The Banking and Strategy Initiative

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The week ahead (December 08-12, 2014) : US Economy & Markets

Connected to Mainland, shanghai-hk ipo blitzkrieg?

Financially connected to Mainland and ready to deliver the Yuan to the world?

It’s Monday Again! Basel gives up on European Banks reform process, and the Dollar rise~! 

If you and I knew any better, we would be more prepared for another edition of the perfect storm, as mechanical and as rabble rousing as the crisis in 2008, and this time as the US finally proved us right ( not wrong again). We (I) promised back in September that the US report was on the cusp of a definite higher rung, and though the optimism dissipated thereabout, it has come to be so indeed with high revisions in data of September, October and the target 320k jobs reached in November, implying that the cut in long term unemployed was real and that there could indeed be a lasting rally in the Dollar, if not real GDP growth beyond 3% , with a 4% Q3 score looking to be matched by a slow Holiday season hit Q4 as well.

In qualitative terms that also means another quick false from the ECRI favorite or any other concoction of leading Economic indicators with the CFNAI (Chicago) also hitting the nadir at 0 again last week and Holiday sales and housing data which is indeed stuck at the bottom of the canyon with just 6% one year growth.

The BIS in the meantime, made up for holding back on European banks with a terse warning to ramp up Capital levels and regulation while the ECB policy date went away without the promised grab for investors allowing the Euro to cool off to 1.21 levels and hopefully down to 1.1 levels though we again think the Bank cabal of IIF , HSBC and others seems to be siding with the hot money packing European economic discipline based frugal economies of Germany into a decade or more of slumber and degrowth with a strong currency economics aka the Yen debacle that allows investors to stay locked into a big source of high safety bonds.

The Euro thus on our radars sliding to 1.10 levels for another burst of more than 0% growth in a couple of years, Oil slipping below sustainable Shale levels from OPEC pressure as the Middle east fights to gain back markets lost to US Oil and Gold sliding below signify another bottom for Global Economics starting back on a strong recovery led by the Dollar, except for markets like Turkey and Thailand, thoroughly int he grasp of Dollar currency Economics and without a domestic basket even the Yen has access to now hitting 120 levels to the Dollar.

The US economy on the other hand, if it manages to keep Job growth at 340k levels (300-340k) can probably find good news in prefect momentum from the initial shouting down of Holiday Sales and is likely to stay above 3-3.5% growth in 2015 but a gridlocked Senate and Congress probably mean bad tidings for Republicans in the coming presidential pig out.

The November budget data comes in on Wednesday after the JOLTsx number confirms the Friday Jobs report with a stronger quits report for October and it will be mundane Jobless Claims data on Thursday and MBA Purchase applications before that on Wednesday. Both refi and Purchase applications scores have perked up considerably though the Purchase market remains in ayear on year negative growth despite lower rates having come around. The Fed Balance sheet also stays stuck north of $4 Tln and the Money Supply data remains a s volatile as always disavowing any sensible analysis – with apologies to Economists who fought for a IS-MS curve replacing the IS-LM divination ( Mankiw/Krugman blogs online)

Consumer credit was up a healthy 5% in October with a 1.25% tick in revolver credit, Auto sales still seem to be on a healthy footing. As we set the tone for a great 2015, College Football sees Buckeyes (Big 10) and Florida State (ACC) making good on their Championship week appointments with Broncos and in two hours Buckeyes get to know if they play in playoffs or go down to the Cotton Bowl fight. OK State’s back in the Big 12 too while Baylor took the Big 12

The coming week will see the S&P 500 hitting overdrive again till Christmas snow blankets New York ( and Boston) again.

disneytheblondesalad hongloon


This entry was posted on December 7, 2014 by in Uncategorized.


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