The Banking and Strategy Initiative

Chillin' out till it needs to be funded

It’s Monday Again! Crimea referendum over, Janet Yellen looks to continue the taper? (US Economy & Markets : The Week Ahead March 17 – March 21, 2014) US:AMZN, US:SBUX, US:GS, US:GMCR, US:TWX

What just happened!

A fresh run to safety after a brief respite in late February saw Friday trading in 10 year US treasuries to 2.6% afresh even as Gold also maintained new highs as Crimea’s overwhelming yes vote to return to Russia nails a sensitive situation into the brain buzzards for 2014.

As markets in Europe wait , eagerly negative for the final reaction on Wall Street, Wall Street futures, not trading in India ahead of this week’s Central Bank policy announcements on account of a trading holiday, may well not indicate the mood on the street as Bond sellers hoping to get some kind of yield buying trades failed twice in two months and bond buyers have the day turning all unconstrained strategies to nought and Emerging market runs, still a favorite topic among many as they keep buying US bonds, also turns  anon event with the focus firmly on leaving China alone and moving to India and maybe Mexico in place of markets like Russia, Turkey and Thailand among others.

A new week of reporting

The Treasury Capital report may still not show all these positive flows into US bonds tonight as many buyers returned in March exp from Chinese funds even as Japan took a big bite again to move its currency to more hospitable levels for the home economy Crude Oil spreads are again being squeezed in the post Sunday trade but that might still mean the Brent moving lower further into the week Evenas MLPs struggle with the expected jump trade in January not materialising despite improvementsin gas prices, the new asset class likely to be thrown out there is multi class REITs , in much the same vein as MLPs but focussing on land and building investments Short interest on the S&P (SPY) is down 5% from last reported data on Feb 28. One also expects shorts on BofA (US:BAC ) to have receded since, though the Citi fraud kept bank stocks swaying  thru last week.and XLF shorts had started backing out by Feb 28 as well.

Aviation, Entertainment and Shorting the SPY

Aviation stocks seem to be positively correlated to the markets recovery in 2014 bringing up even as shorts continue with over 5% of the Float in United and 10% of the float in American, stocks at all time highs anot willing to give up gains of almost 50% each in 2014. Shorts in Delta and United had a limited amount of success last week but this week may not be the same *US:AAL, US:UAL US:DAL Delta hopes to triple its Earnings in Q! 2014 when it reports in April while American will continue to report record earnings as a combined airline expecting a $0.29 and a $0.59 respectively as United reports a slightly smaller loss but big enough to scare off more investors this April

Meanwhile CBS is also going strong with a new woman chief at the head of CBS entertainment even as Disney (US:CBS, US:DIS) rues the loss of Anne Sweeney. disney is also keeping most of its gains as shorts never expected disney to go out after a record breaking 2013 performance while CBS has been a busy hunting ground for shorts adding their keen watch to the stock *US:CBS, US:DIS Traders can look at IMAX, Qunar Cayman and Six Flags (US:SIX) as short opportunities with institutions selling out in IMAX (based on short data release)

India and China, Munis and other risk investments

The Chinese Yuan has also definitively turned south, helped by housekeeping measures along expected lines from PBOC and the Euro has kept the Dollar on the leash and may well be turning south from 1.38 ( peaked at 1.39) levels as the Aussie reached for 90 cents in early Asian trading and the Yen confirmed moves to higher levels after a crisis burst on Friday helped it to 101 levels hurting margin traders locked into Yen depreciation trades from 102 but continuing uninterrupted on Monday. As China hopes for more deficits and commodities temporarily turn to precious metals and an almost resurgent Oil trade, the overall markets remain bearish on all commodities led by Copper as agri prices remain firm on the Crimean fallout.

