fundselect

Economic data/ Politics may take hard, on balancing Act

Posted on August 14, 2011 by fundselect

F.O.M.C . Rip Off and Inflation the ‘ Buzz ‘ words…

The Bear Squeeze in the US markets, on a very High Note. All other markets, remained in weak note. The disparity may get adjusted Next Week. The Dow’s See-Saw, put all in dizzy. As, S&P and FED pulled there ends, very hard. Narayana Kocherlakota, Minneapolis Fed, issued a statement explaining stance for his Dissent. ( see last post)

Monday : Japan GDP commences next week: The performance Post ~~Fukushima Disaster~~ shall fully Reflect the data and Affect Y/$ trade. Moody’s warning on Japan downgrade shall resurface. Some improvement is expected by market. US Empire Mfg survey will deem things, as Expectation of talks between Sarkozy/Merkel are expected on Tuesday

Tuesday : Merkel-Sarkozy Talks will be watched more than needed. Before that, Euro/Germany GDP YOY( 5.2%) and British C.P.I/Retail prices will hit the markets.The data is looked with lower expectations, may surprise market. US Housing starts/ Industrial production and capacity utilization will be out. Watch the sectoral data here, and particularly Oil-Gas Sector. Home Depot, Wall Mart and Dell report earnings. last 2, may have had good times, in China/ India sales.

Wednesday : The day Bank of England Minutes and employment data will have relevance in view of ‘ London Riots ‘ US Producer Price Index, Ex food & Energy is Base line data used by Bernanke camp for its Policy formulation, is Critical. While, Factory Orders will enlighten the ‘ Slow Recovery’. FED Governor, Fisher speaks, may throw Rip off within FED.

Thursday : Japan’s Trade balance thrust upon YEN equation. FED’s Dudley extrapolate the liberal side. Brits Retail sales is expected to be steady. While, US Consumer Price Index is watched, with Lei & Jobless claims, With Philifed Index portrays the incoming expectations. Housing existing Home sales shall be look out for ‘ Bottoming ‘ Processes in the ‘ Ghost Inventories’ and BoA/Fannie Mae etc. While, 3-6 month Bills & 7 year Bond sales market reaction.

Friday : Here, the China’s Business sentiment shall prelude the day. German Producer
Prices are expected to fall. While, US markets play for options expiry in Commodities. The week-end, if otherwise likely to watch ‘ Jackson Hole ‘

Posted in International Economic events and information | Tagged dollar, Euro, International Data, Japan, US Data, US FED, Yen | Leave a comment

FOMC press release

Posted on August 9, 2011 by fundselect

For immediate release Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Temporary factors, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity. Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions. More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations. To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate. The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action were: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period. 2011 Monetary Policy Releases

Posted in FOMC, Dr Ben Bernanke, US | Tagged FOMC, Press Release | Leave a comment

Sarkozy enjoys Swims, While France Sinks, Others Picnicing

Posted on August 9, 2011 by fundselect

French President Nicolas Sarkozy is by the Mediterranean in his swimming trunks. His prime minister is vacationing in Tuscany. British Chancellor George Osborne is in California, where he rode the Jurassic Park log flume at Universal Studios in Los Angeles. The entire 15-member cabinet of debt-ridden Ireland has left Dublin, though the finance minister is taking calls from his home in Limerick, and the European Union is pretty much shut. Europeans have always treasured their long summer vacations, and that goes for their leaders as well. But some analysts say this has left the continent rudderless just when firm action is needed. “Of course, it sends a terrible signal to the markets when the governments of Europe decamp on their holidays in the middle of a crisis,” said David Marsh, the author of a book titled, “The Euro: The Battle for the New Global Currency.” “It does considerable reputational damage when the situation actually demands decisiveness.” Those government spokesmen who can be reached say none of this makes any difference. Never mind that questions have arisen about the sustainability of debt loads in Italy and Spain – economies much bigger and harder to rescue than those of the euro-using countries that have already been bailed out: Greece, Ireland and Portugal. What with mobile phones and laptops, European leaders can conduct business from anywhere, including, presumably, poolside.

The mantra of the month for European spokespeople is “constant contact,” as in my boss is in constant contact with other European leaders, even though photos have appeared of him riding a bike or climbing a mountain. For example, an official in the office of Austrian Chancellor Werner Feyman – speaking on condition of anonymity in exchange for divulging sensitive information – acknowledged that his boss was on holiday “somewhere in Europe,” though, of course, “constantly on the phone.”

