The Banking and Strategy Initiative

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The Week Ahead (US Economy & Markets) September 22 – September 26, 2014

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It’s Monday Again! Banks look better off ( for trading pick sell downs?) for no reason, do you think the deal season is tiring out..

Of course you do not, but  mostly the US fixed income markets responded quite sneakily we though to the coming up trade on yields with a dive down to 2.4% levels on the tenyear, before hitting a nervous high at 2.60% last week and continuing on, in which case all these talks of trading prospects improving are pretty much hooey and even the deal market in big pharma with or without tax ‘farming’ is unlikely to carry on as bond investors indeed look happy enough about not being second guessed and get ready to buy the Dollar even as the Europe triple hunt gets into the game after the Scottish no, which means the down trade ont he Euro is a bit stymied but only because Jimmy the Pound is giving it a biot of a leg up, the cross marks ont he Euro- Pound not able to lose that much after getting to the other end of their range and the Euro’s prospects likely to weigh on the further up move of the Pound till this cross reference trade is actually broken down in trade from the looks of it, esp if the desks at London which hold more than a third of the Global Foirex market also continue to look over their shoulder for the eavesdropping regulator and the whistle blower. The Yen in the meantime pretty much closed on the 110 mark and tehre may be readjusting on that mark too, before next month\’s final QE drawdown and the consequent big tradeion the Dollar and the US Treasury long dated bonds as yields move up all of next year.

The Q2 GDP later this week isgoing to be a high 4.6% later this week but one fears for the US housing market after some pretty sad middle of the month story updates but followers are still in fact not ready for much of a sobering up in either the Existing home sales data or the New Home Sales data both reporting in the first half of the week.

The US is also headed for the biggest PMI report in Services this month for August at 61 and markets may well follow the good news ignoring tomorrow’s Chicago leading indicator six pick that might well be like falling nine pins and champions of the Week 3 of the NFL except that none actually expected the Seahawks to comeback and win the Broncos again and that was another big upset in our book along with the Giants making it from a 0-2 board

We are more worried about the Deal pipe line, the one that has kept Investment banks in the green with a $1.5 Bln for each of them int he first half being repeated in the second half too including the positive runs by most in September and a buddingpositive trade in Goldman SAchs is not really as suspect as trading shuts down in Citi and BofA after a big 2013 extended intot he higher reaches with the S&P above 2000 in late August. The coming downtick would also be hard on JP Morgan that has not been able to make any headway int he tough mortgage market without the FHA pieces after its big fines for outgoing AG/AUSA Holder

Alibaba’s deal for Kabam, comes as a not so surprising topping on the deal cake as Jack Ma sells off in the $25 Bln melee for the IPO and 4 weeks to go before the nail down hurts investors as institutional deadlines appear like  clockwork on the IPO’s institutional buyers and current investors who get free with secondary market sales , Alibaba choosing to be the highest at the fag end of a bull market fromt he looks of it, going to $68 on the priced shares and listing at $98

The GBP and the British Economy are putting a good fight too and the coming weeks should see better days for the US, UK and Japoan drowning out the sad trench songs from Europe and Asia taking the lead in growth with investors out for a big summer holiday yet again, and everything’s all right witht he world again ias September draws to a close and Chinese data passes by with the expected worst of it all in the monthly flash data later tonight (just after the Asian markets open tomorrow/before India opens at 10:45 pm ET)

Gold and Oil trades also keep merrily chomping away at their gander in a revival of the revenge trade and the meek may truly inherit the earth as Europe and the middle east slobber away with the US revival holding fort led by its own domestic production of oil. Global commodities including Aluminium and Iron Ore have nowhere to go even as Coffee and Agri commodities keep buyers awake at nighta fter a small window of respite in the post 2012 business cycle ramp up

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This entry was posted on September 22, 2014 by in Uncategorized.

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