GBP/USD and EUR/USD

4H
we are having CZ forming for down move
but those all penetrated each other.
this is not proper down move.
it more sounds like a chop.

every 10-15 pips down move price creating a new CZ

my guess this will not fixed until US join the game properly

as we are having average ~30 pip range @ US session last week & this week

as also seen D1 chart
we have distance but diveded into 7 days

D1 is in proper down channel but not moving fast & momentum as I expected.
this may also a reverse operation.
but again Until US join the game with decent Range @ session we can not know that.
as biggest player is not playing these days

So far so good, 38fib holding, thought good data was going kill me quick, was always an odd trade, but there is method in my madness "sometimes"
This is old high low chart, I been drag along and update each h or l etc
Will be interest what the 4hr candle is when close in 6min then the next 4hr candle then this daily when close, is a much waiting game this business

Japan: Slip Sliding Away

TUESDAY, NOVEMBER 13, 2012
Marc Chandler



http://2.bp.blogspot.com/-OFBqtol5Zb...lat-earth.jpeg


There is a stark contrast between the deterioration of the political and economic environment in Japan and the relative strength of the yen. The mystery is resolved by recognizing that the drivers of the yen's exchange rate has little to do with the macro-fundamentals in Japan and more to do with the general investment climate and interest rate differentials.

Make no mistake about it, although Japan did not experience the US real estate implosion or Europe's sovereign and banking crisis, its economic crisis is just as profound. And, as appears to be the case in America and Europe, Japan's political institutions or politicians may not be up to the task.

Japan has had six prime minister in the past six years. The list of suitable candidates may be so limited, that tit may begin recycling former prime ministers. The current and increasingly unpopular prime minister appears to have consented to hold elections in which his Democrat Party of Japan is likely to lose mightily to the former ruling, and now main opposition party, the Liberal Democrats. The leader of the LDP is Shinzo Abe who was prime minister from Sept 2006-Sept 2007.

Polls suggest the DPJ will likely lose more than half their 240 seats in an election, which could be held in mid-to-late December. It would require the dissolution of the lower house of parliament in the next week or so. Current Prime Minister Noda has been cagey about when he will call the election. The LDP supported his controversial retail sales tax hike on the condition that he would call elections.

Noda has not done so and wants to parliament to accomplish three things: 1) approve a deficit financing bill, ideally covering a few years; 2) complete the electoral reform; and 3) agree to a framework for social security reform. While the first goal is likely to achieve as negotiations are reportedly underway, the other two look decidedly less likely.

Before the US election, there was some discussion of Federal Reserve Chairman Bernanke's tenure. Some thought if Romney was elected Bernanke would step down. We never believed that and thought there is good reason why the president and Fed chairman terms are not concurrent. We have shared the sense that we have picked up that there is may be an informal term limit for the chairman in the post-Greenspan era.

We do expect a new Federal Reserve chairman in 2014. However, that means that the focus on personal changes at central banks should look elsewhere. Bernanke will likely be in office after BOJ Governor Shirakwa's term ends (March 2013) Bernanke will also likely last beyond PBOC Governor Zhou and BOE Governor King,whose terms end next year.

The new government in Japan will inherit the first current account deficit in more than 30 years. Between deflation and contraction, the economy the LDP will take stewardship has shrunk to 1993 levels. In both the second and third quarter, consumer spending fell. Foreign demand is poor and exports to the US, Europe and Asia are off 10%. With weak demand, capex is also a contracting.

We are often told that countries that print their own currencies are at a distinct advantage to countries that cannot. Hence the argument goes the UK is fortunate for not joining monetary union and that Greece (or other peripheral countries) would be better served by dropping out and reintroducing their own currency. Tell it to the Japanese. The strength of the yen may not be the most significant problem Japan faces, but it makes Japan's problems more intractable.

Storm Clouds Continue to Gather

TUESDAY, NOVEMBER 13, 2012
Marc Chandler

http://1.bp.blogspot.com/-tdVNBGqfjB...320/clouds.jpg

The euro was sold to new two-month lows against the dollar following the failure of the euro area finance ministers show any progress toward an agreement on Greece or bank supervision.

