Chillin' out till it needs to be funded
A hint of QE can do amazing things for market sentiment. A bad jobs report could have indeed been a positive for the markets with QE3 rumors taking over but the long weekend likely blooted that empotion of tradfers out as Hedgefunds that underperformed outnumbered hedgefunds that outperformed yet again in March. Credit Default and Fixed Income funds called the Relative Value arbitrage funds that arbitrage illiquid markets have scored 45% in 2012 to date yet the ones facing off with JP Morgan Treasury ( Bruno Iskil) with Credit Default indices to bet on the segments erstwhile using industry / segment specific CDS spreads have already cornered a few , the JP Morgan Treasury obviously on the right side
hedging trades using Indices while standalone funds fancy themselves as new Leesons without a bank mandate yawning a bigger hole in the financial markets than the first one like Paulson and Bill Gross now busy filing up with new Long positions helter skelter in 2012 even as S&P traces an overall head up in the clouds kind of sentiment without a hope of QE , leading to this morning’s quandary of sentiment.
The Fed also wants the foreclosures to go away from the housing headline number and as rents catch the proverbial fire or the easter egg roll , probably today on Easter Monday, encouraging banks with a CRA credit ( Consumer Reinvestment Act) and stop counting those assets with rental income as sub standard in a note issued after Easter weekend was not allowed a Federal holiday. That could take a lot off pressure of the blanked pockets in Arizona, Nevada and Miami among others as North Dakota rules the statistics on Housing and employment, and energy M&A keep s theUS ticker alive even as Coty could probably look to double its bid for Avon and the BTG Pactual and Facebook festivals get underway for a $15 bln and $10 bln amount respectively in right earnest right about now.
Meanwhile China has coaught the Hollywood bug, if only to cry hoarse about t a 3.6% CPI, regional commentators taking the opportunity to shout for abeyance of rate cuts and RRR cuts in light of the high 3.6% CPI which is still near the all time low of 3.2% reached in May and looks very healthy to me. If PBOC was not given this hint by regional bank economists I believe it would have pushed on with the rate cut but if tbanks think it snot overtly hawkish, it could seem very pliant for the banks that are anyway sitting on having issued RMB 1.5-2 Tln of the Renminbi 8 T target of this year in New/Fresh credit Renminbi issued by banks even as NPLs move up. Meanwhile India is taking longer and longer between cycles to come baclk on top as the investment flavour of the year but is back with a bang as it leads in Services growth for the last 6 months and has already been playing hardball with inflation for a long time with its demand side inelastic to the lower 6% growth number. in a world of globally stacked dominoes India remains the one standing tall for all practical purposes in hail, skeet or rain , while Central bank moves on with tightening bad debt reform, adding Dynamic provisioning norms to Indian banks balance sheet for the first time, that would mean banks decreasing profits by as much as $8 bln when fully implemented at 1% or over of the overall asset portfolio to be provisioned on a rolling basis by banks even as Banks increase credit stock in the Economy by almost $80 bln in one year, to $1 Tln, a huge number in PPP terms.
OUR last week’s US Economy reports:
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