Asked whether Jose Manuel Barroso, president of the European Commission, the EU’s executive arm, was on vacation, spokeswoman Karolina Kottova scrupulously avoided using the V-word in her reply: “The president attends his duties and he is in regular contact with various leaders,” she said. “He is constantly available and is basically working, not in Brussels … ” The issue has gained enough traction among the public – not all of whom can afford trips to Disneyland or the French Riviera – that Britain’s deputy prime minister, Nick Clegg, felt moved to mount a stern defense of government by dispersion. “I reject completely this notion that somehow this government hasn’t been functioning very effectively indeed last week and this week … ,” Clegg said Monday. “We are in constant contact with each other and we are working effectively together as a team this week as we do every week of the year.” British Prime Minister David Cameron had been on vacation in Tuscany, but he hurried back to London on Monday evening -though in response to Britain’s rioting rather than to deal with economic disarray. And if face-to-face meetings don’t add any value, why have them at all?

Normally, the European Union has a bad case of summit-itis, with the 27 national leaders gathering with withering regularity whenever it’s not summer, at some cost to the climate. Finance and other ministers meet together often, as well. Not everyone buys the argument that vacations make no difference in a time of economic peril. In the last few days, markets around the world have been rocked and many experts say the global economy risks falling into a second recession.

Traders are something worse than jittery and, the argument goes, having national governments run on skeleton staffing is doing nothing to calm their nerves.

And some offer no explanation at all. On Sunday, the Belgian finance minister, Didier Reynders, posted a picture on his Facebook page of himself on top of a mountain.

Posted in International Economic events and information, Uncategorized | Tagged Belgium, Britan, ECB, France, French President, Ireland | Leave a comment

Oil demands remains strong, despite slowdown—O.P.E.C. Reports

Posted on August 9, 2011 by fundselect

World demand for oil will grow this year and next despite signs that the tepid international economic recovery is running out steam, OPEC said Tuesday. While revising demand growth slightly downward for both years, OPEC’s monthly forecast predicted that the world’s appetite for crude will show an increase of a daily 1.2 million barrels this year over last year and 1.3 million barrels a day in 2012 compared to this year.

With major consumers like the United States and the European Union facing the prospects of a return to recession, any significant growth in demand will come from other regions, said the Organization of the Petroleum Exporting Countries. “Oil demand in the OECD is expected to continue its contraction after a temporary rebound last year,” said the report, referring to the group of the world’s major industrialized countries.

It said an apparent fall in Chinese oil demand in June – the first in eight months – “also confirms a weakening of manufacturing activities worldwide.” Still, said the report, Chinese demand was expected to show 6.5 percent growth rate for 2011 over last year, and “it is forecast that next year’s oil demand growth will take place in the non-OECD, mainly China, India, the Middle East and Latin America.” For the U.S., the world’s greatest consumer, demand “will remain the wild card for 2012, as it could … be negatively influenced by the country’s economic turbulence, state policies and retail petroleum product prices,” said the report.

But overall, world oil demand – with its forecast daily demand growth of 1.3 million barrels – is expected to average 89.4 million barrels a day next year, said the report. That is a downward revision of only 19 thousand barrels a day from last month’s OPEC forecast.

Oil Supplies :

For this year, the report said that preliminary figures showed global oil supply at 88.33 million barrels a day for last month – an increase of 800,000 barrels a day over June. OPEC members Saudi Arabia, Angola and Kuwait “experienced a considerable increase,” while production fell in Libya,Iran, Nigeria and Iraq.

Posted in OECD, OIL, Oil and Gas indust., | Tagged China, Crude Oil, Europe, India, Inflation, Iran, Libya, OECD, Oil & Gas, OPEC, USA | Leave a comment

US sovereign Downgrade impact : The Thunderstorm

Posted on August 6, 2011 by fundselect

US sovereign Downgrade impact : The Thunderstorm

Standard and Poor’s, along with other rating agencies had kept US’s AAA/ rating on Credit Watch in March and were to review in Mid July. Accordingly, S&P, had expressed ‘Dissatisfaction’ reflecting the U.S. Debt over Extended Debate. The US Law makers failed to plan for the ‘ Debt Reduction’ and/or the method to raise money either through ‘ Increasing Taxation’ Or through ‘Cutting Spending’.

