Friday, February 25, 2011

Fear Is Over ...

... because oil settles higher, as per Dow Jones:

NEW YORK (Dow Jones)--Crude futures settled higher Friday, ending near $98 a barrel as oil markets remain focused on the violent unrest in Libya.

Light, sweet crude for April delivery settled up 60 cents at $97.88 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 78 cents higher at $112.14 a barrel.


Thursday, February 24, 2011

Viking's Latest Paintings

Weekly equity technical focus by Swedish SEB has a lot of red arrows, but ICE Brent Crude has it green ...

Oil Prices And Recessions

If it has not been clear yet to the readers, the following chart by economists at Nomura should make it very obvious, why the stress?

Click on chart to enlarge, courtesy of Nomura.

Interestingly, these guys in video below have a straight forward opinion who is to blame.

Wednesday, February 23, 2011

If China Is Indeed Leading?

Already some time ago I noted that economists at Societe Generale believe that China drives the global manufacturing cycle now. If we look at China PMI now, the outlook would not be very encouraging, if the economists at Societe Generale are indeed right.

Click on chart to enlarge, courtesy of BNP Paribas.

Though, just not yet? The economists at BNP Paribas write today:
The US manufacturing sector continues to grow and outperform other sectors of the economy. February’s Richmond Fed manufacturing survey jumped to 25 from 18 in the month prior. Earlier this month the Philly Fed index surged to 35.9, the highest level since January of 2004, while the Empire manufacturing index improved to 15.4 following a 11.9 reading in the previous month. However, on an ISM-adjusted basis, all three indexes in February were slightly below the ISM index in January; supporting our forecast for a small decline in the Manufacturing ISM in February (see chart below).
Click on chart to enlarge, courtesy of BNP Paribas.

False Transport Confirmation?

I noted bullish confirmation by DJ Trannies last Thursday, it seems to be FALSE bullishness by now.

Click on chart to enlarge, up-to-date version available at

S&P500 below 1311 would be vulnerable to serious correction? Above 1325 it would look bullish again?

Global Oil Bill As % Of Nominal GDP

Excellent chart from economists at Societe Generale. Click on chart to enlarge, courtesy of Societe Generale.

Monday, February 21, 2011

If Libya Is Not Enough, Take A Look At Potential Dissents In Asia

While Fed's POMO and QE2 are on holiday, Libya comes in spot today. If Libya is not enough, take a look at potential dissents in Asia with the helping tool by economists at Societe Generale.

Click on chart to enlarge, courtesy of Societe Generale. "EG" is supposed to be Egypt, "TN" - Tunisia, "VN" Vietnam, "CH" - China, and so on...
Though, it is worth saving poor bankers ...

Friday, February 18, 2011

Watch The Greenback

 ... says Nomura today, and draws the chart of the week, based on the emerging markets fund flows.

Click on chart to enlarge, courtesy of Nomura.

It is not only currency that will be affected then.

Thursday, February 17, 2011

Chartists In Beauty Contest

I am taking the Japanese candlestick masters from Nomura, that have published report in English today, but compiled on 14th February. So, this is not very fair, but Japanese masters have been forecasting a correction for months now.

Click on chart to enlarge, courtesy of Nomura.
However, we have got a bullish confirmation signal according to Dow Theory yesterday.

Click on chart to enlarge, courtesy of Barclays Capital.

Be careful!

Wednesday, February 16, 2011

Two Different Worlds

This is from the presentation by economists at BNP Paribas today. Whatever you think, but the spread is striking. Good that smaller businesses do not matter, also when accounting for GDP ...

Click on chart to enlarge, courtesy of BNP Paribas.
Bigger businesses are more exposed to global markets ... and are less reliant on banks.

Tuesday, February 15, 2011

Danske: China Food Prices And Retail Sales Of Durable Goods

This is my chart of the day, produced by the strategists at Danske Markets Equities.

Click on chart to enlarge, courtesy of Danske Markets Equities.

Monday, February 14, 2011

Chinese Stimulus For The Rest Of World

Stunning growth figures from China today, quote from economists at Nomura:
Click on charts to enlarge, courtesy of Nomura.

