A current analyst at Goldman Sachs is suing the company for gender discrimination over pay and promotion, Bloomberg reported Friday. The analyst is Sonia Pereiro-Mendez, an executive director specializing in distressed investments, according to her LinkedIn. In the lawsuit, Pereiro-Mendez claimed that Goldman Sachs denied her bonuses and opportunities because of her first pregnancy. The judge […]
DETROIT (Reuters) – Tesla Motor Inc said on Friday that construction of its giant $5 billion battery plant in Nevada remains on schedule despite a newspaper report saying the electric carmaker’s project was delayed.
EURUSD hovered between the 1.1500 and 1.1200 figures between late January through the end of February as Greece weighed on traders’ minds. Consequently, the average directional index remained below zero during this period indicating an absence of a clear trend. During such periods of consolidation, it can be handy for traders to use the DailyFX Support & Resistance Wizard app to identify levels where price can be expected to bounce or eventually break to transition to a new trend. This resource can also help traders by providing reference points to place stops and limits.
Referring back to EURUSD, the pair broke below Support levels established by the DailyFX Support & Resistance Wizard app despite Greece winning an extension of its bailout program last week. Since then, it has further declined to an eleven-and-a-half year low as the ECB is proceeded with a monthly €60 billion per month stimulus program on March 9th. And, to follow up, US labor data rallied the Dollar on Friday. The US economy added 295K jobs in February versus 235K expected, and the unemployment rate fell to a new 6-1/2 year low 5.5%. This data will likely test the Fed’s time frame for raising interest rates.
Supporters of healthcare reform were breathing a little easier last week after oral arguments at the Supreme Court over the Affordable Care Act.
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This will officially be known as ‘the week before the critical FOMC meeting’.
The fundamental developments due out next week may generate fresh monthly highs in USD/JPY should the data prints put increased pressure on the Bank of Japan (BoJ) to further embark on its easing cycle.
The New Zealand Dollar looks vulnerable to deeper losses as dovish RBNZ rhetoric and firming Fed rate hike bets drive an adverse policy outlook shift.
Gold prices plummeted this week with the precious metal off by more than 3.9% to trade at 1165 ahead of the New York close on Friday.
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Stocks got smoked, the dollar surged, and bond yields hit year-to-date highs after the latest jobs report showed the unemployment rate in February fell to the lowest in nearly seven years. First, the scoreboard: Dow: 17,847.31 -288.41 (-1.59%) S&P 500: 2,072.42 -28.62 (-1.36%) Nasdaq: 4,928.96 -53.85 (-1.08%) And now, the top stories on Friday: The February jobs […]
Fundamental Forecast for Dollar:Neutral
This will officially be known as ‘the week before the critical FOMC meeting’. However, we may not have to wait until the ‘mid-2015’ anticipated hike or even the March 18 central bank meeting that is expected to set the course to a clearer time frame before the market begins the painful process of adjusting to a normalization of monetary policy. For the Dollar’s part, the FX market is far more sensitive to rate forecasts and the currency has shaped a robust eight-month bull trend. As such, the strong rally following this past Friday’s NFPs doesn’t come as a great surprise. Yet, what was remarkable – and possibly a sign of a more systemic financial market shift – was the tumble from US equities. Have we reached that critical tipping point where investors will actually trade complacency and moral hazard for deleveraging and safety? Is ‘fear’ about to take hold?
Looking back to the event risk of the past months, there have been plenty of developments that reinforce expectations for the Federal Reserve to start lifting rates sometime in the second half of this year. The Dollar has readily responded to the growing probability while the broader financial market seems to carry on seemingly oblivious or indifferent. For the currency, even if the timing was seen many months into the future; a virtual global zero interest rate policy (leveraging a ‘Fed vs ECB’ type contrast) and inherent appreciation of yield in valuation has made it more responsive. Alternatively, capital markets have grown accustomed to and even dependent on accommodation.
In the aftermath of the Great Financial Crisis, the Fed and other central banks have slashed rates and flooded the system with stimulus. The original intention may have been to stabilize the financial system and then evolving into a need to support growth. Having maintained the regime this far, there is reason to believe the effort is at least in-part manipulation – either outright to confer a trade advantage (currency war) or unintentionally to avoid a disruptive return to equilibrium. Whatever the intention, the subsequent investing environment is one where volatility has dropped to extreme lows but so too have yields (rates of return). Desperate for return to beat or even match the incredible S&P 500 climb, investors have had to expose themselves to exceptional risk to compensate. The fear that such risk taking could lead to serious losses has been balanced by the ‘reach for yield’ and the expectation that central banks would maintain their support (moral hazard). Yet, at some point, that equilibrium will shift.
