Z nedzy do pieniedzy ..:)

[andy11]

What we learned about markets in 2013


After a 30 year bull market for bonds and a 13 year bearish market for equities, the performance is now finally reversing. Equities had an outstanding year with the global economic recovery gaining momentum, and no surprise that in this environment bonds had a tough year. 2013 saw the developed world fight back, outperforming the developing. And although oil and energy prices have been strong, commodities have generally not done well with Gold having one of the worst years for decades.

At the beginning of the year at a pension’s conference repeatedly the message was that it was a low return world. Such universal pessimism suggested that the reverse was likely to be true and so it has proved. US stock markets continued to perform – the Dow Jones was up 27%, the S&P 500 up almost 30% to record highs and the tech laden Nasdaq even stronger, up 38%. This was on the back of stronger growth, ignoring both the taper and Washington’s budget mess. In Europe better economic news has also helped with the German DAX up 26%, FTSE100 up 14% and CAC40 up 17%. Even the troubled periphery had a good year with Italy’s FTSEMib up 16% and Spain’s IBEX up 21%. But the outstanding performer of them all has been the Nikkei up 56%, all thanks to the excitement around Abenomics. The MSCI World Index of equities is up 22.5% with strong performances in Finland, Ireland and USA. Small cap has outperformed large cap – always a sign of growing investor confidence in the economic recovery. In total investor demand added $8.76tn to the value of global equity markets to ensure valuations are at their highest since 2007.

The developing world stock markets, on the other hand, have not done so well – the MSCI Emerging markets index has fallen 5.7% YTD with the majority of regional and country markets down. The MSCI BRIC index is down 6.8% so far. Even the next great economic super power – China – was down – the MSCI China index fell just less than 1%. Only four countries are up so far – Egypt, Taiwan, Korea and Malaysia according to the MSCI. Also up was Greece, with a massive 38% increase showing the big improvement in sentiment towards the Eurozone. And if you want a fact to impress over the festive period, the Iranian stock market was up over 130% during 2013 and like Japan it was all due to a change in politician – this time it was the election of Rouhani and his policy of rapprochement with the US.

So what about the best performing stocks? In the Dow, Boeing tops the list up 82% with American Express second up 54%, Nike up 50% and Walt Disney up 48%. Three of top ten top performers in the Dow stocks are financials (AMEX,VISA and Goldman). The worst performing is IBM which is the only stock in the Dow down, losing 4.35%.

In Europe, EADS is up 90%, Deutsche Post up 60% and Daimler up 50%. Again three of top ten in SX5E are financials (Axa, UniCredit, ING). The worst performers are RWE down 15%, LVMH down 6% and ENI down 5%. In fact four of top ten worst performers in Europe are energy firms – RWE, ENI, EON and Enel. As wholesale gas prices soar, cash strapped consumers and governments are hitting back at paying higher prices for energy. This is a theme across Europe which has to build the next generation of power stations, reduce reliance on imported fuel and meet carbon emissions targets all whilst avoiding blackouts and humongous price increases!

In the FTSE100, International Consolidated Airlines tops the list up 116%, EasyJet up 99% and Hargreaves Lansdown up 93%. The worst preforming are Fresnillo down 61%, Randgold down 36% and Antofagasta down 35%. In fact the FTSE100 worst performers are dominated by metals and mining with Anglo American down 33%, Petrofac down 29%, BHP Billiton down 14% and Glencore Xstrata down 10%. This mirrors the performance of the underlying commodities, most of which have had a poor year.

Turning to the bond markets, and like other markets its all been about the Fed’s taper. The 10 year UST is ending the year yielding 3.03% – the highest during 2013 and up from a low of 2.5%. When tapering was first mentioned six months ago, there was a bloodbath with yields rising and developing markets collapsing. When it actually happened in late December, there was little reaction – the Dow Jones closed up 1.84% on the day. Thus proving the old market adage to sell the rumour and buy the fact (or the lack of market reaction may be due to the fact that everyone was in full Christmas swing and didn’t care!) The US yield curve is also steepening as would be expected at the very beginning of a tightening cycle. The 10 year over the two year yield spread reached 2.6% on Dec 24th, the highest since July 2011.

