Kedwards global n00b macro

Discussion in 'Journals' started by Kedwards, Apr 8, 2010.

  1. following global macro headlines. have a bullish bias on ES, but watching Greek debt/headlines and eur/usd for caution. Looking at earnings next week, hoping for positive guidance and not too much concern for rising energy costs, yet.

    this morning was looking for an es short based on eur/usd p.a., but trichet may have provided us with a eur/usd bottom again with 'default is no concern for greece'. Did the same thing on 3/25, first there was some doubt over his comments on 3/24, then van rampuy had some positive comments, and then trichet reassured on greek debt. eur/usd rallied overnight and it got es moving higher of its range between 1170s-1160s.

    in short, looking for long entry to 1200 ES.

    also looking at short eur/aud for a swing.

    comments welcome. will post often, i'm either in the computer lab at school or on laptop.
  2. Trichet got swag:

    Thursday, April 8, 2010 - 12:23
    ECB Trichet: EU Greece Rescue Plan Remains 'A Good One'

    LONDON (MNI) - European Central Bank President Jean-Claude Trichet reiterated tonight that the EU's rescue plan for Greece remained a good one and lived up to the ECB's 'main message' on the issue.

    Speaking to CNBC TV, Trichet said that the Greek rescue plan lived up to the ECB's message - that it is the responsibility of EMU governments to take charge of the fiscal surveillance of one another's policies.

    "I said that I consider the document which was signed by the 16 heads of state and government in Brussels at the end of last month as very important and meeting our main message and our main message was - you have - according to the treaty the responsibility of surveilling your peers and there was a temptation to forget that and to forget this responsibility which is nothing but recognizing that inside the euro area we share a destiny in common."

    "In that respect, this accord is a good one".

    Trichet reiterated that he saw no default risk for Greece, despite recent trends in market pricing:

    "I would say that it is not at all an issue I would consider having any pertinence," he said.

    The ECB president refused to clarify how the plan would work if Greece were to be obliged to resort to it. The issue of whether governments would provide funding in an emergency to Greece at current market spreads or at a subsidised rate was an issue for EU governments to decide, Trichet said.

    Eur/usd p.a. since this morning seems to confirm his comments, but i'd like to see greek 10-yr tomorrow or a positive comment from papandreou.

    greece 10 yr
  3. greek fin min also has swag:

    Thursday, April 8, 2010 - 10:44
    Greek Fin Min: 1Q 2010 Budget Deficit E4.3B Vs E7.1B In 1Q 09

    BRUSSELS (MNI) - Greece's budget deficit declined by 40% in the first quarter of this year compared with the same period a year ago, Greece's finance minister George Papaconstantinou said on Thursday.

    Greece is grappling to manage an annual budget deficit more than four times the European Union's stipulated 3% limit, and many in the market fear it won't be able to make its repayments and could default on its debts.

    Fresh data announced on the Greek finance ministry website said that the deficit in the first quarter of this year was E4.3 billion, 40% lower than the E7.1 billion deficit recorded in the first quarter of 2009.

    "This 40% decline has been achieved even before the latest additional government measures cutting expenditures and increasing tax revenues have fully taken effect," Greek Finance Minister George Papaconstantinou told the country's parliament, according to a statement on the finance ministry web site.

    "It proves that the government is fully on track to meet the 8.7% of GDP deficit target in 2010 and is successfully implementing the Stability and Growth Programme in order to put the economy on a sustainable path," the finance minister said.

    European Union countries have a pact to limit their budget deficits to 3% of annual GDP. In 2009, Greece's budget deficit was 12.7%, and Papaconstantinou said earlier this week that figure would likely be revised higher but that the revision would be small.

    Eurozone finance ministers struck a deal late March to provide bilateral Eurozone loans and IMF aid to Greece if needed.
  4. Think there's a good window for EUR/AUD to continue its trend.

    Australia Faces ‘Inflationary’ Jobless Rate Earlier (Update1)
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    By Jacob Greber

    April 9 (Bloomberg) -- Australia’s jobs boom may push down the nation’s unemployment rate to a level at which a shortage of skilled workers begins to stoke inflation five years earlier than the government predicted in November.