Given how deeply engrained expectations for manufactured stability and tepid returns are – six years of steady policy and equity index appreciation will do that – it is difficult to change investors’ priorities from ‘beating the market’ to ‘protecting assets’. A high profile event is an effective means to change the mass’s view though. This past week’s NFPs extended a familiar trend of labor market improvement and the more recent earnings upswing, but it is the timing that may have carried more sway over sentiment this time around. In other words, the S&P 500 (and other ‘risk’ positions) may have tumbled as the rate hike now seems to be only 3 months away. Waiting for the actual hike to reposition is out of the question because ‘others’ would be expected to adjust beforehand. Beating the crowd is now a practice in constantly taking the market’s temperature.
Has the February labor report already set off a cascade in deleveraging or is this just a stumble and a bigger push is needed? It isn’t clear, but the March 18 FOMC meeting – with updated forecasts and carefully constructed language – will weigh on every investors’ mind. For the Dollar’s part, a shift to risk aversion may initially see some losses for the benchmark as it has seen been treated somewhat like a carry currency. However, the deeper the financial retrenching becomes, the more frenzied the demand for the world’s largest reserve currency will become.
Rush to Judgment The moment Russian opposition leader Boris Nemtsov was gunned down last Friday, Western media rushed to judgment. Heck, even friends who should know better rushed to judgment. One friend sent me the New York Times article After Boris Nemtsov’s Assassination, ‘There Are No Longer Any Limits’ along with this comment: “The world […]
WASHINGTON (Reuters) – Fiat Chrysler Automobiles is recalling 702,578 SUVs and minivans to fix defective ignition switches that can unexpectedly turn off the engine, according to documents posted Friday by U.S. safety regulators.
In a research note published on Friday, Credit Suisse reiterated its Outperform rating and price objective of $86 on Schlumberger Limited.(NYSE:SLB) stock saying: “The wild ride continues.” The sell-side firm believes that Schlumberger is the top high-capitalization oilfield services companies (OSF), with a small amount of exposure to onshore the North-America (NAM) business compared to […]
US Food and Drug Administration or FDA, announced Friday the approval for Swiss drug maker Novartis AG’s (NVS: Quote) white blood cell growth hormone Zarxio TM (filgrastim-sndz) as first biosimilar product approved in the U.S. Zarxio is biosimilar to …
Painting by Anthony Freda: www.AnthonyFreda.com
Tufts University’s Director of the Research and Policy Program at the Global Development and Environment Institute (Timothy Wise) points out:
There is no … consensus on the safety of GM food. A peer-reviewed study of the research, from peer-reviewed journals, found that about half of the animal-feeding studies conducted in recent years found cause for concern. The other half didn’t, and as the researchers noted, “most of these studies have been conducted by biotechnology companies responsible of commercializing these GM plants.”
The only consensus that GM food is safe is among industry-funded researchers.
And genetically-engineered meat isn’t even tested for human safety.
And a leading risk expert says that genetically modified foods could wipe out the global ecosystem.
But government agencies like the FDA go to great lengths to cover up the potential health damage from genetically modified foods, and to keep the consumer in the dark about what they’re really eating. (Indeed, the largest German newspaper – Süddeutsche Zeitung – alleges that the U.S. government helped Monsanto ATTACK THE COMPUTERS of activists opposed to genetically modified food.)
Indeed – as Tufts’ Timothy Wise notes – huge sums of money are being poured into shutting down all honest scientific debate about the risks from GMOs:
Biotechnology companies and their powerful advocates, like the Bill and Melinda Gates Foundation, are succeeding in a well-planned campaign to get GM safety declared “settled science.”
An indicator was a quiet announcement in the press last summer that the Gates Foundation had awarded a US$5.6 million grant to Cornell University to “depolarize” the debate over GM foods. That’s their word. The grant founded a new institute, the Cornell Alliance for Science.
“Our goal is to depolarize the GMO debate and engage with potential partners who may share common values around poverty reduction and sustainable agriculture, but may not be well informed about the potential biotechnology has for solving major agricultural challenges,” said project leader Sarah Evanega, senior associate director of International Programs in Cornell’s College of Agriculture and Life Sciences (CALS).
Got it? The Gates Foundation is paying biotech scientists and advocates at Cornell to help them convince the ignorant and brainwashed public, who “may not be well informed,” that they are ignorant and brainwashed.
“Improving agricultural biotechnology communications is a challenge that must be met if innovations developed in public sector institutions like Cornell are ever to reach farmers in their fields,” added Kathryn J. Boor, the Ronald P. Lynch Dean of CALS.