India also moves for a Bank Policy buoyed by a resurgent India stroy of a firm post election government and a WPI rate below 5% at 4.68% for January helped matters as Exports turned south in the last quarter of the FY along expected lines. At this bottom of the business cycle, India will barley get by with a 4% growth but a clean re-denomination of equities repricing survival memes and rejecting traditional economies mark a resilient equities performance in 2014 as the currency remained out of the ambit of bear moves and EEM turned north on fresh inflows while global investments target India apart from US investments getting back into risk markets outside US bonds from its low of 2.6% reached on Friday. Markets like Spain, Korea and Ireland that made a fresh government bond issue at 3% yields remain attractive. Puerto Rico last week converted interest AT THE BOTTOM OF THE CYCLE INTO A HUGE $3 BLN GO FLOTATION and munis remain perky expecting more than $300 Bln in flows despite market saturation predictions at the turn of the year. Monday is alsoa  trading holiday in Mexico

Private Equity in the mean time has also reached fresh record peak of interest with a lot of new exits in the last three years allowing funds to recycle new profits for demanding investors refusing to bring in fresh funds after the break in 2008 followed a flurry of loss making PE deals. The markets also await confirmation of three new Fed Directors as another seat sees the fight cfor a Communit y Banker. after the exitof Sarah Bloom Raskin. Stanley Fischer is likely to be confirmed as Vice Chairman at the Fed along with Lail Brainard and Jerome Powell (re) by the Senate Banking Committee

US Economy & Markets: The week ahead – Housing data, inflation and the Fed Balance Sheet

Mondays’ Housing market Index may set a new bar of low expectations even as the Housing recovery continues on a year to year basis of almost 10% growth till recently especially in prices across 20 City areas spelled by the Case Schiller index. Subdued or recovering the Empire state a nd Phillty indices have stopped interesting investors with frequent fluctuations and a continued weakness in the job markets in the North East even as Housing interest returned with a bang in Boston at the turn of the year in long underground Housing markets as the Southwest and West turned negative after prolonged peaks in Vegas and San Diego among others.

Inflation (CPI) and Housing Starts data follows on Tuesday and the Wednesday FOMC announcement along expected lines with another $10 Bln in taper is immediately preceded by February’s Current Account data as the US even as the nation’s finances continue much improved after control on expenses and unending bickering over the Debt ceiling throwing GOP chances in an election year into some tizzy  even as Democrats continue to score low on all parameters. More tea party this year? It might probably mean no Republican Presidents later even as the Congress has no hopes of exiting a gridlocked state in this election to the house and at least 33 Senate seats

Thursday sees new data from Existing Home Sales and the Monetary flows confirmed in the Treasury balance sheet and M2 growth announcements while Friday may see extra attention on Canadian stores and CPI data as US retail chains look to consolidate the Americas markets and quadruple witching ensures no data releases on the weekend. Target is likely to hurt again in this week’s trades as security systems gave a due hacking alert it ignored in the run up to the largest event of card fraud in November. Starbucks and McDonalds and kohls and GSP are likely to continue the fresh long trade after great results last week , McDonalds buoyed by its international performance again and Starbucks standing out as a best case example for same store sales growth in the Continental United States.  Jobless claims remained low last week, but the snow frontier has not receded yet the mortgage rates are already moving south leaving the recovery as is at expected 3% levels again

Looks like its time to short Gold again ahead of trend investors who follow later in the weak as heartburn over Crimea’s secession subsides

Bank Results Season

Bank trading desks are resigned to losing 40% business again this year with commensurate job losses as banks have more than made up in retail banking and loan yields have started moving up , with mortgage markets also surviving the removal of Federal subsidies and the mortgage market again looking vibrant with an end in sight to the pain over qualified mortgages and the FMIC replacing Fannie and Freddie Mac in a new compromise reached by the Congress and Johnson and Crapo on the new law earlier presented to the Senate Smaller banks remain in demand with a great growth story, many looking extremely well placed to lend anew with more than 12% and even 14% Basel III Capital ratios. European banks continued to shrink with French Socgen selling its recent global expansions to pay the bills, exiting Asian Private banking business with a sale to Singapore headquartered DBS Bank.  Transaction Banking and the Rates and FX business remain strong in Asia this year with punts for and against EMs in Asia and a dominant profit share for Global Corporations from its consumption markets even as most remain under the spell of Chinese Real estate investors in East and South East Asia and European banks also hoping to recover lost ground in retail markets in UK and Europe as signs of positive recovery remain far and few in between in Europe. Foreign Banks have to fight new Capital rules approved by the Fed in the US counting only Capital brought explicitly to the US ( ina separate subsidiary) as the qualification mark for its US assets.

