Futures are down modestly in early Sunday trading, and one possibility for that is the story that came out after the bell on Friday in the Wall Street Journal from Fed whisperer Jon Hilsnerath titled Fed Maps Exit From Stimulus.
The gist: The Fed is seriously thinking about how it might begin the QE winddown process.
Given the widespread belief that Fed stimulus is a major tailwind for the market, talk of QE winddown is invariably something of a negative.
In tonight’s “Closing Print” note, Mike O’Rourke from JonesTrading thinks the article’s existence is pretty significant.
The WSJ’s Jon Hilsenrath published a story Friday evening titled “Fed Maps Exit From Stimulus – Timing of Wind-Down Is Uncertain, but Focus Is on Managing Unpredictable Market Expectations.” We suspect the twitter taper caper on Thursday opened the window for the FOMC to provide some clarity as to where policy stands. Here are some key questions. Is this story important? Can it be taken at face value and should markets move? The answer is yes, yes and yes. The WSJplaced the article prominently on the cover of the Saturday edition, so they believe they have an important story. It is a Hilsenrath story, and in the post-recession QE era the Fed has used him to foreshadow almost every major monetary policy move. Finally, in a tape where QE is the dominant theme, any indication of policy slowing or reversing course is meaningful. >> Read More
Breaking news from the seige: the suspect Dzhokar Tsarnaev is in custody as of ~8:42 pm. As WaPo reports, he is alive but badly injured, as there was a lit fire in boat where was is hiding.
Some more from the WSJ:
Authorities captured a 19-year-old college student suspected in the deadly Boston Marathon bombings after one of the biggest manhunts in U.S. history paralyzed an entire metropolis. >> Read More
The full story on Weidmann is out in the WSJ:
Many analysts expect that with inflation below the ECB’s 2% target, at 1.7%, and expected to fall further, an interest-rate cut is likely in May or June. Mr. Weidmann didn’t rule out the prospect, but cast doubt that it would do much good.
“We might adjust in response to new information,” however, “I don’t think that the monetary policy stance is the key issue,” he said.
It’s more tentative than the initial headline suggested but it certainly leaves the door open. It’s implied (but unclear) that it was in response to a question about a cut specifically in May or June. >> Read More
“In order for central banks to achieve their ultimate economic objective – which is growth and jobs – they have to push investors into taking more risk than is justified,” is the somewhat chilling warning that PIMCO’s Mohamed El-Erian gives in this excellent interview with the WSJ. “Central banks are operating through the wealth effect and animal spirits,” El-Erian says peeling back the truth onion, as they prop up asset prices to “artificial levels, in virtually every market.” Worries over the central bankers of the world withdrawing easy money policies too early are “unwarranted,” he notes, adding that he suspects, “they will most likely stay too long and they will consciously make that mistake.” Critically, though, he sends a message that appears to fit with many of our recent discussions (most recently here) that “if these levels aren’t validated by the fundamentals, then investors will get hurt.”
The figures provided in this report incorporate the best judgement available at this time. Nonetheless, caveats remain. The data for Cyprus appear not to be comparable with those for other euro area countries in a number of dimensions and should therefore be interpreted with caution.However, once the above mentioned factors are accounted for, the net wealth figures for Cyprus appear less of an outlier…
Yes, we can imagine why the ECB’s first Household Finance and Consumption Surveymight have wanted to make that clear at the outset. (Survey methodology here.)
Possibly because of headlines like this, landing after the German-financed bailout of Cyprus:
ECB Data: Cypriots On Average Three-Times Richer Than Germans
More broadly, maybe, because of the miasma of fear and indignation over wealthy citizens, broke governments, wealth taxes, and who’s bailing out whom, all these years into the eurozone crisis.
The headline was based on this table from the HFCS (but the median should be the one occupying us): >> Read More
World’s oldest Value Investor. Duly noted (hat tip to Mr. Melvin) that Irving Kahn is a former Ben Graham assistant and likes to buy and hold for long time– and not really a “trader” per se.
From the WSJ:
Discipline has been a key for Mr. Kahn. He still works five days a week, slacking off only on the occasional Friday. He reads voraciously, including at least two newspapers every day and numerous magazines and books, especially about science. His abiding goal, he told me, is “to know much more about the stock I’m buying than the man who’s selling does.” What has enabled him to live so long? “No secret,” he said. “Just nature’s way.” He added, speaking of unwholesome lifestyles: “Millions of people die every year of something they could cure themselves: lack of wisdom and lack of ability to control their impulses.”
Here is a link to his current portfolio (he includes a land-based driller).
11 February 2013 - 12:44 pm
Next Friday, a 130,000 ton asteroid is set to pass perilously close to earth. WSJ’s Robert Lee Hotz runs down what you need to know about the 2012 DA14.
11 February 2013 - 10:33 am
The only economic data point of note was Australian December Housing Finance:
But there were some significant news items to be aware of:
Flows were minimal today, but what flows there were had an exaggerated impact in the thin, illiquid, holiday conditions.
EUR/USD fell early in the day on selling from US investment names, triggering stops below 1.3340 to take the rate to 1.3325 before it sharply rose to 1.3380. It settled 1.3365/77 for the remainder of the session.
EUR/CHF buying drove it higher as the CHF was sold off on Zurbruegg’s comments (see news bullets, above)
USD/JPY lost ground in the morning, down to 92.36 before back to 92.70 and settling around 92.45/55 for the balance of the day.
AUD/USD didn’t have much of a reaction to the worse than expected housing finance figures, but sold off late in the day back below 1.0300; NZD/USD fell away a little with it, below 0.8330. The moves were driven by late flows in a very thin market.