The Banking and Strategy Initiative

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It’s Monday Again: Easter Monday Holiday in Europe, April still in a dead heat

Mortgage rates continue falling, with the 30 yr rate under 4.3%, hoping for better first mortgage custom from retail borrowers as US yields return to ultra low and highly unsafe 2.6% levels during a 4 week hiatus for the It’s Monday Report as China data kept getting scarier thru April. Blackrock seems to have done well in its unconstrained funds even as most tried to find bets on rates rising. Current plans for the recovery are yet all on track but while US long term rates were expected to go up to as much as 3.75% in 2014 on the back of the taper, equities after a big comeback week till Good Friday were still at 16,500 and US 10 Y yields reached a low of 2.56% instead mid-week last even as Bank Earnings except the one at JP Morgan strengthened investors for a good rally into the Easter weekend. Kimberley Clark reports another $1.50 quarter later today while United Continental and American put the fighht in the public arena as America starts into its first post merger year with a quarterly report on Thursday

The Flash PMI Reports from China , due on Tuesday have been under 50 for the first three months of the year to 48.1 in March and may be falling still even as China kick started a new $50 bln stimulus for SMEs and the Yuan restarted on currency depreciation to retain the 6.20 mark.

Even as Diageo and Remy nurse a bad mojo in China, US Earnings in Q1 are going from good in Week 1 to much better as investors raise expectations from Netflix and Comcast gets into hectic negotiations with Charter to sell off 3 mln subscribers and keep the Time Warner purchase. GM is investing $3 Bln and more ($12 Bln over 3 years) in China to reduce pressure on its failures at home but the US Auto Sales are likely to continue unabated higher even as Consumers shy away from Credit card purchases which showed up just $2.3 Bln higher in the monthly G.19 Consumer Credit report by the Fed and with Auto loans and Student loan (Transfers to Fed) continuing unabated

In Currencies, The Euro is likely on the cusp of creating that long deflation squeeze with the currency in demand at 1.38 making this month closer to the ECB’s final pre report on a new LTRO type stimulus probably deeper structurally ( maybe one of you can show me how) for which he likely needs two more months even as Japoan bets improve to 110 for the Yen on sustained selling of the idea by Japanese governments and a simultaneous extension of depreciation on the Yuan by the Chinese whose resumption of US bond buying has undoubtedly been behind the ramp back in US treasuries that has been squeezing the US Banks. The Pound continues to make new highs starting from 1.68 on Monday to likely above 1.70 in due course as the UK recovery has side stepped its larger continental neighbours and the plans for a bigger and deeper monetary union with the original Euro 17

The flight to safety and the deepening crises for business in Eastern Ukraine and Crimea continues to make Gold and Oil markets interesting again but my personal recommendation remains that the Black Gold price scare is yet a mirage as Gold already starts moving down after Easter, starting the week at 1280. Head Honcho exits at JP Morgan continue to inspire the Wall Street firm’s followers in the mean time as it navigates a bad stretch after putting the crisis behind it. Goldman Sachs also produced stellar earnings despite the pressure on FICC income with a strong deal pipeline and a large $1.8 Bln score in advisory for the quarter kept its revenues at $9.3 Bln. Asset management revenues stayed above the $1 Bln mark as AUMs started moving up for its fund management business and the firnm remained wedded to achieving the moving targets for Basel 3 capital as it navigates the tortuous details of the Dodd Frank Act regarding PE and proprietary business that impact the firm directly. a 43% cap on Compensation saw expenses decline at the bank yet the stock has already been beaten down to below $160 from where it started the climb back on Thursday post its earnings announcement.

This week’s calendar sees a couple of railroad stocks at the head on Tuesday report earnings for freight business but more importantly the smaller US banks like Regions Financial and Signature Bank continue to build on tremendous lending capacity and more than 2X the Interest margins at the big banks when they report on Tuesday. Amgen also reports on Tuesday even as the Tech will probably get hit by inflated expectations and continue the browbeating that started this month thru Q2. We will also be waiting for Brinker international (US:EAT) report on Wednesday as Boeing and E Trade report on Business gone by and Morningstar and Safeway reports also interesting because of
sectoral growth focus in funds management ( shadow banks get baselised this year) and retail stores

Starbucks and Sun Bancorp report on Thursday while Ford as always follows on some big global reports on Friday including Colgate and Honda. Obamacare hit Aetna and the Big Pharma reports from AbbVie and AstraZeneca also come at the close of the week. AstraZeneca is the target of the recently thinned and cash rich Pfizer who has put another one of the oldest Pharma behemoths into play with a $102 Bln bid this week. We catch up with Big Pharma in two weeks when Pfizer reports (5/5)

Existing and New Home Sales reports come on Tuesday and Wednesday with the US Flash PMI data following the Tuesday night report from China making a perfect segueway after snow laden weakness in Q1 months for a big jump in US industry and retail sale s performance reports by the end of the month and probably higher Gas prices even as the winter closes out well past Groundhog day


This entry was posted on April 21, 2014 by in Amitonomics, Bailout Nation, Banking, Bonds.


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