It’s kind of like depolarizing an armed conflict by giving one side more weapons.
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WARNING: SPOILERS. In the third season of “House of Cards,” President Frank Underwood attempts a clever scheme to fund his $500 billion America Works jobs program. Kevin Spacey’s character plans to declare unemployment an emergency and use this as justification for seizing money from the Federal Emergency Management Agency (FEMA)— an agency normally concerned with natural […]
Dalian Iron Ore prices have been cut in half in the last year (which must mean over-supply and not under-demand, right?). Amid China’s growth target cut, Iron Ore prices there have crashed to below $60 – a record low – and that is having dramatic impacts across many regions. As we recently noted, Aussie gold miners are producing desperately to generate cashflow, but despite the booming housing market in some areas, as Reuters reports, the drop in iron ore and coal prices (the nation’s 2 biggest exports) have led former boom towns to bust as “reality comes into the marketplace.”
As bad as it’s ever been… one-third of 2011 peak credit-enthused levels…
Which has led, as Reuters reports, to layoffs and empty streets in Australia’s boom towns…
When Probo Junio got a visa to work in Australia, he thought he had won a ticket to the good life.
In 2013, the 45-year-old boilermaker left his hometown of Cebu in the Philippines, where he was getting paid about $10 a day, to work in Karratha in Western Australia for $30 an hour. Enough to support his relatives and build a new life Down Under.
What Junio didn’t expect was that Australia’s booming resources industry would go bust less than two years later, taking his job, and leaving him just 60 days to find work or go home.
“It’s very difficult because most of the companies don’t want 457 visa holders,” he said, referring to temporary permits for skilled workers.
Across the country, people like Junio are falling victim to downsizing. Jobs, once plentiful and well paid, are scarce. Real estate prices in boom towns are sinking and even the notoriously high coffee prices in mining capital Perth have levelled off at under $4.
Prices of iron ore and coal, the country’s two biggest export earners, have plunged during the last two years amid falling demand from China, in the wake of its economic slowdown.
Just a few years ago, foreign workers were flooding into Australia, lured by huge pay as the resources industry scrambled to fill positions. Truck driving and cooking jobs offering $100,000 a year made headlines abroad.
But those workers, like Junio, are now hard-pressed to find work, especially if they are on temporary visas. Even permanent residents have to take lower pay.
“There is reality coming into the marketplace about salaries,” said John Downing, who runs global resources recruiting firm Downing Teal, adding that salary expectations have fallen 10 percent to 25 percent.
And while real estate booms in some regions, it’s collapsing in the coal country…
“For Lease” signs are everywhere in West Perth, the headquarters of many mining, oil and gas companies.
“You could shoot a cannon down those streets,” said resources analyst Peter Strachan. “There’s nobody there.”
Commercial vacancy rates in the city are near a 20-year high of 15 percent as resources companies downsize or shut down, said Joe Lenzo, of the Property Council of Australia.
The real estate market has also been hit in the coal country of Queensland, across the continent.
We leave it to one old-timer’s hope to conclude:
It may be the worst of times, but old hands expect things will improve.
“Just as a lot of people thought the boom would never end, some people might think the bust will never end,” said recruiter Downing. “We will go through better times.”
* * *
Coming to a Shale region near you soon…
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Fundamental Forecast for the New Zealand Dollar: Neutral
The New Zealand Dollar snapped four consecutive weeks of gains, losing nearly 3 percent against its US counterpart. Selling pressure may continue to swell in the week ahead as a dovish RBNZ monetary policy announcement fuels rate cut speculation even as bets on near-term Fed tightening grow more confident.
The currencywas noticeably stung by January’s about-face in RBNZ rhetoric. The central bank backed away from the hawkish posture on display in December, saying it expected to keep borrowing costs on hold “for some time” and conspicuously noting that future adjustments can take rates “either up or down”.
That seemedto create an opening for the possibility of easing where one was not previously apparent. The Kiwi responded, punctuating two weeks of pre-positioning for a dovish shift with a drop to the lowest level in four years against the greenback. A cautious correction followed, seemingly fueled in equal parts by uncertainty on the US policy front amid disappointing data outcomes and a broader swell in risk appetite.
Sellers returned with a vengeance last week. The RBNZ signaled it is looking for ways to isolate problem areas in the housing market, suggesting it will opt for a surgical approach to cool activity over the blunt instrument of rate hikes. Meanwhile, a strong US payrolls reading fueled a palpable hawkish shift in traders’ Fed rate hike outlook. The report likewise fueled risk aversion, suggesting the prospect of stimulus withdrawal has emerged as a source of worry once again.