As promised Standard and Poor’s went ahead and downgraded US Sovereign Ratings to AA+.

S&P had discussed about the implication of this Action,

1) We would downgrade the debt of Fannie Mae, Freddie Mac, the ‘AAA’ rated Federal Home Loan Banks, and the ‘AAA’ rated Federal Farm Credit System Banks to correspond with the U.S. sovereign rating.

2) We would also lower the ratings on ‘AAA’ rated U.S. insurance groups, as per our criteria that correlates insurers’ and sovereigns’ ratings.
3) In addition, we would lower the ratings on clearinghouses Fixed Income Clearing Corp., National Securities Clearing Corp., and Options Clearing Corp. as well as on The Depository Trust Co., a CSD.
This reflects our view that their clearing businesses are concentrated in the domestic market and they are correlated with the U.S. economy. We assess the impact of this scenario as moderate for funds and low for all other financial institutions sectors.
4) Impact on Funds:
a) The ratings implications for FCQRs and PSFRs would vary. Would have an impact on funds with exposure to long-term U.S. Treasury and U.S. government securities, but not on funds with short-term investments. For FCQRs, we apply a lower credit score on investments in short-term (365 days or less) U.S. government securities than longer-term investments (more then 365 days). The 73 FCQRs that we placed on CreditWatch negative have significant exposures to U.S. Treasury and U.S. government securities that mature in more than 365 days.
We would downgrade these 73 funds to reflect the lower long-term rating on the U.S.
{ Principal stability funds, on the other hand, seek to maintain stable and accumulating net asset values, and they invest in short-term debt instruments. As long as the short-term U.S. sovereign rating remains at ‘A-1+’, as we outline, we believe that lowering the long-term rating into the ‘AA’ category would not have an impact on the ratings on these funds because the credit quality of the U.S. would still meet the credit quality standards for all PSFR categories. Barring any potential price volatility associated with the lower long-term rating, the short-term rating on the U.S. government remaining at ‘A-1+’ would effectively be business as usual for the money market fund industry }
All other global financial services:
5) We would expect there to be few rating actions (including outlook changes) on specific companies. In most cases, this would reflect that their businesses, operating earnings, and assets are largely U.S. based. In either instance, we don’t expect liquidity to be a critical issue for companies. Furthermore, we do not expect the knock-on effects of the lower U.S. sovereign rating in scenario 2 to lead to additional downgrades immediately in the financial services industry.
6 ) In these scenarios, we would evaluate each company on a case-by-case basis, taking into account macroeconomic conditions and their own financial strength. If we do take rating actions, we could expect to downgrade companies that have a significant U.S. presence, with most of their business and assets in the U.S., or companies in Europe with sizable positive correlations to the U.S. insurance or banking sectors.
7) We would take fewer rating actions, and more slowly, on financial services companies in Asia-Pacific and Latin America–if indeed we took any.

Conclusions : US down grading may Have Massive Loss of Confidence and Confusion. Recently, I posted many views from Alan Greenspan, PIMCO, And Neil Kashkari, all propounded this. I had Predicted this as ‘ Black Swan Event’ which Market Had not Envisaged and Leave Only factored.
1) The Housing Market and Housing Finance in US and Europe shall have Deep Craters.
2) The 401( K) Funds and Other Pension funds, Insurers like AIG, Berkshire, MET, Prudential.
3) The Excessive ‘ Cash Rich ‘ Companies like Apple, Microsoft and Bankers will have Treasury Losses.
4) The ‘ Value Erosion’ might Have Compounding Effects on Commodities, Trading Houses.

Posted in Alan Greenspan, US Economy, ECB, International Economic events and information, US Bonds, US Treasuries, US Economy, US Debt, USA, US Ratings | Leave a comment

Is this a Bear Covering ..?

Posted on August 5, 2011 by fundselect

Well, The Employment Report and upcoming FED meet have put Bears on Part Profit Booking Path.

The Mid day Turn Around was the Out of Books and possibly caught many Napping on the Couches.

The VIX is nudging early 30s and is likely to sustain. The huge Volume generated by Yesterdays fall, shall have resounding effects on the US Markets, in times to come.

Please, be Nimble and Book profits as fast as you make and have Good week End

Posted in Equity | Leave a comment

The Press statement of ECB that spooked the Market Sell off

Posted on August 4, 2011 by fundselect

The Press statement of ECB that spooked the Market Sell off.