News of a worse than expected German ZEW survey (expectations -15.7 vs -9.8 expected and -11.5 in September) saw the low put in. However, news that Greece was able to raise sufficient funds in a bill auction to cover the November 16 redemption saw the euro stabilize.

The euro found a bid near $1.2660 and there is potential in North America today to see $1.2700 or a little more. A move above yesterday's high near $1.2740 is needed to stabilize the short-term technical tone.

While the expectations component of the ZEW fell to snap a two-month improving streak, the current assessment measure fell for the sixth consecutive month. This is broadly consistent with the PMI data that shows the German locomotive is stalling. On Thursday, Germany will report Q3 GDP. The Bloomberg consensus calls for a 0.1% quarterly expansion. The risk is on the downside after the recent dreadful industrial production data (Sept -1.8% m/m vs expectations of -0.7%).

From the other side of the Channel, the UK reported that October CPI rose 2.7% year-over-year from 2.2% in September. This was well above the expectation for a 2.3% pace. The ONS cited food and university tuition fees as culprits. The core rate also jumped (2.7% from 2.1%). Tomorrow's BOE quarterly inflation report takes an extra significance.

The BOE did not extend its gilt purchase operation last week, but by using the interest on the gilts it earns to have reduce the government's debt, Governor King acknowledged it was tantamount to a modest easing of policy (~GBP35 bln). The rise in CPI, a potential modest rebound in housing, the funding-for-lending scheme all suggest point to a BOE that is in no hurry to extend QE. That said, the rise in Q3 GDP was a bit of a fluke and the economy is stagnating or worse.

Sterling was sold to fresh two-month lows, just above $1.5850, and rebounded through $1.5900 on the elevated inflation figures. Initial resistance is seen near yesterday's high ~$1.5915. We are more inclined to see a return to the lows than strong gains through that cap.

Debate over Greece Rages On

TUESDAY, NOVEMBER 13, 2012
Marc Chandler

http://2.bp.blogspot.com/-dGr3_ol67f...1600/atlas.jpg

The German paper Bild reported that Germany may be willing to make a lump aid payment to Greece of 44 bln euros. This popped the euro up a little more than half a cent to the session high just below $1.2730.

Color me skeptical. To give Greece such a large sum at once is counter to the underlying strategy of doling out the aid in tranches to provide assurances of compliance. This is tantamount to unilateral disarmament by the creditors. Second, three euro area members require parliamentary approval, Germany, Finland and the Netherlands. It is unlikely to receive support.

Recall that previously German Finance Minister Schaeuble proposed paying Greece's aid into an escrow account to ensure the orderly servicing of its debt. The Bild report may not be inconsistent with this. In any event, what will eventually be agreed seems to certainly not be as straightforward as the Bild story and dramatic market response would suggest.

Moreover, market participants should not let the Bild story paper over the real development from the eurogroup meeting which is that the Troika is not the united front of creditors that it once was. The IMF has broken with the unrelenting push toward austerity and now insists that the two-year extension for Greece does not mean that the 120% debt/GDP, working definition of sustainability gets pushed out to 2022. The euro zone finance ministers apparently think otherwise.

What is at stake is how to find the roughly 32 bln euro or so that Greece is projected to need to extend to 2016 when it spends only 2% more than it collects. The IMF wants the official sector, but not it, to take a haircut. However, euro zone finance ministers are more inclined to lower interest rates and extend maturities, which is a tactic that has been deployed for Greece twice since 2010.

European finance ministers are loathe to do two things: commit any fresh funds to Greece and take a haircut on existing loans. It will prove difficult to square the circle.

The euro has pared its gains. Initial support is now seen just below $1.2700. A break signals another test on the $1.2650 retracement objective.

Great Graphic: Fiscal Cliff

TUESDAY, NOVEMBER 13, 2012
Marc Chandler



http://2.bp.blogspot.com/-4MObiLO4ic...nfographic.jpg

This Great Graphic is from the Washington Post and Pew Research. It finds that by a margin of 51%-38%, Americans believe that President Obama and the Republican-led House of Representatives will not reach an agreement that avoids the fiscal cliff.

