JAPAN DATA: From quarterly survey by the Ministry of Finance:
— Japan Q3 Non-Financial Firm Capex +5.0% Y/Y Vs Q2 -1.7%
— Japan Q3 Capex (Ex-Software) +4.8% Y/Y Vs Q2 -1.5%
— Japan Q3 Capex (Ex-Software) S/A +1.9% Q/Q Vs Q2 Rev +5.3%
— Japan Q3 Manufacturer Capex +9.1% Y/Y Vs Q2 -10.5%
— Japan Q3 Non-Manufacturer Capex +2.9% Y/Y Vs Q2 +3.4%
— Japan Q3 Non-Fncl Firm Current Profit +54.1% Y/Y Vs Q2 +83.4%
–House GOP Leader Boehner: Vote ‘Does Undercut’ Bipartisan Tax Talks
–Rep. Boehner: House Dems Are ‘Playing Games’ With Thursday Tax Vote
–Senate GOP Leader McConnell: All Bush Era Tax Cuts Will Be Extended
–Sen. McConnell: Only Issue Is ‘How Long’ Tax Cuts Will Be Extended
By John Shaw
WASHINGTON (MNI) – House Republican Leader John Boehner and Senate
Republican Leader Mitch McConnell Wednesday blasted House Democrats for
scheduling a vote Thursday on a bill that renews the middle class
portion of the Bush era tax cuts.
At a briefing with several newly elected Republican governors,
Boehner and McConnell said they are perplexed and displeased with the
House vote that is set for Thursday.
“It does undercut the bipartisan negotiations on extending the Bush
era tax cuts,” Boehner said.
He accused Democrats of “playing games” by scheduling a House vote
Thursday on a bill to extend the Bush era tax cuts only for those
individuals making $200,000 or less and couples making $250,000 or less.
“It’s not going anywhere,” McConnell said, adding there is an
agreement between the White House and GOP leaders on extending all of
the Bush era tax cuts.
The only issue, McConnell said, is “just how long that extension
Earlier in the day, House Majority Leader Steny Hoyer said the
House will go forward with a vote Thursday on a tax cut package that
includes extending the Bush era tax cuts for the middle class.
Hoyer said that he believes it’s important for the House to vote on
a plan that extends the Bush tax cuts for individuals making up to
$200,000 and couples earning up to $250,000 and includes AMT relief and
Hoyer said that this vote “should not undermine” the negotiations
that have just begun between Treasury Secretary Tim Geithner, White
House budget director Jack Lew and four congressional negotiators.
Hoyer said the House vote is not designed to put Republicans in a
“difficult place” but to express the views of the Democratic majority
that controls the House for the rest of this year.
** Market News International Washington Bureau: (202) 371-2121 **
After a big move overnight, and with stop-loss orders obviously too far away to be of interest, we are seeing some mild profit taking in pairs like EUR/JPY, GBP/JPY and AUD/JPY, all of which had big moves higher overnight.
Hourly support levels in the EUR/JPY are around 110.25, GBP/JPY around 130.85 and AUD/JPY around 81.00.
The big talk overnight was that the ECB had finally overcome the inflation-angst of Herr Weber and the German populace and is about to join the Fed and the BOJ by printing more money and hoping that all our problems will go away.
Surely the EUR, USD and JPY should be losing even further credibility as stores of value. No wonder blue chip stocks soared overnight and it’s a wonder that Gold didn’t surge as well (though I guess it is already quite overbought). The ECB’s logic is probably that if everyone else is doing it, then we should too.
I’m off to buy some more GBP and perhaps a few more ounces of AU!
By Denny Gulino
WASHINGTON (MNI) – More than 20,000 Federal Reserve data entries,
and many names of crisis-era borrowers were revealed Wednesday for the
first time and although the data dump generated only a huge yawn among
market participants, precedents were set that will change the flavor of
any future crisis aid.
In establishing new crisis rules for the Fed, the Dodd-Frank Act
eliminated the Fed’s so-called Section 13-3 authority to bail out
individual firms it might feel should get emergency help and also
specified the rules for disclosure of emergency aid that were followed
for the first time Wednesday.
Starting at noon, anyone could go to the Federal Reserve Web page,
federalreserve.gov, and find out that Citigroup borrowed $2.2 trillion,
Morgan Stanley $2 trillion, Merrill Lynch a little more than $2 trillion
and Goldman Sachs more than $600 billion. Foreign banks like Barclays,
UBS, BNP Paribas and the Royal Bank of Scotland were in for hundreds of
billions. Some of the draws were highly repetitive, with single
institutions borrowing, paying back and borrowing again many times.
It was one of the largest single set of financial disclosures by
the Fed or any other federal agency.
In its announcement of the disclosures, the Fed said, however, that
discount window borrowers will still have their identities protected
for two years.
Generally, analysts found little of interest in the mountain of
historical data with most of the aid programs now wound down. Some of
the banks, like Goldman, said their crisis borrowings were urged on them
by the Fed and Treasury so therefore didn’t provide any insights into
their degree of need — if any — at the time.
Ray Stone of Stone & McCarthy Research Associates said “much of
this information had already been made public or is largely irrelevant
with regard to where we are today.”
Stone noted that Merrill Lynch Government Securities inclusive of
its London unit had daily advances totaling $2.017 trillion, much of it
“borrowed in the weeks following the Lehman failure, but prior
to the BofA acquisition of Merrill.”
Now, however, all financial institutions know that any future
crisis borrrowing will be disclosed in detail if such borrowing is
available at all. Whether that will add a stigma that will prevent or
delay needed borrowing, or exact an additional market penalty for
borrowing, the anti-bailout provisions of Dodd-Frank will be in force.
Will the new regime of allowing orderly liquidation of financial
institutions that are in trouble, and prohibiting the kind of help that
may have saved them last time, survive the next test? Can a way be found
to provide across-the-board systemic support — still permitted under
Dodd-Frank — that is more industry focused than broad measures like
QE2, that can’t be construed to be helping individual firms? Those are
the question posed — and not answered — by the day’s Fed disclosures.
** Market News International Washington Bureau: 202-371-2121 **
I think we can also get used to more of the same as these markets are going to stay choppy. The directional traders are going to get chopped but the skilled trader should have a ball.
Japan’s monetary base and Australian retail sales are the main economic releases this morning.
Corporate sell orders in USD/JPY around 84.40/50 but I’m hearing talk of some very juicy stops above 84.50 which might catch dealers interest this morning, especially when the markets are thinner than normal before Tokyo opens.
Good luck today.
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