Bank Research Consensus Weekly 04.02.12
The End of the Big Rise?
Gerard Minack, Morgan Stanley
Australia's superb macro performance over the past two decades has been assisted by two major tailwinds: rising leverage and rising export prices. Both trends seem set to reverse. The prospective shift to falling leverage - particularly by households - and a turn in the terms of trade (export prices relative to import prices) will have important implications for investors. These changes will likely reduce Australia's resilience to external shock, are important adverse structural shifts for sectors of the equity market, point to significantly lower nominal profits growth and will likely see the currency weaken over the medium term.
FX: Has the Big Euro-Short Unwind Started?
Arne Lohmann Rasmussen, Chief Analyst, Danske Bank
Every Monday we publish an update on positioning in the FX market. We use the socalled IMM data that are part of the Commitments of Traders reports published by the US Commodity Futures Trading Commission (CFTC). The IMM data provide a breakdown of open futures positions on the Internal Money Market (IMM) division of the Chicago Mercantile Exchange. Hence, the data are just a small sample of the otherwise huge global OTC FX market, but still they seem to give a very precise overview of positioning in the market.
Bernanke Remains Cautious
John E. Silvia, Chief Economist, Wells Fargo
Ben Bernanke’s speech to the National Association of Business Economics was quite a bit more cautious than the general tenor of most recent economic reports. The Fed Chairman seemed to cast doubt on the veracity and durability of recent employment gains and suggested that the recent slide in the unemployment rate may simply have been a catch up for some earlier inconsistencies to the upside. The key takeaway from his talk, as well as his lecture at George Washington University, is that he is keeping an open mind on additional securities purchases, which he feels have made a meaningful effect on promoting growth and recovery.
U.S. – Squaring the Circle on Jobs and Growth
Alistair Bentley, Economist,TD Bank Financial Group
This week was relatively light in terms of data releases in the U.S. and the calendar was dominated by housing market data. Housing starts, existing and new home sales all came slightly below expectations. However, the softness was chalked up to month-to-month volatility and did not alter the market perception that a modest improvement remains under way in the housing market. So, despite the negative surprises, these reckonings did not rock the markets. What did move the markets this week were the manufacturing purchasing managers’ indexes of the euro zone and China. The former dropped to 48.7 in March, down from 49.3 in February, pushed down by contractions in both the German and French indexes. In China, the HSBC/Markit PMI came down to 48.1 in March, which put it below the 50-point mark that separates contraction from expansion for the fifth consecutive month. These indicators suggested that manufacturing activity is having a hard time gaining momentum globally, which combined with the recent spike in crude-oil prices, casts a shadow on the short-term global economic outlook.
Compiled by David Song, Currency Analyst
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