For China the Fed' s QE2 works definitely ....
Import growth also surged by an even more impressive 51.0% y-o-y (10.8% m-o-m, seasonally adjusted), the highest level in 13 months, from 25.6% in December, also far exceeding expectations (Consensus: 27.0%; Nomura: 38.0%). In our view, while there was probably some front-loading of imports ahead of the holidays, the surge also reflected prices of commodities on the global market (lifting the cost per unit of China’s imports); strengthening growth momentum in domestic demand; and companies responding to rising international commodities prices (and expectations that they will continue to rise) by building-up raw material inventories. On commodities, import growth in value terms in most categories was much higher than in volume terms, as evidenced by soybeans (value growth of 51.7% and volume growth of 26.0% y-o-y), iron ore (145.7% and 47.9% y-o-y) and crude steel (204.0% and 126.5% y-o-y). Supporting our inventory build-up hypothesis, import volume growth of several raw materials surged, including crude steel (126.5%), iron ore (47.9% y-o-y), paper pulp (29.2%), crude oil (27.4%) and copper (24.7%). Supporting our hypothesis of strengthening domestic demand absorbing more imports, ordinary goods imports – that is, imports catered for domestic demand rather than being used in the production process to make finished goods to export – grew 55.5% y-o-y to USD84.9bn – much faster than imports of processing trade (39.7% y-o-y; USD37.6bn).

Friday, February 11, 2011

Inflation Can Be Equities Killer

Simple as it gets from economists at BNP Paribas today (see the chart below):
Chart 7 refers to research by the IMF and our own work. We looked into the response of equity markets to rising inflation rates from 1965. This study suggests equity returns become negative when inflation exceeds 6%. The equity market’s optimal inflation rate is 3%. Higher or lower inflation rates are counterproductive.
Click on chart to enlarge, courtesy of BNP Paribas.

Thursday, February 10, 2011

Ready For Inflation Scare?

While the economists are rather cool about the Eurozone, where Commerzbank expects the headline inflation to top out by March, the US psycho may be less robust due to QEasing. Albert Edwards from Societe Generale expects the major American overreaction.

Click on charts to enlarge, courtesy of Commerzbank.

Wednesday, February 09, 2011

Food Retail Price Structure

There are quite a lot of discussions around the food inflation and monetary policy these days, mainly due to tail risks, like this. However, it is interesting to see how much "Farm value" is in the food retail price, see below the estimate version by Barclays Capital.

Click on chart to enlarge, courtesy of Barclays Capital.

Tuesday, February 08, 2011

"Giddy Euphoria About The Swedish Economy" And Household Dreams In Debts

Of course, I did not know yesterday that SEB is going to publish their Nordic Outlook today. As I have spent some posts recently and some time earlier too, I thought it is worth to refresh the Swedish dreams in debt.

The economists at SEB write today:
Looking a bit ahead, the rapid upturn in home prices and household debt in recent years constitutes the biggest risk in the Swedish economy. After a brief slowdown in 2008, household borrowing has accelerated and debt is now close to 180 per cent of disposable income, a high level in an international comparison. Meanwhile home prices have continued climbing in a way that diverges sharply from trends in other countries.

In the latest issues of Nordic Outlook, we have discussed these risks in detail. There are several factors underlying current developments, for example structurally low home construction, exceptionally low mortgage interest rates and strong growth in employment and income. Meanwhile, international experience indicates that as a rule, a debt expansion as rapid as that occurring in Sweden is followed by a significant correction.
Click on chart to enlarge, courtesy of SEB.

So much for giddy euphoria...

Monday, February 07, 2011

Vikings See Different Stock Stories

Relative value gaming? Is it obvious that S&P500 is by far more stretched than Nikkei 225?

Click on chart to enlarge, courtesy of SEB.

So far any correction appears like a wishful thinking, when everyone waits for it and is ready to buy the dip.

Friday, February 04, 2011

Noise Around The US Debt Ceiling

Fear mongering tactics by Ben Bernanke of default is noise and, probably, should be rather assumed as detraction, if history of debt ceiling crisis of 1995-96 is any guide.

Click on chart to enlarge, courtesy of Societe Generale.

Thursday, February 03, 2011

Inflation Scare Of The Day

From Dow Jones Newswires today:

*DJ US 4Q Unit Labor Costs -0.6%; Consensus +0.1%
Well, there are risks of honest hedonics in statistics ...

Some additional explanations, from Global Data Watch Handbook by J.P.Morgan:
... Unit labor cost is equal to total labor costs (wages and benefits) divided by total output. (Or, equivalently, labor cost per hour divided by output per hour.) Consequently, unit labor cost depends on both productivity and compensation: the rate of increase in unit labor cost is approximately the rate of increase in compensation minus the rate of increase in productivity. For instance, if labor cost inflation is 4% and productivity growth is 1%, unit labor cost inflation is 3%.

Productivity growth outpaces compensation ... errr.