Dave Lutz of Stifel, Nicolaus passes along the topics that traders are talking about today.
Morning, Futures in the US are basically unchanged this Expiry Friday, but NDX underperforming by 15bp early as the Tech ? Fins continues today with GOOG and MSFT results. DAX just surged back to unchanged on headlines China is removing the “floor” on lending rates domestically. That said, Shanghai had lost 1.5% as the Solar trade row escalates, and Taiwan was hit for almost 2% on heavy tech weakness (TSM) overnight. There was heavy volatility in Japan, with a 4% intraday swing, before the Nikkei closed off 1.5% ahead of Sunday’s elections. Watch RSX as Judge Frees Putin Critic During Appeal, and there are heavy headlines about the Detroit Bankruptcy. (Market Focus is on the Muni Side, where they are trying to write down $500mln in GOs to pennies on the dollar.
The 10YY in the USA has popped back towards unch on the China headlines, and Yields across the PIIGs have all tightened despite Germany barking at Greece. The DXY is dropping quick on the China reform – and the Aussie Dollar is ripping higher, driving the “Carry Trade” of AUD-JPY back towards the 200dma. Commodities are popping as well, with Gold knocking on $1300/oz again, and Oil Globally popping to new highs – The Brent/WTI Spread rests at 50c this AM.
Headlines showing the G20 is backing the OECD’s 15point plan to reform International tax Loopholes and Havens. This has weighed on some issues this week, but looks like it is a minimum of 12+ months from implementation. EPFR indicates some $19.7bn was invested in global equity funds in the past week, the highest weekly inflows since 2008.
China’s Solar Panel Feud With the West Leads to New Tariffs – The tariffs could exceed 50 per cent on materials for solar panels, a move seen as retaliation for an American trade lawsuit – Beijing’s move, a widely expected hit on U.S. and South Korean producers, coincides with difficult talks between the EU and China to defuse a conflict over alleged dumping of Chinese solar panels in Europe.
Huge sums poured into US equity funds – Wall of money sends weekly inflows to highest since June 2008 – Some $19.7bn was invested in global equity funds in the past week, the most for six months, while $700m was pulled from bond funds – $1.7bn of outflows from investment grade debt funds and $1.1bn of outflows from Treasuries as bullish investors turned away from assets regarded as “safe”. High-yield bond funds saw $4bn of inflows, the largest since October 2011 – emerging market debt funds continued to suffer, with a further $1.3bn worth of outflows
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