Chillin' out till it needs to be funded
After a great show of fireworks on Friday, US markets continued unfazed on Monday, which we used to grb more shuteye despite parading our report carrying Monday in the title of the report. In Asia, taperin worries and the Euro rate cut caused mixed signals despite the great Dow show in equities as current speculation now includes a reversal of flows from EMs if only because US equities are bullish under Yellen.
The coming Yellen era already sees the post shutdown trade encouraging the continuing rising of longer term US yields to above 2.75% and the Twist trade lives even as banks are compensation for the winding f the roll down the yield trade with higher dividends in Fixed income portfolios and Munis see return of strength as a yield hungry market absorbs the 204k Jos report and uncovering of Sub rime trades at near 20% yields in the US market. Any Taper will be modest but the already started mark up in yields will probably continue till the 3% mark9Fixed Income commentators) , 4% ( which we see as a ceiling for DEveloped world yields and 3% still ths will see that head room and move beyond to 4%) That means the mortgage market will not see rates mroe than 6.5% in any case which is the only pinching number for the Economy ahead
This week sees a lot of Banks speaking in detail about their robust growth models in the post crisis era, with Stanchart worried by Asia directions reducing its growth targets for the Macro and Chase(Gordon Smith) last week showing how it will easily manage double digit growth in retail including Cards. JP Morgan saw a record (almost) 69 branch openings in this quarter alone and in the face of nearly 169 branches shut down by the Bank of America in the year while community banks and private US banks have been showcasing wondeerful results and ramping up on equity not to fill a hole in the portfolio but welcome new business which still looks more than unlikely for European Banks for three mor years as the feverish restructuring and downsizing of levered credit portfolios continues alongwith ramp up in supplementary capital requirements and new Liquidity coverage after the disallowance for inter bank markets. We will be watching the BofA ML conference all week
Starbucks show cased a lot of innovation in earnings in the first week of November ahead of the Holiday season as its food business kicks its long struggle for Op margins in the coffee store business wide open and NFL turns into a more interesting post season than before with Bengals, Broncos and Seattle Seahawks all back after a longish period of silence
Dow continued the session almost flat at near record 15780 levels on Monday as results season has otherwise drawn to the close and Black Friday/Cyber Monday fever is catching in retail after robust inflation and Jobs reports also reconfirmed by the other data series
IBM Boosts the Dow on a Slow Day(fool.com)