Chillin' out till it needs to be funded
A bad Thursday and Friday is so easily forgotten that Iraq has just about inched ahead on the post weekend conscious scratching out ahead of the US Open and the Soccer World Cup. Oil’s flare ups are causing a few reset buttons to click on longstanding 2014 are trades, but this will Die sooner than you say Saddam before the middle of the week. Meanwhile the banks have been definitive at the Deutsche Bank and the Morgan Stanley conferences to point out that the deal business and IPOs and stake sales at Facebook, Alibaba and Twitter are unable to hold off the clutches of the Big bad Bear on their incomes for Q2 and 2014 as JP Morgan leads the Big Four is cutting down compensation and taking away jobs especially from Fixed Income desks. That actually means of course that the Banks’ standoff with the Fed on rising interest rates is nearly over and investors (banks) will not fight rising interest rates further, the springcleaning and bonus debates covering the hole in bond portfolios. The Fed would likely not even need to force the case on the street as 10 year yields still near lows look north for the ultimate bond run from 2.6% in yields to an even 3.5% before 2014 is over
The big bad bear in debt thus actually means Wall street will hold for most of the run up in fear indices from a Crude Oil temper and Iraq will likely again not see the Aircraft carriers in action and if it does the markets would absorb the shock ?( esp we expect not south of more than another 500 points from the weekend levels at their worst.
Capital One for a change would probably see more of investors good side as they show off their perfectly balanced portfolio of more than $200 Bln in Credit Card debt, Household debt and the GSE sponsored mortgages (safe business) as they showed perfectly in end 2013 and again post Q1.
Most banks have however caught up on the Fed requirements for Liquidity coverage even as JP Morgan loses market share of the debt trade /Investment Banking business overall to just 15% and Munis become a little more expensive and a little less profitable for the Big Banks but remain in play both GO and Sewer debt ( New Jersey being the last weeks gem)
Mortgage business would likely show up in the negative growth leaders again in Q2 but the industry as such has recovered and the week sees a flurry of Data from th Index on Monday that can finally showcase future sales moving to current business, Housing starts that have remained over a million on Tuesday and the Empire state Index and Philly Fed index continuing a strong performance following the 65 posted on the Chicago PMI at the beginning of June. The FEd will also have some optimism to share and Oil and gold keep inflation hawks a little happy thru the week as CPI data posts another 0.2% figure. Jobless claims may well stay elevated as investors wait out the release of Flash Chinese data next week before taking a call for moves into July. Thus on the whole a lot of nothings to be reiterated by the Fed instead on the bimonthly presser with FOMC forecasts unlikely to move on the short term rates and bonds use the time till the Wednesday meeting to firm up back to 2.7% levels
The faltering European markets may not impact the Dow and more international interest return to the global MNCs from the continent even as US follows the May report with another dull TIC report of foreign buying and selling report for the month. The Dow highs seen this month and the big jump in bonds will likely show up in the next report while the Case Schiller Index and the House price index follow the Existing Home Sales report next Monday. The months trade and inflation data from the Euro zone is also unlikely to affirm anything but the resurgence of the downward trend as Mario’s double down stimulus takes time to get a bite from the tired European whales
Amazon is slotted to launch its new phone to beat the growing iOS menace for the Kindle family of products and will likely be a quickfire sell out in the first few lots but streaming and mobile facebook has already covered the coming years choices for the consumers out there.
The US CAD which tamped down to a marvelous $81 Bln in December is likely to be just north of $90 Bln again and from all counts the Services surplus is again ahead of the curve supported additionally by robust exports int he coming second half of the year allowing business sentiment to move to actual productiona nd inventories . Durable goods orders are due next week,