Fri, 26th May 2017

Anirudh Sethi Report


Archives of “socgen” Tag

Societe General says Russia Has Begun Selling Its Gold

So what is the truth? Well, we won’t for sure until the next official report by the Central Bank of Russia hits the IMF database,  but in the menatime, SocGen just reported that the selling may have started: 


Looking at the correlation between gold and oil prices, the chart above illustrates that both commodities were moving closely in tandem over the July to September period. However, this link was broken in early October when gold embarked upon the new rally on weaker US dollar and some physical support, while oil prices continued to slide. The rally, nonetheless, proved to be short lived, as gold returned to its downtrend after hitting the $1,250 level on 21 October, and continued to move down, along with oil, for the remainder of the month.


Starting from November we have seen gold and oil prices moving in opposite directions again. As we mentioned earlier, oil prices came under significant pressure on concerns about a growing global oil supply glut. On the contrary, gold recovered some of its earlier losses, supported by fresh buying interest in India on the news that the Reserve Bank of India (RBI) was reviewing gold import restrictions that were introduced last year. Towards the end of November, the RBI surprised the markets by announcing the withdrawal of the 80:20 rule, which saw gold imports surging to 150 tonnes that month, according to the latest statistics from the Indian Ministry of Commerce and Industry. In addition, worries over the potential impact of stronger US dollar on the global economy spurred some safe-haven buying. 

HSBC raises gold forecast

HSBC isn’t bothered by the $125 drop in gold prices since late August. They’ve raised their year-end target to $1446/oz from $1396/oz.

SocGen is on the other side of the trade, they say it will drop to $1200 by year end. Even worse, Goldman Sachs says there is a risk gold could drop below $1000 but their target for 2014 is $1050.

Here’s A One Paragraph Explanation For Why Markets Are On Such A Roll

eagleSocGen’s Kit Juckes explains it in simple terms:

European and Asian equities and ‘risk-on’ currencies have all benefitted as the post-payroll asset rally gained momentum. I think the move has a decent chance to last till Christmas. Tapering will be announced next week, the ‘tapering isn’t tightening message’ will be repeated and policy uncertainty will decrease. The Fed is on hold until the second half of 2015, the ECB for even longer, the Chinese slowdown is having a vacation (thanks to some shadow banking) and it looks as though military action in Syria will be avoided. Have the global economy’s structural problems gone up in a puff of smoke? No, but that’s not the point right now.

How Emerging Market Currencies Have Been Clobbered Since The Start Of May

Here’s a useful chart real quick from SocGen, which accomplishes two things.

One it shows the various performance numbers for emerging market currencies (the worst of which is the Brazilian Real) since the start of May.

It also establishes that not only are emerging market currencies weak, developed market ones are strong.

The Swiss Franc, the pound, and the euro have all strengthened against the US dollar during this timeframe.



SocGen’s Russian unit fires CEO Golubkov

GolubkovFrench bank Societe Generale’s Russian unit Rosbank has dismissed Chief Executive Vladimir Golubkov following his prosecution for bribery and will launch a search for a successor, it said on Monday.

France’s second-biggest bank is seeking to reassure markets that it can overcome the latest blow to its underperforming Russian subsidiary after a years-long turnaround campaign that has cost billions.

Rosbank said its board had fired Golubkov with immediate effect. His first deputy, Igor Antonov, will continue as acting chief executive until a replacement can be found. Read More 

SocGen: There’s ‘Simply No Growth Recovery’ In China

The world markets have been rattled by last night’s disappointing China Flash PMI number, which unexpectedly fell to 49.6 in May from 50.4 in April.slow

 This is the first sub-50 reading in seven months.  Any reading below 50 signals contraction.

This only confirms fears that China, the world’s second largest economy, is decelerating.

“The reading pretty much dashed hopes of a Q2 growth recovery,” wrote Societe Generale’s Wei Yao in a note titled “Simply No Recovery.” Read More 

SOCGEN PRESENTS: 7 Big Trades To Kick Off 2013

SocGen’s Global Asset Allocation is out with a report on Seven Key Calls To Kick Start 2013.

 It’s a good solid list of some themes that a lot of people are talking about.