    The jobless rate has tumbled to 5.3 percent in March from 5.8 percent in October, and is forecast by economists including Craig James at Commonwealth Bank of Australia to slide below 5 percent this year.

    Prime Minister Kevin Rudd’s government forecast five months ago that unemployment would peak at 6.75 percent in the current quarter, before falling to 5 percent in fiscal 2015. That’s the rate that Australia’s Treasury has referred to as the so-called NAIRU, or non-accelerating inflation rate of unemployment, a measure economists use to assess when labor shortages feed wage and inflation pressures.

    “We’re very close to that level of unemployment where inflation accelerates,” said Joshua Williamson, an economist at Citigroup Inc. in Sydney, who predicts the jobless rate will fall to 4.8 percent this year.

    “There’s not a lot of wriggle room left in the economy, and that’s why the central bank will have to raise borrowing costs above a neutral rate toward 6.25 percent by the end of 2011,” he said.

    Mounting evidence that the Australian economy is generating more jobs and growing faster than the government and central bank predicted a year ago is increasing pressure on policy makers led by Governor Glenn Stevens to extend a world-leading series of interest-rate gains.

    ‘Much Lower’

    The Reserve Bank of Australia increased the benchmark overnight cash rate target this week by a quarter percentage point to 4.25 percent, the fifth increase since the start of October when the rate was at a half-century low of 3 percent. By contrast, policy makers in the U.S., Europe and Japan have kept borrowing costs at or close to record lows.

    Australia’s dollar traded near its highest since Jan. 15 against the greenback as the extra yield offered by two-year government debt over similar maturity U.S. Treasuries rose to 398 basis points on April 7, the most since July 2008. The local currency traded at 92.86 U.S. cents as of 10:18 a.m. in Sydney.

    Governor Stevens this week signaled further increases in coming months, citing evidence that unemployment “appears to have peaked at a much lower level than earlier expected.”

    Rate Bets

    Investors are betting there is a 24 percent chance of a quarter-percentage-point increase in the overnight cash rate target to 4.5 percent on May 4, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 11:18 p.m. yesterday. The central bank will increase its benchmark to 5.25 percent by the end of March 2011, according to the median forecast of 18 economists surveyed by Bloomberg News this week.

    The number of people employed gained 19,600 from February, when it fell a revised 4,700, the statistics bureau said in Sydney yesterday, matching the median forecast of 20 economists surveyed by Bloomberg News. Australia’s jobless rate of 5.3 percent is almost half the 9.7 percent rate in the U.S. and 10 percent in the European Union.

    Lower unemployment may help Prime Minister Rudd win an election due to be called within the next 12 months even as interest rates threaten to climb higher.

    Tax Revenue

    The jobs boom may also enable the government to return its budget to surplus sooner than the current forecast of fiscal 2016 amid higher income tax revenue and lower welfare spending.

    “Australia is likely to be in fiscal balance within five years, if not sooner,” said Annette Beacher, an economist at TD Securities Ltd. in Singapore. “If the unemployment rate is 5 percent by June, this provides a substantial ‘automatic stabilizer’ boost to the budget balance.”

    Treasurer Wayne Swan will publish the government’s annual budget on May 11, as well as forecasts for economic growth and unemployment.

    Treasury said in November that the unemployment rate is projected to decline steadily over the period from 2011-12 to 2014-15, reaching the NAIRU of 5 percent in 2014-15, two years earlier than anticipated in the budget published in May 2009.

    In recent months Australia’s central bank policy makers have expressed increased concern that a surge in resources projects such as the A$43 billion ($40 billion) Chevron Corp.- led Gorgon natural gas project in Western Australia may worsen a skills shortage and stoke inflation.

    Mining Industry

    The number of workers in Australia’s mining industry almost doubled to 174,500 in the three months through February from 94,900 in the same period in 2003, according to estimates from the statistics bureau.

    More than A$100 billion of resources projects in Western Australia are likely to generate about 40,000 construction jobs and 12,500 permanent positions, a state government report released last year shows.