The markets don’t expect an outright policy change from the RBNZ. Indeed, priced-in expectations place the probability of a rate cut at a mere 4 percent. Economic news-flow has soured since January’s sit-down however, leaving room for Governor Wheeler to rhetorically build the foundation for a possible downward shift in borrowing costs at subsequent meetings. If that cements probabilities of a cut some time over the next 12 months in the minds of investors, the Kiwi is likely to suffer.
On the US data front, excitations point to a rebound in retail sales and a pickup in consumer confidence (as tracked by a University of Michigan survey). Such outcomes may further bolster Fed tightening bets, weighing on sentiment and amplifying perceptions of the policy divergence between the US and the rest of the G10. Needless to say, that bodes ill for the Kiwi in its own right. It would hurt more so if it came against the backdrop of softening yield prospects at home.
Grand jury hearing Michael Brown case; some believe there won’t be indictment
Mark O’Mara says it’s important to let the process play out
Case should be decided on the facts, not as a proxy for racial justice issues, he says
Editor’s note: Ma…
NEW YORK (Reuters) – Crude oil prices closed down on Friday, with benchmark Brent losing its most in a week since January, as a resurgent dollar and fear of a U.S. rate hike diverted attention from the shrinking number of rigs drilling for oil in the United States.
With Monday set as the day the ECB will embark on an ill-fated crusade to monetize the entirety of euro fixed income net issuance twice over, inquiring minds want to know how long it will be before yields on all EMU government bonds fall into negative territory.
The yields on bonds issued by one-time trouble spots including Spain, Italy and bailout recipient Portugal struck record lows on Friday. Short-dated Irish bond yields fluctuated around 0% and Spanish two-year bonds dropped to around 0.08%.
Traders and investors often position for well-flagged monetary policy shifts in advance, pulling back once details are released, but in the case of the ECB’s bond-buying program, that hasn’t materialized.
“We could see the two-year Spanish, Portuguese and Italian bonds yields falling below zero in coming months,” said Azad Zangana, a European economist at Schroders , which has about £300 billion ($455 billion) of assets under management.
“It is only a matter of time,” said Nick Gartside, chief investment officer for fixed income at J.P. Morgan Asset management, with $1.7 trillion under management. “We’re still big buyers of debt in those countries.”
Alberto Gallo, head of macro credit research at Royal Bank of Scotland , said that the restriction of only buying debt yielding more than minus 0.2%, will likely generate even more demand for long-term debt in southern Europe, in contrast to elsewhere in the region, “since many core countries already trade very close to the no-buy zone.”
Oh, how far we’ve come in three short years. Recall that in mid-2012, many periphery governments were priced out of the debt market altogether and yet now, not even 34 months on, these same countries are being paid to take investors’ money. Not only has the market been stripped of its ability to serve as a price discovery mechanism, it has been destroyed altogether.
In this environment there is virtually no question that in short order, everything that’s not tied down in the eurozone will be monetized and will trade with a negative yield. In fact, we’ve been headed that way for quite some time as the following chart shows:
… and as you can see from the following, the core is well on its way towards being paid for each and every piece of government guaranteed paper they care to issue with nearly half of bonds issued by Germany, Finland, the Netherlands, and Austria already trading with negative yields…
Here’s where it gets particularly interesting. Yesterday, Mario Draghi virtually guaranteed the ECB will soon operate from a position of accounting insolvency by pledging to buy €1.1 trillion in bonds at a weighted average price of 124% of par.
Buying above par effectively means the ECB will only have to buy 80% of the number of bonds it would otherwise have to buy to hit its monthly targets (a way of silencing critics who claimed the central bank wouldn’t be able to locate enough assets). It also means that should periphery sovereign spreads suddenly blow out (i.e. begin to price in 2012-like redenomination premia due to a deterioration in Greece or a Podemos victory in Spain), balance sheets engorged with EGBs will incur massive losses plunging the ECB into a negative equity position.
Central banks will generally counter the accounting insolvency argument by claiming they plan to hold the bonds until maturity and thus will not actually realize any losses. However, if you drive yields so low that every issue you’re chasing sports a negative yield, you can no longer use that argument. That is, buying bonds with a negative yield and holding them to maturity guarantees a loss. It’s quite difficult to see how this ends well.
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A Russian official has accused US fast food giants McDonalds and Coca Cola of waging “war” against citizens by aggressively marketing “unhealthy” products to them. With tensions between Russia and the US at their highest point since the Cold War, the office of Russian Deputy Prime Minster Dmitry Medvedev has stepped up its attacks on […]