Goldman Sachs and JP Morgan hope to report on course for a $16 and $6 year in earnings respectively parf or the course for Q1 while BofA will report tremendously improved scores if it indeed reports $1.40 in earnings this quarter. Citi will be expected to eat up the $400mln loss reported last week and report close to $1.30 in earnings in Q1 over $1.20 last year. BofA had reported under a $1 in 2013 Q1 while Wells Fargo investors would be looking to the bank to more aggressive buybacks and a promise to make the $1 mark in earnings everytime as it catches up on the more publicly popular peers of the east coast post its continued success nin mortgage banking and a completion of the assimilation of Wachovia into the bank

Chinese data on Housing in terms of the galloping Price index and FDI data for February comes after markets close on Monday . European inflation data for February remained anemic at 0.3%. Chinese investments in Brazil make bulk of the $100 Bln inflows into Brazil twice in blocks of two years . The weekend will see the new Flash data for Chinese Manufacturing for March after quadwitching day

Dow Jones will start the week at 16100 levels and likely keep trying to go north to record highs in 2014 as S&P 500 also remains above 1850. Green Mountain(US:GMCR) enters the main S&P 500 indices on Friday before quadwitching. The last rebalancing in the week ending  December 20 saw Facebook entering the indices. Biogen Idec similarily qualifies to be part of the S&P 100 (US:BIIB) The week sees a bout fof small mid cap IPOs including two new Pharma companies and Paylocity ( Payroll in the cloud) and Q2 Holdings ( Banking in the cloud:: US:QTWO) rushing investors to more digital confidence. Square 1 Financial (US:SQBK) and Opus have also recently filed financial services /banking IPOs. SQBK services Venture Capital teams with commercial banking services. Irvine based Opus (US:OPB) is a regional commercial bank also listing on NASDAQ. Both issues are being run by Sandler O Neil and KBW

Also hot this week ( must know)

I suggest you trade google/ bing search tokens for them ( I prefer in exchange for a …, post that to me and i”ll know better this time)

Facebook is still the champion replacing Google and Microsoft in the post social world soup that will be your tablet and in your ad company’s exclusive social budget while Linkedin takes over the HR budgets Facebook continues to spiral down from its $75 highs already a 10% lower as insiders finally exit.

Chinese IPOs like Alibaba this week and Weibo in May are listing on NASDAQ making it that wobbly time for markets at the top of the hour predicating one factor in bubbles into the market return and economic recovery equation here

Veronica Mars got bludgeoned ( not to be confused with Blodgeted, equally good new word choice) as the actress in a new digital movie production of the TV series from Warner bros themselves that came undone last week. Backers were looking to download the movie ahead of theater release after paying $35 to launch the movie. This apparently comes close on the heels of  after another series that Totalled earlier (In the Loop; Betty Liu) -> US:TWX

Amazon(US:AMZN) in the meantime merrily increased the Prime feature cost by $20 and everyone should be counting how many subscribers ( we expect all, right Lisa Bernhardt?) go back

Comcast has already taken Time Warner Cable from their hands is Warner Bros off too? Comcast paid $45 Bln for US:TWC earlier in those two weeks in February we were snowed in and did not post he weekly or mid week reports

– Someone from the S&P backers US:MHFI is getting listed again

PIMCO is not getting its house in order again as the TRF fund loses investors on US yields responding to the return to safety for investors and Neal’s experiments with equity are still far from delivering results but I won’t give it to Jeff Gundlach yet and 2.6% is the bottom of the yield score, so the sell was right in time Mr Gross.

