Archives of “September 2019” month

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Big German banks warn against further rate cuts (expected from the ECB this week)

  
  Analysis
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Both Deutsche and Commerzbank Banks have weighed in against forecast further cuts from the European Central Bank this week:

  • would benefit those with assets
  • further burdening savers.
  • neither sustainable, nor responsible
The central bank is expected to cut as [part of measure to support the Eurozone economy. As an example of the slowing of the EZ economy was the data from Germany last week:
  • Germany July industrial production -0.6% vs +0.4% m/m expected
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European Central Bank policy meeting is on September 12,
Its an amusement to debate who wins, who loses, and what the ECB should of should not do. Nothing wrong with that. Its also of more direct to use to traders to debate will the ECB will or will not do. I’ll have previews of what to expect upon approach to the meeting, but for now, here is something for EUR bulls and bears:
  • EUR/USD to stay weak, ECB next week
  • Risk for EUR is positive for next week’s ECB meeting – BAML
Both Deutsche and Commerzbank Banks have weighed in against forecast further cuts from the European Central Bank this week:

Can you imagine what the oil market would look like the day after this?

  
  Analysis

A ban on fracking?

Presidential candidates say all kinds of unrealistic things and this most-certainly falls into that category but it’s a line that’s ringing alarm bells in the oil and gas industry.
It’s from on tweet from Elizabeth Warren on Friday evening. She’s currently the odds-on favorite to win the Democratic nomination:
On my first day as president, I will sign an executive order that puts a total moratorium on all new fossil fuel leases for drilling offshore and on public lands. And I will ban fracking-everywhere.
A fracking ban would cut the knees out of US oil and gas. Prices of both would skyrocket and corporate bankruptcies wouldn’t be far behind. The election is now 14 months away and I don’t want to be writing about it every day but it won’t be long before political risks begin to dominate US markets and this is a hint at what the stakes might be.
A ban on fracking?

China trade balance data for August – surplus comes in below median estimate

  
Analysis, Economy
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Trade balance data out from China Sunday will not be viewed as a positive input for China-related risk markets.

The counter to this is, of course, the expectation of stimulus from China, some of which we have already indeed seen (eg. only on Friday we got news of  the cut to the RRR) and more is forecast.

Yuan terms trade balance data

Surplus for the trade balance of 239.60bn … miss

  • expected CNY 299.3bn, prior was CNY 310.26bn

Exports +2.6% y/y … miss … slowing global growth and US tariffs key points for exports missing

  • expected +6.3%, prior was +10.3%

Imports -2.6% y/y  – falling imports are often associated with domestic economic weakness -this result not as sharp a fall as expected.

  • expected -3.1%, prior was +0.4%

USD terms

China trade balance: $+34.84

  • expected $44.3bn, prior was $44.58bn

(more…)

Berkshire taps Japan’s hunger for yields with $4bn bond debut

  
  Analysis
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Warren Buffett’s Berkshire Hathaway headlined a record day in Japan’s bond market Friday by setting the terms on a 430 billion yen ($4 billion) offering, the biggest yen-denominated issue ever by a foreign multinational.

The U.S. investment group is selling five-, seven-, 10-, 15-, 20- and 30-year bonds.

The biggest chunk, 146.5 billion yen in 10-year debt, carries a 0.44% coupon — an attractive yield at a time when Japan’s benchmark long-term interest rate languishes below zero.

Banks, insurers, asset managers and other investors flocked to Berkshire’s offering, which falls under a global yen bond heading that allows foreign buyers to participate. Debt offerings under this framework have been growing gradually, with such big names as Apple, Starbucks, and Procter & Gamble joining in, and both Wall Street and Japanese financial institutions are pitching bond floats.

The success of the record debt sale could embolden other multinationals to raise capital in Japan’s bond market, where most yen-denominated offerings by foreign issuers have been small.

Berkshire’s AA issuer rating from S&P Global Ratings puts it slightly above the AA- of Japanese blue chip Toyota Motor. (more…)

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