Given the cast of characters and pledges not to raise taxes, we had suggested that the fiscal cliff may be easier to address after the fact than preemptively.

Taking remedial action will allow some to honor the letter of their pledge and support the reinstatement of some tax breaks. The economic impact may not be so severe if the US remains over the cliff for a short period of time.

EURUSD formed a hikkake with pinbar off support. Strong Reversal pattern.


http://tigerfxbd.com/wp-content/uplo...9-1024x525.png

US has joined the game & as expected they attempt to reverse it.
this session will be more clear

Possible BreakOut Scenario

Fed Won’t Catch Markets, If US Falls Off ‘Cliff’: Fisher

Published: Tuesday, 13 Nov 2012 | 7:47 PM ET
By: Lee Brodie - Producer



http://media.cnbc.com/i/CNBC/Section...rescue-200.jpg


In the event the US goes off the Fiscal Cliff, don’t expect the Fed to shield markets from the worst. In a live interview on The Kudlow Report, the hawkish Dallas Fed President Richard Fisher said he’d resist that kind of intervention.

“I do not see us as that kind safety net,” he said. “There’s got to be a limit. In committee we’d have to decide what kind of limit, but there’s got to be a limit.”

That means if Congress play partisan politics and a big tax hike kicks in, the first quarter turns negative and lawmakers are still scurrying around Washington, unable to reach a deal – don’t expect a massive bond buying program, explained Larry Kudlow.

It’s not coming. Read More: Fiscal Cliff: America's Looming Economic Crisis

Fisher went on to say lawmakers have to step up – and if need be he thinks the Fed should force their hand.

“The more we do at the Fed, the more excuses politicians have to do nothing.”

And Fisher is tired of the indecision.

“Fiscal authorities must get their act together,” he said, “We can’t just rely on monetary policy – we can’t have a monetary policy of infinity and beyond.”

“The Fed has been carrying the ball,” Fisher added. “But we can’t carry the ball all by ourselves.”

*It's worth noting in the interview Fisher emphasized that what's outlined above was strictly his opinion and not that of Ben Bernanke.
You can see our entire interview with Dallas Fed President Richard Fisher in the video above.



http://media.cnbc.com/i/CNBC/Section...ory_360_TV.gifTune in:"The Kudlow Report" airs weeknights at 7 p.m. ET.




Source :CNBC

Multi Levels for EURO in H1 time frime

Wednesday - November 14, 2012

GREEN Levels Colour (with Prices) is SMALL Levels move.
PURPLE Levels Colour (with Prices) is MEDIUM Levels move.
BLUE Levels Colour (with Prices) is BIG Levels move.

Broken Lines Colour (without Prices) is IMPORTANT Levels.

Multi Levels for POUNDS in H1 time frime

Wednesday - November 14, 2012

GREEN Levels Colour (with Prices) is SMALL Levels move.
PURPLE Levels Colour (with Prices) is MEDIUM Levels move.
BLUE Levels Colour (with Prices) is BIG Levels move.

Broken Lines Colour (without Prices) is IMPORTANT Levels.

Multi Pairs FX in Bar Trend + Power Graph

Wednesday - November 14, 2012

Dynamic Trend : Looking for Any Pairs Trends, from H4 to M1 time frime
Daily Dynamic : Looking for Any Pairs Trends, from D1 to D4 time frime

Four Key Developments

WEDNESDAY, NOVEMBER 14, 2012
Marc Chandler



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The US dollar is broadly mixed here at midweek. The euro is at its best levels of the week and is consolidating the break below $1.2800.
The Swiss is being dragged for the ride, but is trading near two month highs against the euro.

The yen is the weakest of the majors and sterling fell out of favor following a more dovish BOE inflation report. The dollar-bloc is little change, with the Canadian dollar out-performing, even though late yesterday the finance minister acknowledged that the balance budget goal will going to take longer than previously anticipated.

Germany auctioned 2-year notes with a next yield for the first time in four months today, but bond markets are narrowly mixed throughout Europe.
Spanish and Italian 10-year yields are extended yesterday's decline. Greek yields are lower as well. Core bond yields , including the UK, France and the Netherlands are a bit firmer.

