AM Dear Dairy: Risk-On Move Extended

Markets were persistent last night.  Asia is slowly opening back up after the lunar new year, with Hong Kong rejoining the work week and putting in a 1.63% gain, bringing its total to over 10% this month.  Year of the Dragon, indeed.  Interestingly, Japan had a loss, though minor, of 0.39%.  Europe is solidly in the black, up more than 1% across the board.  German and French consumer confidence rose slightly more than expected and are remarkably upbeat considering they have to clean up after the neighborhood block party.

One interesting detail is the breakdown of the French quarterly business confidence report.  This is not a big market mover, but nonetheless showed a deterioration over the past three months in Overall and Foreign Demand, from 1 to -12, and from -1 to -11, respectively.  CAPU also ticked down, from 83 to 82.  Just food for thought as markets move higher.

But the real story is the markets themselves, with QE Europa and a very accommodating Fed setting the stage for a healthy global risk appetite.  Bernanke dangled the possibility of Q3 at the press conference, and the talk is that the next LTRO at the ECB will be a monster.  That won’t be til the end of February.  The party looks set to roll on.

PM Dear Dairy: White Noise Edition

It was one of those days where random information kept flowing in, none of it earthshaking, and little of it related, but yet overall it was worth paying attention.

First, from France comes the news that not only is Sarkozy’s rival Monsieur Hollande a rabid anti-banker, he’s also a few freedom fries short of le Happi Meal:  He wants tolower the retirement age to 60.  I’m not sure how many of the last years he’s slept through, but he may be shocked to discover Edith Piaf is no longer on the radio.

Second, there were a number of economic releases out from the US today, and it was pretty much split down the middle in terms of green light vs red light.  Durable goods were better than expected, and rather solid at +3% rather than the expected 2%.  The details of the report were solid, all looking good.  On the negative side, the Conference Board leading indicator came in substantially weaker than expected at 0.4% rather than 0.7%, with last month’s revised down from 0.5% to 0.2%.  New home sales were also weaker than expected, at an annual rate of 307k rather than 321k.

Initial unemployment claims were also released today, a tad weaker than forecast at 377k.  But by and large they have been doing just fine, as shown in this nice graph from the folks at Calculated Risk:

Despite the gnashing of teeth from Bernanke and Co. yesterday, this drop in claims since the end of the recession is good news and very encouraging.  I don’t quite buy it as far as a true indicator of economic health, but it’s great to see people going back to work.

AM Dear Dairy

China is still on holiday so the nights aren’t what they used to be, but they’ll be back with us Sunday night.  In the meantime we had some interesting data to look at.


Japan’s inflation number came in as expected at -0.2%.  Though not a surprise it’s sobering to see that apart from a few months, Japan has been in deflation since 2008, part of that being material.  Ex food and energy the number was worse, at -1.1%.  These numbers may have contributed to the yen’s rise.  The yen has given up its move of the past three days and is back to 77, where it has been more or less since July.

Moving on to Europe, in a similar vein the Eurozone’s M3 data was released and was half a percent weaker than expected on an annualized basis, at 1.6%.  This is not a major surprise, but like the looming recession there, a bit sobering.  You can see that the improvement so clear from the end of 2009 has stalled at best.

But now from the What? Me Worry department we can see the Dax continuing its frogmarch higher (so to speak), up 13 out of 20 sessions and joining the growing number of exchanges up over 10% for the month.  The market never divulges its secrets but it looks an awful lot like Mario Draghi’s “QE Europa” LTRO deserves the credit.