They are:

  • Long Europe (European stocks will outperform US stocks).
  • Fall in Spanish yields (buy Spanish debt).
  • Selloff in safe assets (sell yen, sell German bunds).
  • Don’t fight the Fed (buy gold).
  • Expecting overheating in the US credit market (buy high-yield credit).
  • China re-accelerates (buy base metals).
  • Buy Brazil (buy the currency and the stocks).

Complete Event Calendar For The Coming Week And Through November

A new week begins. Here are the major global market-moving events to look forward to for both the next week, and for the remainder of October and November.

Monday 15 Oct 2012

  • US Empire Manufacturing Oct; Previous: -10.41; Consensus: -4.8
  • US Retail Sales Less Autos Sep;  Previous: 0.8;  Consensus: 0.6
  • US Advance Retail Sales Sep; Previous: 0.9; Consensus: 0.7

Tuesday 16 Oct 2012

  • UK CPI (% YoY) Sep 2.5; Consensus:2.3
  • UK RPI (% YoY) Sep 2.9; Consensus:2.7
  • EC CPI (% YoY) Sep 2.7; Consensus:2.7
  • GE ZEW Survey (Econ. sent iment ) Oct -18.2; Consensus: -15
  • US Industrial Production Sep -1.2; Consensus:0.2
  • US NAHB Housing Market Index Oct 40; Consensus: 41
  • US Capacity Ut ilizat ion (%) Sep 78.2; Consensus: 78.3
  • US CPI Ex Food & Energy (% YoY) Sep 1.9; Consensus: 2.0
  • US Consumer Price Index (% YoY) Sep 1.7; Consensus: 1.8

Wednesday 17 Oct 2012 Read More 

Europe’s Got A New Crisis, And This Time The ECB Can’t Solve It

Since the European sovereign debt crisis began, it was always clear that somehow it must end with the ECB.

 The ECB has the unlimited firepower to back stop wobbly governments, and furthermore, every other modern economy basically works this way: The central bank, not the bond market, is the real funding mechanism for governments. That’s why Japan, the UK, and the US don’t have sovereign debt crises despite huge government debts.

So when ECB chief Mario Draghi unveiled a plan a couple of weeks ago to buy unlimited amounts of short-term government debt, it appeared that at least a mechanism that would actually work would soon be put into place.

And that mechanism (known as OMT) could work if it gets off the ground, but the rules are that a country has to seek outside aide and oversight in order to be eligible for bond buying, and here’s where we run into a problem that the ECB can’t solve.

In a note to clients this morning, in the aftermath of the massive protests in Spain, SocGen’s Kit Juckes put it bluntly: Read More 

8 Crucial Market Moving Events To Watch In The Coming Week

Next week looks busy, between global economic indicators and the Eurogroup meeting scheduled for July 20.

After the collapse in manufacturing in June, and the horrible German economic sentiment numbers, Societe Generale gives us the highlights of the coming week:

  • Empire State Manufacturing Survey, July 16: Manufacturing in the north east plunged after the Empire state survey fell to 2.29 in June. SocGen analysts are looking for the business conditions index to rise modestly to 5.70. 
  • U.S. retail sales, July 16: “Stepped-up auto-dealer revenues, combined with an anticipated rebound in building materials purchases, likely propelled retail and food services sales 0.4% higher in June, erasing all but a fraction of the decline posted over the April-May span.”
  • The German ZEW economic sentiment survey, July 17: As the strong arm of Europe, all eyes are on Germany’s economic sentiment survey which plunged in June. SocGen analysts “expect another deterioration in both the economic sentiment and the current situation, but not nearly as severe as the exceptional weakness reported in June.”  Their consensus is for economic sentiment to decline to -25 and for a current situation reading of 25.
  • U.S. and UK inflation, July 17: After a downward inflation trend UK consumer prices should be unchanged at 2.8 percent year-over-year in June. In the U.S. inflation is expected to increase for a fourth straight month but at a marginal rate of 0.2 percent per month.
  • Philadelphia Fed Survey, July 19: The Philly Fed collapsed to -16.6 in May. SocGen analysts expect the survey to contract for a third straight month, improving slightly to -14.7 percent.
  • UK retail sales, July 19: “Sales have been highly volatile of late, buffeted by varying weather conditions.” But analysts are looking for a 1 percent month-over-month increase.
  • Eurogroup meeting, July 20: The meeting is expected to deliver a finalization of the Memorandum of Understanding for financial assistance to the Spanish banking sector. The meeting could also offer more details on Greece’s compliance with its financial programs.