There are four developments to note today :

First, after much consternation, Japan’s parliament will be dissolved at the end of the week to prepare for elections in the middle of next month.

The DPJ will most likely turn the reins of power back over a center-right coalition led by the LDP. The most head of the LDP, Abe is already staking out his agenda. It will include a large supplemental budget and a more earnest commitment to ending deflation.

Abe wants the government to have a bigger say in picking the next head of the BOJ and wants it to have a new and higher inflation target (suggested 3% recently) and an open ended commitment (see ECB and Fed). The yen has weakened across the board. The dollar is testing resistance just above JPY80.00 and the next target is the recent highs near JPY80.70. The euro has gained 1% against the yen and is testing the JPY102.00-20 resistance area.

Second, the Bank of England’s quarterly inflation report was more dovish than anticipated and this knocked sterling to new session lows after appearing poised to take out resistance near $1.59. The key elements included a warned that after expanding for the first time in four quarters in Q3, the UK economy may contract again here in Q4, warning the economy may be “weaker for longer” and that another round of gilt purchases has not been ruled out.

King indicated that the inflation outlook was behind the BOE’s decision did not extend the gilt purchases last week, but that there was not a loss of confidence in QE itself. Separately the UK reported soft employment figures with the claimant count rising 10.k. The consensus had expected no change.

Third, European officials are not only have trouble reaching an agreement about Greece and the bank supervisory functions, but efforts to finalize the EU’s 2013 budget have been dashed. Late last night, members of the European parliament boycotted a meeting, which prevented an agreement which means that whole process have to begin again.

The European parliament, one of the few European institutions that has not been drafted to assist in the crisis, was objecting to the fact that the new budget did not cover the 9 bln euro shortfall from this year. Finalizing the 2013 budget was one of the main goals of the Nov 22-24 EU Summit.

Fourth, the US calendar is full with PPI (risk is to the upside following the stronger import prices), retail sales (risk is to the downside, with softer auto and chain store sales), President Obama holds a press conference (the negotiations over the fiscal cliff begin formally on Friday), and later today the minutes from the Oct 24 FOMC meeting will be released. Usually those minutes are not the stuff that moves markets, but this time, especially in light of Yellen’s comments late yesterday, they may take on added importance.

Yellen, who some see as a potential successor to Bernanke, whose term expires at the end of next year, endorsed using numerical thresholds to enhance the Fed’s forward rate guidance to signal the timing of the first hike. This is slightly different than some others at the Fed who have suggested such thresholds to know when to stop the open-ended QE. There does seem to be a consensus forming to use macro-economic numerical threshold rather than a calendar point.

With Operation Twist set to finish in a few weeks, the market will be looking for signs of the Fed’s intentions. In particular, the question is whether to roll the Treasury purchases into QE, which would effectively double the outright purchases being conducted.



* NOTICE :
Bio of Janet L. Yellen in HERE

Will London Lose Power to a Euro Bank Bloc?

By Ambereen Choudhury, Elisa Martinuzzi, and Kevin Crowley on November 08, 2012



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In what would be the first step toward a European banking union, the European Central Bank will become the main regulator for the biggest banks in the 17 nations that use the euro as their currency as soon as Jan. 1. Britain, a member of the European Union, chose not to join the euro zone when it was established in 1999, and has said it won’t take part in a banking union. That decision risks isolating London from its major trading partners and undermining its status as the world’s top money center. “If there is a European banking union and a notable missing member of that is the U.K., then that will likely hurt London as a major financial market,” says Jay Ralph, a management board member at Munich-based Allianz, Europe’s largest insurer.

London, the world’s biggest center for foreign exchange trading, cross-border bank lending, and interest rate derivatives, has 251 foreign banks and more international financial firms than any other banking hub, including New York or Frankfurt, according to TheCityUK, a bank lobbying group. The City and Canary Wharf, London’s financial districts, are home to three-quarters of the EU’s foreign exchange trading, including 42 percent of euro trades. Financial sector jobs have been disappearing in the wake of the credit crisis, with the Centre for Economics and Business Research saying employment will fall to a 20-year low of 237,000 in 2013.