– The Soccer World Cup ( give me at least 2 different teams a day and the NFL draft , probably the most top heavy ever with Jake Matthews and Johny Football and a dozen other quarterbacks in June and April respectively

– The new F1 races where Nico Rosberg dominated those (other) Germans for Mercedes

Titanfall as Gamestop comes back with CoD interest reviving too making it interesting for EA both ways

Auto sales in the US remaining at the top of the 16 mln mark with negative growth for GM

Alibaba of Yahoo is actually planning to raise $15 Bln and now it makesmore sense why Twitter is ponying up to the Chinese government trying to meet them to liuft the ban on Twitter. Linked in is live in China and did we forget to mention, Facebook paid $15 Bln for Whatsapp in a decided snub to Twitter not Google aas other commentators and Sheryl Sandberg believe

Janet Yellen changing the stated disposition of the Fed increasing the timeline formally thru which interest rates if ever will return to normal evena s a 5% quarter may pass us by without easy inflation going away for bigger dings  ( Squawk Box)

– The NBA Bracket – still a week to go for College brackets and Duke again but Grizzlies, Hawks, Pacers and Heat are all in and the Jazz are not.

Vodafone is buying Ono in Spain ( unlikely) Charter is not completing those two unlikely deals (John Malone) and Softbank is hoping to buy something for Sprint in the US (T Mobile)

– The Surgeon General was not my choice ( Gun Control , NRA and Democrats against Vivek Murthy)

Jeep is hiring in Ohio

– The New McLaren P1 even as Honda bids to come back to fuel efficient racing

– (Bloomberg) Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) would lead a 69 percent increase in dividends and stock buybacks over the next 12 months after the central bank releases results of its annual tests on March 20 and March 26, according to analysts’ estimates compiled by Bloomberg. That’s assuming the companies pass, which some of the analysts say is less than assured. – looks like the paths are cleared all the way i dont see what is making those dozen analysts cagey – Also Bank of New York Mellon (US:BK) ‘s return to dividends seems unlikely but they could have made enough new provisions for that hole in the balance sheet, Bank of America is definitely expected back among the winners

Citigroup’s request may be complicated by a $400 million fraud the bank reported last month after it found falsified documents tied to loans made by its Mexican unit to an oil-services firm, according to Chris Kotowski, an Oppenheimer & Co. analyst in New York. Management can’t say whether the episode would affect the test’s outcome, John McDonald, a Sanford C. Bernstein & Co. analyst, wrote last week after meeting with Chief Financial Officer John Gerspach (Bloomberg)

Clearing Houses face a quick second review from BoE as it tries to come out ahead of the European College of regulators ( FT) in posting agreed global agreements for their streess tests and capital requirements regulations

Caremark (CVS ) turns out to be not the only one banning tobacco sales, but it all depends on how much pressure regulators are allowed to bear on Walmart, Walgreens and Kroger Foods

– Happy St Paddy’s Day and Happy Holi

– IPOs in the London market including Just Eat ( GBP 100 Bln) and that came online last week

Coach results (US:COH) swayed a lot of wallets again blazing a trail of glory in luxe with Kors

Guess who’s buying coffee houses – Prada fought its way in to buy Italian cakehouse Marchesi after LVMH beat it to purchase Cova in Milan (fastFT)

FDIC has filed a suit against 16 (mostly foreign banks) in response to Liborgate passing it by

– If your torrents have delivered , you might have missed out on Netflix losing big to iTunes as it could not afford its subscribers any Oscar nominated movies . According to HuffPo, none of the 2013 or 2014 Best Picture shows are available on the streaming giant even if House of Cards has caught on, a Power struggle for content which no longer has the leadership of Steve Jobs or power for the negotiating Big Studios and Publishing Houses..don’t see anything moving there for at least another Olympics

Quiznos has filed for bankruptcy protection

– Only US $ 60 Bln of Russian money has been pulled out in this run till now. Potentially there is much more and everyone got off  lightly if they did

Goldman Sachs and Visa again lead markets in Morning trades up $3 each


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