    “If we want to have all this mining investment” the “other parts of the economy have to, for the moment, be restrained somehow,” central bank Deputy Governor Ric Battellino said Feb. 24. “There’s only so much activity that can take place.”

    Gross domestic product grew 0.9 percent in the fourth quarter from the previous three months, the most in almost two years, helped by China’s demand for shipments of iron ore and coal, Australia’s biggest exports.

    “A tighter labor market raises the odds of catch-up wage increases,” said Kieran Davies, a senior economist at Royal Bank of Scotland Group Plc in Sydney. “This suggests inflation should accelerate next year, and which is why the Reserve Bank will move beyond neutral to tight policy in 2011.”
  5. EUR/USD still higher confirming trichet, asia/europe strong overnight. Greek 10 yr narrowed ever so slightly. Seems like greenlight long just like 3/25. But sort of cautious on ES as to AA earnings Monday, they missed eps on 1/12 and market was mixed.


    -Greece may need to seek emergency aid from the International Monetary Fund within days as a surge in financing costs makes funding its budget deficit unsustainable, UBS AG economists said.

    “The recent market action means that an external intervention may be unavoidable and could happen very soon as the situation is untenable,” UBS economists including Stephane Deo wrote in a note to investors late yesterday. “We think an intervention over the weekend is a distinct possibility.”

    -“Equity markets continue to do well despite the concerns with regard to Greece, so they seem to expect the issue will be solved,” said Guy Verberne, Amsterdam-based Head of Investment Strategy at Fortis Bank Nederland. “How, and with or without the International Monetary Fund, doesn’t really matter. Except for Greece, things are looking quite positive. I see room for equities to rise a bit further.”

    -Greek Finance Minister George Papaconstantinou said today he’s still not planning to seek emergency financing from European Union allies. The spread on Greek 10-year debt narrowed to 409 basis points.

    -European Union officials are “ready to act” on financial assistance for Greece, European Commission spokeswoman Amelia Torres said in Brussels. Funds investing in emerging-market stocks attracted the highest inflows in six months in the week ended April 7, garnering $3.27 billion, according to EPFR Global.

    -Yields on Greek two-year notes fell 18 basis points after rising more than 200 basis points in the past three weeks. Greece plans to announce today how much it will sell at an April 13 auction of Treasury bills. National Bank of Greece SA, the nation’s biggest lender, rallied 2.1 percent, snapping a three- day, 17 percent plunge.

    -Billionaire investor George Soros said he doesn’t expect Greece to default on its debt.

    “Greece should not default and there is a solution,” Soros said in an interview with Bloomberg Television today.
  6. Greece Wins EU45 Billion Aid Pledge to Blunt Crisis (Update1)

    By James G. Neuger and Jonathan Stearns

    April 12 (Bloomberg) -- European governments offered debt- plagued Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates in a bid to stem its fiscal crisis and restore confidence in the euro.

    Forced into action by a surge in Greek borrowing costs to an 11-year high, euro-region finance ministers said yesterday they would offer as much as 30 billion euros in three-year loans in 2010 at around 5 percent. That’s less than the current three- year Greek bond yield of 6.98 percent. Another 15 billion euros would come from the International Monetary Fund.

    “This is a huge amount,” said Stephen Jen, managing director at BlueGold Capital Management LLP in London and a former IMF economist. “This is more than a bazooka. They have gone nuclear on the issue of Greece. In the short run the market is short Greek assets so we’ll get a rally in those.”

    With the euro facing the stiffest test since its debut in 1999, the 16-nation bloc maneuvered around rules barring the bailout of debt-stricken countries, aiming to prevent Greece’s financial plight from spreading and to mute concerns about the currency’s viability. Germany also abandoned an earlier demand that Greece pay market rates.

    No Aid Request

    The euro has dropped 5.7 percent against the dollar this year as the discord within Europe over the response to the Greek crisis sapped faith in Europe’s economic management. The single currency rose 0.9 percent to $1.3617 as of 7:06 a.m. in Tokyo after jumping 1 percent on April 9.