The danger of a banking union that doesn’t include the U.K. is that Britain’s voice in setting the rule-making agenda will be weakened as the ECB gains new powers, bankers say. Trading in euros could shift to Frankfurt or Paris and be regulated by the central bank. A banking union that gives the ECB new supervisory powers will create an “inner core” of euro-region nations that sidelines the rest of Europe, including Britain, according to Thomas Huertas, a former U.K. representative on the European Banking Authority, which drafts financial rules for the EU.

The concern for U.K. banks is that “you end up with a policy weighting toward the euro-zone banks because they’re in aggregate bigger,” says Douglas Flint, chairman of London-based HSBC Holdings (HBC), Europe’s largest bank by market value. Spokesmen for British banks including Barclays (BCS), Royal Bank of Scotland Group (RBS), and Lloyds Banking Group (LYG) declined to comment.

The EU has struggled to meet its yearend banking-union deadline as members negotiate provisions, including the scope of the ECB’s authority.
The new regulatory regime—a response to Europe’s debt crisis—is aimed at reducing the mutual dependency of banks and their national governments. It is to be phased in for all 6,000 euro-area banks by 2014. In addition to common supervision, a banking union could mean that governments share the costs of winding down failed lenders.

The U.K. doesn’t want to have its banks come under ECB regulation because it doesn’t want to be responsible for paying for failed banks in Spain and elsewhere in the euro area, according to top U.K. government officials. Still, it’s wary of the potential impact of unified bank regulation in Europe. “The worst outcome would be the creation of an overpowerful banking bloc,” Deputy Prime Minister Nick Clegg said in a speech in October. “The rest of Europe needs to be crystal clear: If they integrate in a way that hurts the City, they potentially hurt Europe as a whole.”

The City remains the world’s most important money center because of its time zone, language, talent pool, and legal infrastructure, according to Z/Yen Group, a London-based research firm. New York and Hong Kong are ranked Nos. 2 and 3 by Z/Yen. “My personal view is, it won’t be dramatically bad for the U.K.,” says George Mathewson, who retired as chairman of Edinburgh-based RBS in 2006. “The U.K. has got some in-built advantages that are difficult to dislodge.”

If London is isolated as a result of closer banking ties in the rest of Europe, it might find itself under pressure to submit to ECB regulation after all. Foreign banks would consider shifting operations to within the euro zone, according to an executive with knowledge of lobbying by U.S. lenders who asked not to be identified because the effort is private. Ash Saluja, financial-services partner in London at law firm CMS Cameron McKenna, says global banks may choose to put themselves under full ECB supervision by moving their headquarters into the euro region—or by pressing the U.K. to surrender national regulation in favor of the single supervisory mechanism. It’s “very worrying for the City and the Bank of England,” he says. “The euro zone holds all the cards.”


The bottom line: London, home to 251 foreign banks, could lose its dominance as European banks come under a common regulator.

Choudhury is a reporter for Bloomberg News in London. Martinuzzi is a reporter for Bloomberg News in Milan. Crowley is a reporter for Bloomberg News in London.



Source : Businessweek

Investors wait for Europe, U.S. fiscal progress

By Richard Hubbard
LONDON | Wed Nov 14, 2012 8:41am EST



http://s1.reutersmedia.net/resources...=CBRE89L01ES00


(Reuters) - World markets were little changed on Wednesday as investors waited to see if there would be progress in approving an aid payment for Greece and in addressing the U.S. fiscal cliff.

A wave of strikes across Europe to protest against spending cuts and tax hikes kept the focus on the region's debt crisis.

"A quick solution for the U.S. fiscal cliff doesn't seem to be on the cards and (there are) ongoing worries about Greece and renewed concern about Spain," said Zeg Choudry, head of equities trading at Northland Capital.
The MSCI world equity index .MIWD00000PUS was ultimately little changed around 321.90 points after five days of losses, as falls across Europe were offset by a 0.4 percent rise in Asia as markets there recovered from seven-week lows. .MIAPJ0000PUS

U.S. stock index futures pointed to an early rebound on Wall Street where the release of minutes from the last Federal Open Market Committee meeting later is likely to confirm an easy policy bias for some time to come. .N
But in Europe investors were unable to shake off concerns about a rekindling of the debt crisis, sending the FTSEurofirst 300 index .FTEU3 of top European shares down nearly 0.5 percent by the midsession to 1,093.87 points, erasing all of Tuesday's 0.4 percent rise.