Posted in Uncategorized | Leave a comment

The Press statement of ECB that spooked the Market Sell off

Posted on August 4, 2011 by fundselect

Trichet still in a Denial

Jean-Claude Trichet, President of the ECB, Vítor Constâncio, Vice-President of the ECB, Frankfurt am Main, 4 August 2011 Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will report on the outcome of today’s meeting of the Governing Council, which was also attended by Commissioner Rehn. Based on its regular economic and monetary analyses, the Governing Council decided to keep the key ECB interest rates unchanged, following the 25 basis point increase on 7 July 2011. The information that has become available since then confirms our assessment that an adjustment of the accommodative monetary policy stance was warranted in the light of upside risks to price stability. While the monetary analysis indicates that the underlying pace of monetary expansion is still moderate, monetary liquidity remains ample and may facilitate the accommodation of price pressures. As expected, recent economic data indicate a deceleration in the pace of economic growth in the past few months, following the strong growth rate in the first quarter. Continued moderate expansion is expected in the period ahead. However, uncertainty is particularly high. For monetary policy, it is essential that recent price developments do not give rise to broad-based inflationary pressures. Inflation expectations in the euro area must remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. Such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area. At the same time, short-term interest rates remain low and financing conditions are favourable. Thus, our monetary policy stance remains accommodative. We will continue to monitor very closely all developments with respect to upside risks to price stability. Given the renewed tensions in some financial markets in the euro area, the Governing Council today also decided to conduct a liquidity-providing supplementary longer-term refinancing operation (LTRO) with a maturity of approximately six months. The operation will be conducted as a fixed rate tender procedure with full allotment. The rate in this operation will be fixed at the average rate of the main refinancing operations (MROs) over the life of the supplementary LTRO. The operation will be announced on 9 August 2011, with allotment on 10 August 2011 and settlement on 11 August 2011, and will mature on 1 March 2012. The Governing Council also decided to continue conducting its MROs as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the last maintenance period of 2011 on 17 January 2012. This procedure will also remain in use for the Eurosystem’s special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the last quarter of 2011. The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time. Furthermore, the Governing Council has decided to conduct the three-month LTROs to be allotted on 26 October, 30 November and 21 December 2011 as fixed rate tender procedures with full allotment. The rates in these three-month operations will be fixed at the average rate of the MROs over the life of the respective LTRO. Let me now explain our assessment in greater detail, starting with the economic analysis. In the first quarter of 2011 euro area real GDP posted a strong quarter-on-quarter increase of 0.8%. Data and survey releases for the second quarter point towards ongoing real GDP growth, albeit, as expected, at a slower pace. This moderation also reflects the fact that the strong growth in the first quarter was in part due to special factors. The underlying positive momentum of economic growth in the euro area remains in place and continued moderate expansion is expected in the period ahead. Euro area exports should continue to be supported by the ongoing expansion in the world economy. In addition, the present level of consumer and business confidence in the euro area supports private sector domestic demand. However, growth dynamics are currently weakened by a number of factors contributing to uncertainty, and activity is expected to be dampened somewhat by the ongoing process of balance sheet adjustment in various regions and sectors. In the Governing Council’s assessment, the risks to this economic outlook for the euro area remain broadly balanced in an environment of particularly high uncertainty. On the one hand, consumer and business confidence, together with improvements in labour market conditions, could continue to provide support to domestic economic activity. On the other hand, downside risks may have intensified. They relate to the ongoing tensions in some segments of the euro area financial markets as well as to global developments, and the potential for these pressures to spill over into the euro area real economy. Downside risks also relate to further increases in energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. With regard to price developments, euro area annual HICP inflation was 2.5% in July 2011, following 2.7% in June. The relatively high inflation rates seen over the past few months largely reflect higher energy and other commodity prices. Looking ahead, inflation rates are likely to stay clearly above 2% over the coming months. Upward pressure on inflation, mainly from energy and other commodity prices, is also still discernible in the earlier stages of the production process. It remains of paramount importance that the rise in HICP inflation does not translate into second-round effects in price and wage-setting behaviour and lead to broad-based inflationary pressures. Inflation expectations must remain firmly anchored in line with the Governing Council’s aim of maintaining inflation rates below, but close to, 2% over the medium term. Risks to the medium-term outlook for price