    Bond investors’ response will determine whether Greece needs to tap the aid, a Greek Finance Ministry official said in Athens yesterday. Finance Minister George Papaconstantinou said the government plans to go ahead with debt sales, including a dollar-denominated bond, without taking up the offer for aid.

    The package “sends a clear message that nobody can play with our common currency and our common fate,” Greek Prime Minister George Papandreou told reporters in Larnaca, Cyprus.

    Yesterday’s teleconference of euro-region officials, which included European Central Bank President Jean-Claude Trichet, left open just how much Greece might need in 2011 and 2012, the final years covered by the package.

    “It shows there is money behind this,” Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels yesterday after chairing the conference call. “The initiative for activating the mechanism rests with the Greek government.”

    IMF Loan

    Europe’s contribution would represent about two thirds of any aid, with the IMF chipping in the rest, European Union Economic and Monetary Commissioner Olli Rehn said.

    “We cannot speak on behalf of the IMF, but we know that they are ready to cooperate and contribute with a substantial amount,” Rehn said. Greek, EU and IMF officials will meet today to start working on details.

    The IMF was “ready to join the effort,” Managing Director Dominique Strauss-Kahn said an in e-mailed statement, without giving more details on the IMF contribution.

    European rhetorical support in February and March failed to prevent Greek 10-year bond yields from soaring to 7.51 percent on April 8, according to Bloomberg generic prices, amid concern that Papandreou’s government will be swamped by its bills.

    The jump in Greek yields to the highest since December 1998 helped overcome resistance to an aid package in Germany, which as Europe’s biggest economy would contribute almost a third of the loans, the largest single share.

    Germany Backs Down

    Germany “has lost the competition,” said Carsten Brzeski, an economist at ING Group in Brussels who used to work at the European Commission. “All that fuss and talk about not putting taxpayer money at risk has been made obsolete.”

    The premium investors demand to buy Greek 10-year bonds instead of German bunds jumped to 442 basis points April 8, easing to 398 basis points the next day as speculation over a rescue gained steam.

    In the compromise hammered out yesterday, the European loans would be tied to Euribor and priced above rates charged by the IMF, a nod to German opposition to subsidizing a country that lived beyond its means. The EU will offer a mix of fixed- rate and floating rate loans.

    The IMF would charge less than the EU. Both types of funding would be offered at the same time, Rehn said. Transfers to Greece would be made by the ECB.

    Greece last week raised its estimate of the 2009 deficit from 12.7 percent of gross domestic product to 12.9 percent, the highest in the euro’s history and more than four times the EU’s 3 percent limit.

    Deficit Limits

    While rules dictated by Germany in the 1990s foresee fines for countries that go over the limit, no penalty has ever been imposed. Germany also led the charge to loosen the rules in 2005 after three years of excessive deficits.

    While all euro-region governments vowed to contribute, some would need parliamentary approval. Ireland, itself reeling from the financial crisis, would require “national legislation,” Finance Minister Brian Lenihan said in an e-mailed statement.

    The Greek government has yet to request a European lifeline, confident that this year’s planned budget cut of 4 percentage points will stem speculation that it is heading for the euro region’s first-ever default. Fitch Ratings highlighted that risk by shaving Greece’s debt rating to BBB-, one level above junk, on April 9.

    A combination of higher taxes, lower spending and salary cuts for public workers have prompted strikes and protests against Papandreou, a socialist elected in October on promises of raising wages.

    Maturing Debt

    The EU showed no sign of demanding further Greek austerity measures. Rehn hailed the Greek government for implementing “a very bold and ambitious program.”

    Greece needs to raise 11.6 billion euros by the end of May to cover maturing bonds, and another 20 billion euros by the end of the year to pay debt coupons and finance this year’s deficit.

    The debt agency plans to offer 1.2 billion euros of six- month and one-year notes tomorrow, in a test of investor confidence.

    Greece is likely to need money by the end of April, said Erik Nielsen, London-based chief European economist at Goldman Sachs Group Inc. Noting that the budget cuts threaten to cripple the economy, he said in a research note that “this thing is unlikely to go to bed anytime soon.”