"The failure to sustain any momentum to the upside suggests there is a buyers' strike and they are staying on the sidelines, waiting for a resolution either in Greece or in the U.S.," Ioan Smith, strategist at Knight Capital said.

London's FTSE 100 .FTSE, Frankfurt's DAX .GDAXI and Paris's CAC-40 .FHCI were between 0.4 and 0.6 percent lower..EU .L

Although Greece is now expected to secure short-term funding to meet its debt obligations, international lenders disagree over how Athens can cuts its borrowings to more sustainable levels, and a deal to release aid payments remains some way off.
The concerns over Greece, as well as lingering uncertainty over whether Spain will seek a bailout and the prospect of slow economic growth across the 17-member euro area also boosted demand at a German debt auction.

Triple-A rated Germany sold 4.3 billion euros ($5.5 billion)of two-year bonds that paid no interest, meaning Berlin was able to borrow for free because investors prize the country's strong fiscal position and highly liquid debt market.
"It's a combination of worries about the euro land economy plus ongoing fiscal concerns in Greece keeping the short end of the German curve underpinned," said Nick Stamenkovic, strategist at RIA Capital Markets in London.

Italy's borrowing costs also fell at a 3.5 billion euro sale of new three-year government bonds, which completed its funding needs for the year.
While Italy's bonds are considered risky because of its high debt levels and weak economic outlook, borrowing costs have been coming down due to the European Central Bank's promise of support for nation's struggling to fund themselves.

"Demand was solid, and the yield on the three-year note resumed its downward trend and is at pre-crisis levels," Nicholas Spiro, managing director at Spiro Sovereign Strategy.


JAPAN CRISIS

The euro meanwhile gained against both the dollar and the yen after Japan's Prime Minister Yoshihiko Noda said he was set to dissolve parliament's lower house on Friday for a snap election next month, which is likely to cost him his job,
Opinion polls show Noda's Democratic Party of Japan (DPJ) heading for a drubbing in the vote, which government and senior party members have said would be held on December 16.<ID:L3E8ME1QE>

That outcome is regarded as negative for the yen as the main opposition Liberal Democratic Party (LDP) favors further monetary policy easing by the Bank of Japan.

The dollar rose 0.9 percent to 80.12 yen and the euro climbed 1.2 percent on the day to 102.10 yen. Against the dollar, the euro was 0.25 percent higher at $1.2730.
The greenback was easier against most major currencies other than the yen on growing signs that the Federal Reserve was likely to adopt an ultra-loose monetary stance in coming months.
Influential Fed Vice Chair Janet Yellen said on Tuesday that U.S. interest rates may need to stay near zero until early 2016 to forcefully lift employment.

However, any weakness was still being capped by concerns that Washington will fail to find compromises needed to avoid a series of mandated tax hikes and spending cuts due to take effect next year that could send the world's largest economy back into recession.

U.S. Treasury yields edged higher in Europe on Wednesday but were not expected to stray far from their lowest levels since September on concerns over the outcome of negotiations.
"The negotiations will be tough and could trigger a downgrade of the U.S. credit rating," said Efigest Asset Management portfolio manager Regis Yancovici.

Ten-year Treasury yields were up two basis points in European trade at 1.61 percent, having fallen as low as 1.57 percent on Tuesday.


CHINA WATCH

Moves in commodity markets were limited, with traders watching developments in Europe and the United States and also wary about the ramifications of the political transition in China due to be announced on Thursday.
On Wednesday, the 2,270 carefully vetted party delegates cast their votes in Beijing's Great Hall of the People for the new central committee, which in turn will appoint the Politburo Standing Committee that will ultimately rule China.

