Posts Tagged: Economy

 

Collecting BucketThe US will reach its spending limit in less than a month if leaders are unable to come to agreement on a new debt ceiling, according to Treasury Secretary Jack Lew.

In a letter sent to Congressional leaders, Mr Lew estimated the Treasury would exhaust all of its funding abilities no later than October 17, and called the potential impact “catastrophic”.

The White House is determined not to compromise when negotiating a rise to the $16.7tn limit, which it had in 2011 to avert a shutdown.

If an agreement is not reached before October 17, Mr Lew estimates the Treasury will have less than $30bn to use to cover expenses, below the $60bn in outlays it pays on same days, potentially leading to the first default by the US on its debt obligations.

From his letter:

The debt limit impasse that took place in 2011 caused significant harm to the economy and a downgrade to the credit rating of the United States. The drawn-out dispute caused business uncertainty to increase, consumer confidence to drop, and financial markets to fall. If Congress were to repeat that brinksmanship in 2013, it could inflict even greater harm on the economy. And if the government should ultimately become unable to pay all of its bills, the results could be catastrophic.

A focus for the RBI

25 September 2013 - 10:36 am
 

It needs a well-defined objective and policy instrument.

In his maiden monetary policy announcement, RBI Governor Raghuram Rajan unveiled a mix of easing and tightening measures. He raised the repo rate and lowered the bank rate. In July, the RBI had suddenly raised rates to defend the rupee. Since then, the bank rate, or the MSF rate, has become the operational policy rate, the rate at which commercial banks borrow from the RBI. It is too high for the economy today and needs to be reduced even further.

The decision to cut the MSF rate was obvious. That was the easy part. Rajan also raised the repo rate, which used to be the policy rate before the RBI’s actions to defend the rupee in July. This was supposed to indicate the RBI’s intent to target inflation by lowering inflationary expectations. Bringing such expectations down is a difficult task for any central bank. For the RBI, the problem is even more difficult since it must balance multiple objectives, has numerous instruments and is not independent.

Rajan will have to work hard to build the RBI’s credibility as an inflation targeter. He will need to get rid of its multiple objectives and many instruments. He will have to focus on defining the objective of monetary policy and its instrument clearly, building credibility, being consistent and communicating his policy stance to the public. The success of his term will be measured by how well he is able to anchor inflationary expectations and bring down consumer price inflation. The growth slowdown and high food inflation will make inflation forecasting and targeting difficult. So far, the RBI has not managed to communicate clearly because it has too many instruments and unclear objectives. >> Read More

Emerging Market -An Update

24 September 2013 - 5:43 am
 

Sometime this week, Brazil central bank will release its quarterly inflation report. Minutes from the August 27/28 meeting suggest a 50 bp hike at the October 8/9 meeting is baked in the cake, but the inflation report may shed some light on the November 26/27 meeting, when we now see a 25 bp hike that is meant to be the top in the cycle – for now at least. For USD/BRL, support seen just below 2.20, resistance seen near 2.25 and 2.30.

 
Hungary central bank holds policy meeting Tuesday and is expected to cut rates by 20 bp to 3.60%. Officials have said rates are likely to bottom in the 3.0-3.5% area, and so several more cuts appear likely. Some data suggest the recession is ending, but the signs do not point to a robust recovery. For EUR/HUF, support seen near 295, resistance seen near 300 and 305.
 
Mexico reports mid-September CPI on Tuesday and August trade on Thursday. Minutes released last Friday show the vote was 3-2 in favor of cutting. Minutes were very dovish, and the next meetings are October 25 and December 6. Given how cautious the central bank has been, we think back-to-back cuts are unlikely but that a December cut is on the table if data remain weak in Q3. For USD/MXN, support seen near 12.80 and 12.60, resistance seen near 13.00 and 13.40.
 
Taiwan central bank holds policy meeting Thursday and is expected to keep rates steady at 1.875%. Right before that decision, Taiwan reports August IP and commercial sales. Earlier in the week, it reports August export orders, expected at 1.3% y/y vs. 0.5% y/y in July, on Tuesday. The economy is sluggish, but we think policymakers will rely on fiscal policy and a weaker currency to boost demand rather than on rate cuts. For USD/TWD, support seen near 29.40, resistance seen near 29.80 and 30.00. 
 
Czech central bank holds policy meeting Thursday and is expected to keep policy steady. Several central bankers seem thoroughly convinced of the need for further stimulus via a weaker koruna, but we do not think a consensus has been reached yet. The November 7 and December 17 meetings may offer an opportunity to announce a policy change. For EUR/CZK, support seen near 25.60, resistance seen near 26.00 and then 26.20. 
 
Colombia central bank holds policy meeting Friday and is expected to keep rates steady at 3.25%. This has shifted from earlier calls for a 25 bp cut to 3.0%, as recent data (such as Q2 GDP) have been stronger than expected. Officials seem to be trumpeting that a modest recovery is under way. However, any further peso gains will surely raise concerns for policymakers as USD/COP is already below the desired range of 1900-1950. For USD/COP, support seen near 1880 and 1860, resistance seen near 1900 and 1960.
 

It seems just as a plethora of Fed heads had to walk back Bernanke’s last press conference hawkishness, that the uber-dovishness interpreted by the market from Wednesday’s FOMC is now being tapered back. Speaking on Bloomberg TV, Fed’s Bullard warns an October Taper is on the cards:

  • *BULLARD SAYS ECONOMY ISN’T THAT FRAGILE
  • *BULLARD SAYS $10 BILLION TAPER VERSUS NO TAPER NOT `BIG THING’
  • *BULLARD SAYS NO TAPER, SMALL TAPER WAS A `BORDERLINE’ CALL
  • *BULLARD SAYS `SMALL TAPER’ POSSIBLE BY FOMC IN OCTOBER

The market (bonds, stocks, and gold) reacted accordingly and is unwinding the exuberance in a hurry. The question now, of course, is what key data is due out that will shift them off the fence. For traders, clearly good news is now very bad news – especially over the next month.

