Posts Tagged ‘Canada’

Notes From Underground: The markets will labor with the unemployment report

January 6, 2011

Let me state out again as to why the FOREX markets are going to be a difficult investment in 2011. The emerging markets and commodity-based currencies have been the repositories of global capital seeking to take advantage of the Chinese and India growth phenomena without having to actually invest in the countries themselves. If you like China, buy the Australian equity or currency as it provides a proxy on Beijing’s growth policies: A classic case of providing picks and shovels rather than mining yourself.

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Notes From Underground: Pimco calls for some of the PIIGS to leave the STRAW HOUSE AND HIT THE BRICS

December 20, 2010

A note from Andrew Bosomworth, head of Pimco’s European Portfolio, suggests that Greece, Ireland and Portugal would be better off leaving the euro currency until they get their houses in order. Bosomworth wrote it will be difficult but it can be done and the currency devaluations that will be part of exit will aid the PIG in its attempt at economic recovery.

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Notes From Underground: Swiss go CucKOO for COCOs

December 13, 2010

Something to put on your radar screens for the new year: contingent capital, or CoCo bonds. These instruments are contingent convertible and will be a very respected form of TIER 1 capital under the foggy regulations of Basel 3. The regulators like these instruments as they are DEBT that converts to equity if/when the bank-in-question’s equity/capital ratio falls below a certain level. Rather than the BOND holders getting a free ride and the equity owners bearing the burden with an equity raise, the CoCos will automatically convert to EQUITY, which will lower the level of DEBT and increase equity capital to a regulatory acceptable level. Credit Suisse announced it’s going to do a $30 billion CoCo so you can be certain that other large multinational banks will be joining in. It has yet to be determined what effect CoCos will have on the markets overall. If its popularity catches on, as I suspect, it could provide a boost to the global behemoths as it would lower the need to float more stock to reach the needed capital levels.

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Notes From Underground: Just like Frank Zappa, the markets are like a Penguin in Bondage

December 8, 2010

During the last two days the markets have heard from the Australian and Canadian central banks and both institutions held its rates steady. Both banks cited its strong currencies and the still-fragile state of the global economy outside of emerging Asia as the primary reasons for holding.  (more…)

Notes From Underground: Wikileaks confirms it–the Walrus was Paul; and Chinese data is suspect

December 7, 2010

Last night, the RBA voted to hold Australian rates steady at 4.75 percent. Governor Stevens showed us his usual, steady hand in the BANK‘s statement as he provided us with a global view that weighed heavily on Aussie monetary policy. The strength of the Aussie dollar kept the RBA from raising rates as the bank had unexpectedly raised rates in November and was content to see if the U.S. and European economies can overcome their current malaise. The Chinese and Indian demand were responsible for the best terms of trade for OZ since the 1950s and growth in other Asian nations was brightening the jobs and capex picture even more. In a few paragraphs, Governor Stevens and his comrades are very clear that Australia is the epicenter of the Asian growth story and the RBA will be watching for indicators that Australian employment is getting too tight for the BANK to move rates higher.

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Notes From Underground: OOPS, got it way wrong on the JOBLESS CLAIMS

December 2, 2010

Well, my guesstimate on jobless claims was way off as the previous number was not supported by further improvement. The consensus was 425,000 and the number actually reported was 436,000, well above what I anticiapted and hoped would be a three handle.

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Notes From Underground: GDP reports of the North-U.S. and Canada

October 28, 2010

Friday morning we will get the third-quarter GDP reports from the U.S. and Canada, both coming out at 7:30 a.m. CST. The U.S. is looking for growth of 2.1 percent and it will give us a good look to see if there was enough growth to support the equity rally and corporate profit picture we have seen this quarter. A bigger number may give the FED the cover to proceed down a less robust QE path and push out a liquidity addition on a glide path that was proposed by ST.LOUIS FED President James Bullard.

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Notes From Underground: The Aussies have a hung Parliament

August 22, 2010

The biggest news from the weekend is that the Aussie elections resulted in a hung parliament–the first in 70 years–as neither the Liberals nor Labor Party received the necessary 76 seats in the Lower House that would’ve given them the majority that was needed. The Liberals (Conservatives) are in front with 72 confirmed seats to the Labor’s 71, but both must seek a coalition. The GREEN PARTY controls one seat in the Lower House, making them a potential factor in any coalition, but if the Liberals can coax four independents they will be able to form a government.

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Notes From Underground: FOMC convenes Tuesday

August 8, 2010

Friday’s unemployment report was worse than expected and to make matters worse June’s tepid numbers were revised downward. Prior to the U.S. release, we got news that Canada had negative job growth but that is not a terrible thing as the three previous Canadian numbers were very robust. The question facing all economic policy makers is whether or not the global economy is indeed slowing or merely treading water at very tepid rates of growth? All the news reports from the U.S. during the weekend reflected concern that the U.S. recovery was grinding to a halt and the Obama administration was searching for a new policy mix to stimulate the moribund jobs market.

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Notes From Underground: Kan faces a big test within the DPJ–can he remain prime minister?

July 11, 2010

The biggest story from the weekend was the release of the Chinese trade numbers and surprisingly the export component rose 44 percent year-over-year, while the imports slowed resulting in an increase in the trade surplus.We know that this will not play well in Washington and will provide fresh fodder for the protectionist drumbeat that is looking for more participants to march along.

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