Japan’s ten year yield is expected to be at its lowest year end close since data began to be compiled by Bloomberg at 0.7%. However the low during 2013 was at 0.315%, set on April 5, the day after the Bank of Japan announced record stimulus.

The two biggest and most actively traded bond markets in the world, UST and JGB are seeing a divergence of performance as their central banks pursue differing policies. The Fed has now begun its taper of QE whilst the Bank of Japan continues aggressively with the printing presses. Thus the yield spread of UST over JGBs widened to highest in three years, to 2.3% for ten year debt on Dec 24. So America has to pay 2.3% more than Japan to borrow 10 year money from the markets reflecting that rates may go up in the US in 2015.

Looking down the world bonds page on Bloomberg, 10 year yields are at their highs for the year for pretty much all the major sovereign markets with UK 10yr yielding 3%, France 2.5% and Germany 1.9% thanks to the Fed’s actions and better economic news from UK and Europe. But 10 year yields for the periphery troubled EZ countries are ending the year towards their year averages or below with Portugal at 6%, Spain 4.1%, Italy 4.2%, and Greece at 8.1%. This highlights the reduction in perceived Eurozone risk.

Low interest rates with a threat of tightening in UK and US have ensured that bond markets continue to see very high corporate issuance. Verizon raised $49bn of debt on Sept 11, the biggest corporate bond offering in history, as part of its $130bn deal with Vodafone. Apple’s $17bn issue in April was the previous largest. In total US companies sold $1.5trillion of bonds through to Dec 24, with the highest percentage ever – 15% – to fund share buybacks, according to Moodys and Bloomberg.

At the same time that American companies are issuing massive amounts of bonds, the perceived risks of them doing so is falling. The cost to protect against default on US Corporate debt via the CDS market has come down in 2013 – the Markit CDS North American Investment Grade Index dropped 32bp through this year to Dec 24th to 62bp. This reduction in risk of US corporate debt is also reflected in the yield spread over Treasuries – the extra borrowing costs for US quality corporates over UST fell to a six year low at 1.88% on Dec 23rd. The same trend is seen in Europe – the Markit iTraxx Europe CDS Index of 125 companies with investment grade ratings fell 47bp to 70bp. As the global economic recovery gathers pace, so companies will do better, reducing the risk of default. In the emerging world though the story is similar to that of equities – under performance. The costs of insuring Asian corporate debt via the CDS market has increased – the Asia Markit iTRaxx Asia Index of 40 investment grade borrowers (ex Japan) up 10bp to 124bp,showing that investors perceive a greater risk for Asian corporates over the last year.

In the currency markets, the big trade has been yen weakness – falling to its lowest level against the dollar since Oct 2008 at 105.41. Japan’s currency has lost almost 20% this year, which is the biggest decline of the major currencies. And according to data from CFTC, net shorts on yen versus dollar, is at the highest levels since 2007, suggesting many continue to expect yen weakness. It’s all due to Abenomics and the commitment of the BOJ to print and print until the end of deflation. Again it highlights the divergence of policy by the central banks of American and Japan with the Fed moving to tighten monetary policy and the Bank of Japan still keeping the taps on.

The Fed taper has again driven currency markets with sharp falls in emerging market currencies as the end of cheap American money was threatened. The Asia Dollar index lost 3.5% in 4 months after the initial taper talk, but it has since rebounded 0.9%. The Taiwanese Dollar lost 3.4% during 2013, its biggest decline since 2001. The Indonesian Rupiah fell to five year low against dollar on Dec 23rd. India’s Rupee fell to a record low of 68.845 per dollar in August. All thanks to the taper. But the Thai Baht reminds us that political risk is still important – it is down to its weakest level since March 2010 as political tension is escalating. And the Turkish Lira also fell, to all time low of 2.10 per dollar in Dec 25th on the back of a corruption scandal that has already claimed three government ministers. The Istanbul stock market is also set for the lowest close in the year, proving once again how interlinked markets are.

