Posts filed under “Think Tank”

Foreign purchases of longer term assets

April foreign purchases of longer term assets totaled $11.2b, less than estimates of $60b and down from $55.4b in March but the components were mixed. Purchases of US Treasuries totaled $41.9b which while down from $55.3b in March, is still well above the one year average of $25.3b. Foreigners sold agency paper for a 2nd straight month and they were net sellers of corporate bonds by $9.7b after buying a net $3.5b in March. Purchases of US stocks totaled $4.6b down from $13.2b in March. A large portion of the net selling was attributed to foreign selling of foreign bonds and stocks that trade here which totaled a combined $23b vs selling of only $1b in March. China sold $4.4b of treasuries but after buying $23.7b in March and Japan sold $800mm but after buying $24.8b in March. The rally in stocks and coincident selloff in treasuries in April was reflected in the $8.9b selling of treasuries from the Caribbean, where many hedge funds are located.

Category: MacroNotes

Empire survey

The June NY mfr’g survey was weaker than expected at -9.4 vs forecasts of -4.6 and down from -4.6 in May but it’s still well above the record low in March of -38.2. The headline # is not a sum of its parts and the key categories of New Orders and Employment rose a touch….Read More

Category: MacroNotes

More positive reaffirmation

After getting some positive reaffirmation from the Japanese of their love for our debt, Russia’s Finance Minister at the G8 said there was “no alternative” to the US$ as a reserve currency and that the US$ was “in good shape”. Russia has the 3rd largest reserves and the comment comes on the heels of news…Read More

Category: MacroNotes

Words from the investment wise June 14, 2009

Words from the (investment) wise for the week that was (June 8 – 14, 2009)

“Words from the Wise” this week comes to you in a shortened format as “day-job” responsibilities precludes me from doing a comprehensive commentary. However, a full dose of excerpts from interesting news items and quotes from market commentators is provided.

Signs of stability characterized trading on financial markets during the past week. As investors placed their bets on a global economic recovery, equities, base metals and crude oil made further headway, with long-term government bond yields remaining at elevated levels, but declining somewhat after a successful US 30-year bond auction and pro-US Treasury comments from Japan’s minister of finance.

Notwithstanding buyers returning to US long-term bonds, the greenback retreated on concerns of the huge issuance of government bonds, whereas commodity-linked and other high-yield currencies improved strongly.


Source: Jeff Stahler, June 9, 2009.

The British pound also advanced as the UK’s National Institute for Economics and Social Research said the recession had passed through its trough in March. Also, the Organization for Economic Co-operation and Development (OECD) reported on Monday (via the Financial Times) that most of the world’s big economies were close to emerging from recession and that data pointed to a possible recovery by the end of the year. “Twenty-two out of the 30 OECD countries saw a rise in forward-looking measures of activity,” said the report.

The week’s performance of the major asset classes is summarized by the chart below. Not shown, platinum (-2.1%) and silver (-2.9%) cooled off in tandem with gold bullion (-1.6%). As the precious metals consolidate, gold bull Richard Russell (Dow Theory Letters) said in frustration: “Gold, gold, you’re making me old.”



The surge in oil prices to an eight-month high of more than $72 a barrel (in the case of West Texas Intermediate Crude), raised concerns as this is equivalent to a two-percentage-point drag on real GDP growth, according to David Rosenberg (Gluskin Sheff & Associates). In order to provide guidance on the direction of crude oil, Adam Hewison of has prepared another of his popular technical analyses, arguing that the long-term trend is bullish, but that a short-term pullback appears likely. Click here to access the short presentation.

The MSCI World Index (+1.2%) and the MSCI Emerging Markets Index (+0.4%) last week again added to the rally’s gains to take the year-to-date returns to +8.1% and a massive +39.4% respectively. Both these indices have only had one down-week since the advance commenced in early March.

Although trading was relatively flat, the major US indices (with the exception of the Russell 2000 Index) nevertheless gained for a fourth consecutive week – and for the twelfth week out of the past 14 – as seen from the movements of the indices: S&P 500 Index (+0.7%, YTD +4.8%), Dow Jones Industrial Index (+0.4%, YTD +0.3%), Nasdaq Composite Index (+0.5%, YTD +17.9%) and Russell 2000 Index (-0.7%, YTD +5.5%).

The Dow on Friday became the last of the major indices to break into positive territory for the year to date, albeit by a meager 0.3%.

Click here or on the table below for a larger image.


As far as non-US markets are concerned, returns ranged from top performers Namibia (+8.5%), Vietnam (+6.5%), Mauritius (+5.4%), Palestine (+4.5%) and Thailand (+4.0%), to Ghana (-8.7%), Serbia (-5.2%), Sudan (-4.8%), Taiwan (-4.4%) and Bahrain (-2.4%), which experienced headwinds.

Among the major markets, the Japanese Nikkei 225 Average jumped by 3.8% to breach the 10,000 level for the first time since October on the back of recent data releases, indicating that the pace of Japan’s recession was moderating. (Click here to access a complete list of global stock market movements, as supplied by Emerginvest.)

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Category: Economy, Markets, Think Tank


With the upward momentum in bond yields reversing on the heels of yesterday’s strong 30 year bond auction, 10 yr swap spread spreads today are falling to the lowest level of the month as pressure eases up for those wanting to swap floating rate exposure for fixed. MBS are also bouncing for a 2nd day…Read More

Category: MacroNotes

Consumer Confidence

The preliminary June U of Michigan confidence # was 69, .5 point below estimates but up a touch from May and its the highest since Sept. Interestingly, current economic conditions (measuring how people feel today as opposed to what they think about the future) saw a 6.8 point jump, rising to 74.5 and is just…Read More

Category: MacroNotes

The King Report: Intervention Time

> Verbal intervention via leak in time to help dealers loaded with US bonds – The WSJ: Fed to Keep Lid on Bond Buys; Big Boost in Purchases Is Unlikely; Divisions Emerge Over Handling Risk of Inflation We warned in missives this week that when bonds are tanking into an auction, dealers try to affect…Read More

Category: Markets, Retail, Think Tank

We still love you

Just as a kid needs some love from his parents after he or she gets into trouble and confirmation that they’ll still get their weekly allowance, Japan’s Finance Minister said “The US $’s position as the world’s reserve currency isn’t under threat…Our trust in US Treasuries is absolutely unshakable.” Hopefully the child grows up at…Read More

Category: MacroNotes

King Report: Not a Real Recovery

> Goldman CEO Lloyd Blankfein, speaking in Tel Aviv on Wednesday, said ‘chances are’ the US is not in a real recovery; the recession is likely to be long and protracted; and the recovery will be shallow. The Street quickly surmised that Goldie must be short the stock market. The Fed, via Jeff Lacker, engaged…Read More

Category: Economy, Markets, Think Tank

Report card is in/Fed’s flow of funds REVISED

REVISED: The Q1 flow of funds report from the Fed is out and the report card is in on the US consumer. Due to a rise in disposable income from Q4 (likely due to the large COLA adjustments and also tax refunds) and a drop in consumer credit (mortgage debt was flat), household debt (consumer…Read More

Category: MacroNotes