady and Amy Klobuchar)

Ratings agencies prove their quest for opacity missing the agency MBS market now ready to bite in 5..4..3..2..1?

At least a quarter of the current stock of MBS should be investment grade(Ft.com: subscription required)

UK survives Q1 growth scare to plunge headlong into Q2 gloom with retail sales negative on Monday..

The Dollar ready for a slide soon after it is already at 84

- Global -

Ford comes back with good news for US economic data with increasing production, toll brothers looking at housing demand exploding this year and Saks for sale as Target about to miss sales peg(Reuters Insider/Bloomberg Tv)

Dan loeb scores a soft big hug from Sony and the deal perks look increasingly low margin Asia business

The Yuan’s strength, what mirage of hope is holding that up!! China PMI flashes marks of a tough changeover for big brother

Mitsubishi, now did that ever make cars?

From ring shaped spaceships in California (Apple Campus 2) to 95 ft Spherical biosphere cacti in Seattle signalling Tech tax tribulations a new cash option?(ft.com: subscription required)

From minutes to April data signals requiring bigger liquidity boosts for Ben? (Really we listened and did not see the confidence required to get out of QE in the JT ECONOMIC COMMITTEE with Brady and Amy Klobuchar)

Ratings agencies prove their quest for opacity missing the agency MBS market now ready to bite in 5..4..3..2..1?

At least a quarter of the current stock of MBS should be investment grade(Ft.com: subscription required)

UK survives Q1 growth scare to plunge headlong into Q2 gloom with retail sales negative on Monday..

The Dollar ready for a slide soon after it is already at 84

Sucker’s bets, Seeking alpha and the season of transcripts coming to an end

Detroit ready to report a Chapter IX event in 6 months (Reuters insider)

whats driving dropping euro zone yields and how much is that appetite

JP Morgan is of course sitting pretty on the best outcome of yesterday’s vote with a 68% vote agreeing with Jamie Dimon’s exemplary record and granting him no interruptions from institutional shareholders Blackrock apparently did not vote for the resolution. even thus, Other bank AGMs this week will likely be low key affairs in the fourth estate and for the bank investors with the Q2 pick me up in business frittered away in a slow May, retail sales and inflation in the US crossing into dangerous territory before today’s expert testimonies by Ben Bernanke and Jack Lew. As US Treasuries and 10 Y sell off continues despite China and Japan holding on, the JGB sell off the RBA rate cuts and the weakness in China and trade in Europe ensure that the Euro and the Yuan continue to gain while the Aussie and the Yen could bring back a stronger dollar only if the sell off in those currencies becomes bound again and not a little subdued at 0.98 and 102.7 respectively.

The impact on India – unnecessary though – and imputed by the same banks with big business in Transaction Banking in the Rupee – seems to be a quasi subsidy transaction trying to average back the 2013 rates of the rupee by letting the rupee easily slide in the window before the Dollar weakness comes back and thus the rupee is now smarting towards 56 levels and may likely slide further to 57 before its rise against the dollar thus caps the upside to 54

Being a non free market adjustment trade, the weakness in the rupee obviously has failed to entice the bears and those looking to match the correlation between fx and equities should even ignore this week’s data as equities continue to climb.

Qatar continues to focus on the opportunity tio extend its stakes in larger financial plays globally buying stakes in VTB and Deutsche Bank even if GS commentators’ lack of oratory skill on Indian television could trace back to their losing control in the region’s growth stories. The exit for Goldman Sachs from ICBC would now run into some headwinds as Asia progresses from a story of Frontier markets to a large play for global financials across the trade strories from malaysia, Thailand, Singapore Indonesia, Korea and India, even Turkey and the Middle east growth story where local investment bankers like HSBC and even CIMB hold sway and JPMorgan, Nomura, Goldman Sachs UBS and even Stanchart investments have yielded squat.

Meanwhile midcap traders like Ashwini Gujral and SS (TV18) continue to look for the elusive IT comeback in Infosys or exit Lupin even though the rally in Sun pharma seems to be at an end ( and would seem to be that 5% of market which has completed with honors in the run to 6200 and are twiddling thumbs) before the shift to infracos which offer deep value

Earnings growth in this results season was again led by private banks and Yes Bank and ICICI Bank remain great values. HDFC is a little bit near its edge at 900 with not many FIIs allowed to add tot hat exposure and J&K Bank being in ‘uncharted territory’ I agree is a risky trade though a great fundamental value for an institutional portfolio. The buzz around CAPITAL GOODS makers Crompton Greaves, L&T and BHEL is probably out to emulate that of unethical operators in PSU banks and so should be a big AVOID esp as turnkey project pipelines have been showing the weakness in PMIs and the weakness in Capital Goods trade data wreaking havoc on Japan globally

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