 

Bullard added:

  • *BULLARD: PRESS CONFERENCE MAY BE POSSIBLE AFTER OCTOBER MEETING
  • *BULLARD SAYS OCTOBER IS A `LIVE’ MEETING
  • *BULLARD SAYS FALLING PARTICIPATION RATE IS MOSTLY `STRUCTURAL’ (told ya so dance?)
  • *BULLARD SAYS `FLOW RATE OF QE REALLY DOES MATTER A LOT’ (wow, where have we heard that before?)

The Fed is in the End Game

19 September 2013 - 21:58 pm
 

The Fed failed to announce a Taper yesterday of any kind.

 It is positively outrageous, but it does inform us of many things.

 First and foremost, the Fed has made it clear that it cannot be hawkish is any way. We had just two months of hinting at tapering QE from the Fed (Bernanke was back talking up how accommodating he’d be by July).

 So for all the talk of taper and shifting to a more hawkish tone, the Fed’s actions speak louder than words: the Fed is totally and completely incapable of being hawkish at this time.

 Secondly, the Fed knows that the US economy is a total disaster. If tapering even $10-15 billion per month from $85 billion month QE programs would damage the economy, then we’re all up you know what creek without a paddle. >> Read More

 

ASR-NFBernanke makes no apologies for taper surprise

Investors maybe confused but the Federal Reserve isn’t apologising.

That’s the message that Federal Reserve chairman Ben Bernanke sent on Wednesday, when asked at his press conference about the widespread surprise among Wall Street economists and investors that the Fed did not begin to slow its bond-buying programme today.

Mr Bernanke said:

I don’t recall stating that we would do any particular thing at this meeting. What we are doing is the right thing for the economy.

Mr Bernanke went on to explain that “we can’t let market expectations dictate policy actions” and said that the incoming data simply failed to satisfy the Fed’s growth and inflation targets required for tapering stimulus.

HAPPY123

Last Close : 5931

NF-1909

Above is Daily Chart of Nifty Future

Now SGX Nifty @  6092 ( +156 points )

ot

Our SMS :Buy 6100-6200 Call & Buy 5700 put (Let’s see what happens Today )

TODAY WHAT TO EXPECT

Today 3rd Gap…………………….Again !

On 16th Sept it opened with gap and filled same day (Remember low of 5814 )

gap-4976One GAP @ 6069 to be filled ,Today it will fill !!

Today ,Will Try to kiss 6083———-6096 level in minutes only.

LAXMAN REKHA @ 6158 level.

REDALERT

Now ,Above 6028 level if closes for 3 Consecutive DAYS………………Then ??

It will cross  high of 6239 & will kiss 6300+ level too !

Support at 3 & 7DEMA …………Untill & Unless it breaks these levels…No worry for Bulls.

MILLION DOLLAR QUESTION-ASR

Will it kiss 5750-5700 level First or Will zoom to kiss 6300–6400 level ???

New High in October ?

Yesterday too we had written :Forget Fundamentals ,Economy ,Growth ,Inflation ,Corporate Results (Just concentrate on Central Bankers + USDINR +Fii’s flow …Nothing else )

Will Update More to our Subscribers during trading hrs (Reversal points with Time too )

Updated at 7:50/19th Sept/Baroda/India

Hilsenrath’s take on the Fed

19 September 2013 - 0:01 am
 

Nothing surprising from Hilsenrath but his take is up at the WSJ:

Fed officials pointed to concerns that financial conditions had tightened in recent months and that those conditions could slow the economy if sustained.

Fed officials were on the fence in the days leading up to the meeting, even though many investors were convinced the central bank would make a small reduction to the bond-buying program at the September meeting.

FOMC Shocker: No Taper

18 September 2013 - 23:35 pm
 

It seems the Fed is so scared about something (despite every long-only asset manager telling us day after day that the economy is recovering and the US doesn’t need crisis support… oh and can withstand higher rates) that they have gone against consensus and decided that Tapering now is premature:BB-GIF

  • *FED REFRAINS FROM QE TAPER, KEEPS MONTHLY BUYING AT $85 BLN
  • *FED: RISE IN MORTGAGE RATES, FISCAL POLICY RESTRAIN GROWTH
  • *FED: `TIGHTENING OF FINANCIAL CONDITIONS’ COULD SLOW GROWTH
  • *MOST FED OFFICIALS SEE FIRST INTEREST-RATE RISE IN 2015

Consensus was for a $6bn taper in TSYs and $3bn taper in MBS

Full redline comparison with the July statement: 

September FOMC Redline

 

And now the response… We’re recovering nicely – but no negotiations?

  • *OBAMA SAYS `WE’VE COME A LONG WAY’ ON ECONOMY
  • *OBAMA SAYS BUDGET DEBATE MAY BE MOST CRITICAL FOR ECONOMY
  • *OBAMA SAYS HOUSE ENGAGED IN IDEOLOGICAL FIGHT ON BUDGET

 

 

NONPLAN

 

downhttp://www.finmin.nic.in/the_ministry/dept_expenditure/notification/emre/ExpMan_EcoMeasure18092013.pdf

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Technically Yours,
Team ASR,
Baroda, India.