Commodities were out of favour in 2013 with corn, silver and gold dropping the most during the year. Commodity funds saw record levels of selling, down $88bn to $332bn in the first 11 months of 2013. The S&P GSCI Spot Index of 24 commodities fell 1.5% YTD, the first drop since 2008 and any strength only due to strong oil and energy prices which constitute about 70% of index. Fourteen of twenty four commodities in the index fell in price and nine by double digits. Corn prices are down 38% YTD, the worst fall in at least 50yrs. Silver is down 36%, the biggest loss for more than 30 yrs. And the Gold price is down 28% YTD, the first annual slide since 2000, biggest drop since 1981 and the worst annual performance in 30yrs (remember though that Gold was trading at $398.15 ten years ago!) The price slump in precious metals has been a surprise – in Dec 2012, most predicted that precious metals would continue strong, with gains of up to 25%. In fact the Gold price is now 37% lower than its record high set in Sept 2011 of $1923.70, right at the height of eurozone woes.

Oil though has done fine with WTI up 8.2% in 2013, which is the fourth annual gain in five years. And natural gas prices up 32% (as anyone in UK who pays an energy bill knows). This is probably the main reason energy stocks are such poor performers in Europe as investors fear whether companies can pass on such high price increases.

Gold falling
The same themes have driven all the different markets. Gold has been weak thanks to a reduction in risk, particularly in the Eurozone. Its safe haven status is no longer so required. The recovery in the USA and better growth from the UK and Europe has helped stock markets. And as the developed world recovers, money can be invested safely back there. Each data release showing stronger economies particularly in the US, brings the first rate rise closer, thus bonds have done poorly. And the commitment by Prime Minister Abe to print until the end of deflation has driven the Yen lower, Japanese equities higher and JGBS to a record yearly low close.

And finally what else did well in 2013? Bizarrely French wine. Prices for bulk red wine, already at highest level since at least 1995, kept on rising through December. At E70.90 Euros for 100 litres, the price is up another 7.5% YTD. Apparently France’s wine production has been hit this year this by grape rot, hail damage and poor flowering. A bit like the Christmas weather in the UK which has been dire.

[andy11]

zamkniecia z 31 grudnia 2013

EUR/USD – 1.3762
USD/JPY – 105.29
GBP/USD – 1.6533
USD/CHF – 0.8921
USD/CAD – 1.0674
AUD/USD – 0.8929
NZD/USD – 0.8221
Gold – $1205.65

[andy11]

What To Expect From NZD In 2014? - Barclays, Credit Agricole

The following are the outlooks and forecasts for NZD in 2014 as provided by Barclays Capital and Credit Agricole.

Barclays: The NZD is likely to come under downward pressure as the RBNZ disappoints market expectations for rate hikes in Q1 2014. NZ interest rate market pricing now implies about a 50% possibility that the RBNZ will begin its tightening cycle as early as January 2014 with a 25bp hike, which is sooner than we expect (Q2 14) and the timing implied by the RBNZ’s forecasts (Q2 14).

Furthermore, positioning data, which show speculative investors are currently very long NZD/USD, suggest risks of an extended move lower. Expected slowing Australian and Chinese economic growth in 2014, which together take almost 40% of New Zealand’s exports, would likely to weigh on the NZD, in the context of broad-based USD strength. However, strong economic growth is likely to see the NZD outperform its high-yielding/high-beta G10 counterparts. The RBNZ expects increased consumption and the reconstruction of Canterbury (latest rebuild cost is NZD40bn, or 20% of GDP) to drive GDP growth to 3.5% y/y in mid-2014.

End-2014 forecast: 0.75

Credit Agricole: RBNZ tightening expectations and strengthening dairy prices should lift NZD relative to USD and its peer-group in 2014. Limiting the impact of these positive influences, portfolio investment outflows will likely increase to produce only mild NZD gains versus USD and a stable outcome versus AUD. Despite improving US growth expectations, NZD should continue to perform well during 2014 driven by superior RBNZ tightening expectations and a supportive trade influence. Already reflected in market pricing, policy tightening in New Zealand is predicted to occur well ahead of its higher-yield developed peripheral peer group. Indeed short-rate expectations sit significantly above those of Australia and Canada arguing NZD will remain attractive in 2014.

For similar reasons, we expect Japanese investor inflows (eg, Uridashi) to persist, driven by the BoJ’s aggressive policy stance. The recent news of China’s relaxation of its one-child policy will have a positive impact upon New Zealand export markets including milk solids exports. Only partially reflected in a recent terms of trade improvement, further gains in export prices should be expected through Q114. In turn, New Zealand now appears likely to return to a short period of trade surplus during the first half of next year. Offsetting this positive trade surplus impact, a further deterioration in portfolio flows will weigh upon NZD. In particular, equity outflows driven by New Zealand funds will go at least some of the way to recycling trade inflows limiting NZD/USD gains next year.