developments remain on the upside. They relate, in particular, to higher than assumed increases in energy prices. Furthermore, there is a risk of increases in indirect taxes and administered prices that may be greater than currently assumed, owing to the need for fiscal consolidation in the coming years. Finally, upside risks may stem from stronger than expected domestic price pressures in the euro area. Turning to the monetary analysis, the annual growth rate of M3 decreased to 2.1% in June 2011, from 2.5% in May. Looking through the recent monthly volatility, M3 growth has broadly stabilised over recent months, after edging up until the first quarter of 2011. The annual growth rate of loans to the private sector declined to 2.5% in June, from 2.7% in May. Overall, the underlying pace of monetary expansion remains moderate. At the same time, monetary liquidity accumulated prior to the period of financial market tensions continues to be ample, and may facilitate the accommodation of price pressures in the euro area. Looking at M3 components, the annual growth rate of M1 remained unchanged at 1.2%, whereas growth in other short-term deposits declined to 3.7%. The growth differentials continue to reflect in part the gradual increase in the remuneration of short-term time and savings deposits over recent months. At the same time, the still relatively steep yield curve implies a dampening impact on overall M3 growth, as it reduces the attractiveness of monetary assets compared with more highly remunerated longer-term instruments outside M3. However, this impact is likely to be waning. On the counterpart side, the annual growth of loans to non-financial corporations continued to edge up, from 0.9% in May to 1.5% in June, whereas the annual growth of loans to households hovered over recent months around rates of slightly above 3%. The overall size of MFI balance sheets has remained broadly unchanged over recent months. Where it is necessary to provide adequate scope to expand the provision of credit to the private sector, it is essential for banks to retain earnings, to turn to the market to strengthen further their capital bases or to take full advantage of government support measures for recapitalisation. In particular, banks that currently have limited access to market financing urgently need to increase their capital and their efficiency. In this respect, we welcome the EU-wide stress-testing exercise, which was prepared by the European Banking Authority and national supervisors, in close cooperation with the ECB. We also welcome the commitment made by national authorities with regard to the provision of support facilities for banks where private sector means are insufficient. To sum up, based on its regular economic and monetary analyses, the Governing Council decided to keep the key ECB interest rates unchanged, following the 25 basis point increase on 7 July 2011. The information that has become available since then confirms our assessment that an adjustment of the accommodative monetary policy stance was warranted in the light of upside risks to price stability. A cross-check with the signals coming from the monetary analysis indicates that while the underlying pace of monetary expansion is still moderate, monetary liquidity remains ample and may facilitate the accommodation of price pressures. As expected, recent economic data indicate a deceleration in the pace of economic growth in the past few months, following the strong growth rate in the first quarter. Continued moderate expansion is expected in the period ahead. However, uncertainty is particularly high. For monetary policy, it is essential that recent price developments do not give rise to broad-based inflationary pressures. Inflation expectations in the euro area must remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. Such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area. At the same time, short-term interest rates remain low and financing conditions favourable. Thus, our monetary policy stance remains accommodative. We will continue to monitor very closely all developments with respect to upside risks to price stability. Turning to fiscal policies, the Governing Council stresses the need for strict and timely implementation of the IMF/EU adjustment programmes in Greece, Ireland and Portugal. In addition, it underlines the importance of the renewed commitment of all Heads of State or Government of the euro area to adhere strictly to the agreed fiscal targets. For several countries, this requires announcing and implementing additional and more frontloaded fiscal adjustment measures. Those that enjoy better than expected economic and fiscal developments should make full use of this room for manoeuvre for faster deficit and debt reduction. The common aim should be to put public debt ratios and public finances on a sustainable path as soon as possible. As emphasised by the Heads of State or Government of the euro area, the inflexible determination of all euro area countries to fully honour their own individual sovereign signature is a decisive element in ensuring financial stability in the euro area as a whole. The Governing Council also welcomes the renewed commitment of all Member States to improve competitiveness and address macroeconomic imbalances. Indeed, substantial and comprehensive structural reforms need to be implemented in the countries of the euro area in order to increase the flexibility of their economies and their longer-term growth potential. The removal of labour market rigidities and the implementation of measures which enhance wage flexibility, notably the elimination of automatic wage indexation clauses, are of key importance. We are now at your disposal for questions.

Posted in Euro, International Economic events and information | Leave a comment