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Tuesday, June 25

25th Jun - US Close: More on Fed, plenty of US macro

Previously on MoreLiver’s:

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Roundups & Commentary
Markets – Between The Hedges
The Closer – alphaville / FT
US: Volumeless Rally In Stocks; Bonds Still Tapering – ZH

Europe: Your RopeMarc to Market
European finance ministers will meet (on Wednesday) ahead of the Summit that begins Thursday afternoon in order to see if more progress can be made on the banking union. Talks broke down at the end of last week, without resolution. There are four dimensions to the issue…

Swiss banks from a financial stability perspectiveBIS (pdf)
Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 20 June 2013.

Challenging economic and financial conditions for the Swiss banking sectorBIS (pdf)
Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 20 June 2013.

A snapshot of the financial situation in SwitzerlandBIS (pdf)
Mr Fritz Zurbr├╝gg, Member of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 20 June 2013.

Whose low rates are these?Free exchange / The Economist
My view is that central banks have been a significant contributor to low rates globally, but mostly through policies designed to engineer persistent demand shortfalls, like opportunistic disinflation in the rich world and undervalued currencies in the emerging world. QE has on net been a force for higher rates. I would be very surprised to see sustained rate increases alongside QE withdrawal and falling inflation expectations. Sustained higher rates are ultimately a sign of healthy demand, and America still seems to be a long way away from that.

Which came first, rising real rates or taper fear?alphaville / FT
The Fed has rumbled the markets with QE exit/taper talk. That, at least, is the standard explanation with regards to the EM sell-off and other market turbulence. But what if all this wasn’t started by the Fed, as much as the sudden rise in real rates in the last few months?

The mismatchButtonwood / The Economist
Although the economy has been weak, American corporate profits are high relative to GDP. Indeed the collapse in 2008 and 2009 was a brief blip in what looks like a long-term upward trend…. But one doesn't need to be a Marxist to perceive that the share of capital might be cyclical; surely high returns should be competed away?

Can the Fed pat its head and rub its stomach?Wonkblog / WP
Fed President Narayana Kocherlakota said that the problem was central bank communication. The Fed has not adequately conveyed the message that the bond purchases and interest rates are not directly connected, he said. That has made the markets unnecessarily anxious about the first reduction in bond-buying.

Full blown damage control?MacroScope / Reuters
Central bankers are talking tough in the face of the wild gyrations in financial markets. But it’s becoming increasingly clear they are sweating – and drawing up contingency plans to assuage the panic

What Happened The Last 2 Times Mortgage Rates Spiked Like This?ZH
The last times we saw mortgage rates surge like they just have, that marked the peak in consumer confidence and the market followed shortly after.

Orders for U.S. Durable Goods Rose More Than Forecast – BB
Durable goods orders, business spending plans rise – Reuters
Durable Goods Orders Beat Expectations On Boeing Orders – ZH
Analysis: Durable Goods Report Looks Encouraging – WSJ
The ’’Real’’ Goods on the Latest Durable Goods Data – dshort
Consumer Confidence Hits 5-Year High – WSJ
Consumer Confidence in U.S. Increases More Than Forecast – BB
Consumer confidence highest in over five years in June – Reuters
New Home Sales at 476,000 SAAR in May – Calculated Risk
New home sales near five-year high, prices rise – Reuters
Case-Shiller: Comp 20 House Prices increased 12.1% y-o-y in April – Calculated Risk
Home prices see biggest annual gain in seven years in April: S&P – Reuters
A Look at Case-Shiller, by Metro Area – WSJ
Great Graphic: CaseShiller House Price Index and Change – Marc to Market
A few comments on House Prices and New Home Sales – Calculated Risk
Real House Prices, Price-to-Rent Ratio, City Prices relative to 2000 – Calculated Risk
Richmond Fed Manufacturing: A Welcome Return to Expansion – dshort

China’s Market Stress: Pay Attention to the PoliticsDealBook / NYT
China looks to have a classic moral hazard problem. Unless the government either allows defaults and failures, or arrests some bankers, how can it force the banks to improve their risk and liquidity management and really start channeling financing to more productive parts of the economy?

Rates volatility & Cross Asset volatilities  Macronomics

IMF Releases and Expands Coordinated Direct Investment Survey to 100 EconomiesIMF
The database—available publicly at and through the IMF e-library—presents detailed data on “inward” direct investment

New Research in Economics: The IMF and Global Financial Crises; Phoenix Rising?Economist’s View
This is from Joseph P. Joyce, the author of The IMF and Global Financial Crises; Phoenix Rising?, which was published last year by Cambridge University Press. The book examines the evolution of the policies and programs of the IMF with respect to the global financial markets and crises in these markets

361 Capital Weekly Research BriefingThe Reformed Broker