End-2014 forecast: 0.84

[andy11]

EUR In 2014: Themes & Forecasts - BofA Merrill

The following is Bank of America Merrill Lynch's comprehensive outlook for the EUR in 2014 including its themes and forecasts.

Themes: this time could be different

In our year ahead report, we argue that the Eurozone's weaker recovery and lower inflation compared with the US will gradually weaken the Euro as the Fed starts exiting from unconventional monetary policies. Our assessment of the monetary policy stance suggests that the ECB has the tightest policies, compared with both the rest of G10 and its own history. This is driven by the weak Eurozone recovery and falling inflation during 2013, despite two ECB rate cuts since last spring. Although tight policies have supported the Euro in the past, we argue that the ECB will have a loosening bias looking forward to address deflation risks, which will be EUR negative. Moreover, our analysis suggests that the massive positioning adjustment during 2013 from very short EUR in FX and underweighted European equities early in the year is now complete, suggesting that the Euro will be more sensitive to data and central bank policies looking forward.

EUR/USD:
Q1-1.31
Q2-1.29
Q3-1.27
Q4-1.25

EUR/JPY:
Q1-138
Q2-137
Q3-136
Q4-135

[andy11]

The following are 2014 major currency forecasts as provided by Australia and New Zealand Banking Group (ANZ).



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[andy11]

Here Is The FX Trade With The 'Most Value' In 2014

Traditional fair value models suggest that GBP & USD are undervalued while CHF & NOK are most overvalued, says Bank of America Merrill lynch.

"With the Great Rotation now underway and likely to accelerate in 2014 as the Fed tapers and the US economy recovers, equities will become a more popular asset class with cross-border equity flows a bigger driver of FX returns. Examining equities on a relative basis, suggests UK equities are most undervalued while Japanese equities are overvalued," BofA argues.

"The outlook for GBP is positive for 2014. Our analysis for G10 FX based on both "Value" and "relative monetary policy" suggests a favorable stance towards non-USD GBP crosses," BofA adds.

"Combining these results, we find most value in being long GBP/CHF over 2014," BofA concludes.

[andy11]

TOKIO zamkniete do 6 stycznia ... moga byc teleportacje na parach jenowych...

[andy11]

DANE (02.01.2014)

02:45 CHINY Indeks PMI dla przemyslu grudzien 50.5 50.5 50.8

09:00 POLSKA Indeks PMI dla przemyslu grudzien 54.4

09:15 HISZPANIA Indeks PMI dla przemyslu grudzien 48.6

09:30 CZECHY Indeks PMI dla przemyslu grudzien 55.4

10:00 NIEMCY Indeks PMI dla przemyslu grudzien 54.2 52.7
10:00 STREFA EURO Indeks PMI dla przemyslu grudzien 52.7 51.6

10:30 WIELKA BRYTANIA Indeks PMI dla przemylu grudzien 58.7 58.4

14:00 POLSKA Saldo rachunku biezacego (EUR) III kw. 362 mln

14:30 USA Wnioski o zasilek dla bezrobotnych tydzien

15:00 USA Indeks PMI dla przemyslu grudzien 54.4 54.7

15:30 KANADA Indeks PMI dla przemyslu grudzien 55.3

16:00 USA Indeks ISM dla przemyslu grudzien 57 57.3

[andy11]

GBP/CHF - wlasnie zblizamy do SR na wykresie W1

[andy11]

wczoraj tj 01.01.2014 byly publikowane dane z Chin (PMI dla przemyslu za grudzien ) index spadl do 51 pkt wobec 51.4 pkt w listopadzie,prognoza byla 51.2pkt. patrzac na poprzednie odczyty to jest to pierwszy spadek od czerwca 2013. natomiast odczyt PMI dla Australii znajduje sie ponizej 50pkt (w grudniu wyniosl 47.6 pkt) slabe odczyty z Chin i slabe dane z Australii ( gospodarka Australii powiazana silnie z gospodarka Chinska ) ma wplyw na cene aud...