The new government's attitude to supporting growth, which has been slowing all year, will be closely watched as China is the world's top consumer of many commodities.
Three-month copper on the London Metal Exchange was down 0.4 percent at $7,646 a tonne, while gold fell 0.1 percent to $1,722.91 an ounce, still below a 3-week peak of around $1,738 struck on Friday. <GOL/>

In oil markets Brent crude reversed early losses to gain 54 cents to $108.80 a barrel, supported by the dollar's fall against a basket of currencies, aside from the yen, which makes dollar-denominated oil more affordable.

U.S. oil gained 34 cents to $85.72, snapping two days of losses.
($1 = 0.7867 euros)

(Reporting by Richard Hubbard; Editing by Will Waterman and Anna Willard)



Source : REUTERS

Wall Street Breakfast: Must-Know News

November 14, 2012 | includes: AMD, CHG, CSCO, ED, F, FB, GS, IBM, INTC, KAR, NGG, QCOM, QQQ, SHCAY.PK, SPLS, SPY, TM, VALE, WMT



Top Stories

Cisco shares spike as net profit jumps 18%. Cisco's (CSCO) shares climbed 7.7% premarket after the company's FQ1 results beat analyst expectations, with net profit jumping 18% to $2.1B, adjusted EPS coming in at $0.48, and revenues rising 6% to $11.9B. Cisco also gave FQ2 guidance that was in line with consensus. The rise in earnings came despite weaker government demand dragging on U.S. sales and a 10% plunge in EMEA revenues, although Cisco's video business grew strongly, helped by its $5B acquisition of NDS.

Obama to demand extra $1.6T in tax revenues. President Obama will go into budget negotiations with Congressional leaders on Friday calling for a $1.6T increase in tax revenues over 10 years, double the $800B discussed during debt-ceiling talks in 2011. The sides are sticking to their guns over tax hikes for the rich, while Republicans also want entitlement changes. Today, Obama is due to meet a who's who of top CEOs, including those of Wal-Mart (WMT), IBM (IBM) and Ford (F).

PBOC governor looks to be heading for retirement. As scripted, China's 18th Communist Party Congress has closed with President-To-Be Xi Jinping and Premier-To-Be Li Keqiang elected to the party's Central Committee. However, off the committee is Zhou Xiaochuan, the governor of the People's Bank of China, possibly signaling the end of his tenure at the PBOC. And causing consternation is the appointment of former banker Wang Qishan to the Communists' top discipline post. The move might be good for fighting corruption, but could hamper efforts to overhaul China's economy.


Top Stock News

Staples swings to net loss of $569M. Staples (SPLS) swung to a net loss of $569M in Q3 from a profit of $324M a year earlier, due to the impairment of goodwill and other assets, and charges related to restructuring, accelerated amortization and taxes. EPS of $0.46 beat forecasts, although revenues slipped 2% to $6.35B and missed expectations. Earnings were also hurt by increased investment in Staples' online business, falling margins, and weakness in Europe and Australia.

Intel, Qualcomm eye Sharp investment. Intel (INTC) and Qualcomm (QCOM) are in talks to invest ¥30B ($378M) in cash-strapped Sharp (SHCAY.PK), Reuters reported yesterday, two months after the Japanese company denied speculation of an Intel capital injection. Sharp's IGZO low-power and high-resolution panels are a good fit for Intel-powered ultrabooks and tablets, while its 5" 1080p panels could be a killer app for high-end smartphone app processors.

Facebook slips ahead of lock-up expiration. Facebook (FB) shares were -0.85% premarket ahead of today's expiry of a lock-up on another 800M shares, the third and biggest expiration since the social network's IPO. The two previous releases of share restrictions caused a sharp decline in Facebook's stock price, although sentiment on Wall Street has since improved following the company's Q3 earnings report.

AMD denies that it's considering a sale. AMD (AMD) has dismissed speculation that it's planning either a sale of itself or its assets, although it didn't deny a report it has hired JPMorgan to explore its strategic options. Reuters reported that while a full-blown sale is "not a priority," a patent sale is among the options on the table. There's logic behind a cash-raising effort: AMD has over $2B in debt, while its deteriorating cash flow has led to downgrades. Shares fell 1.9% after-hours.

Toyota recalls 2.77 vehicles worldwide. Toyota (TM) is recalling 1.52M vehicles in Japan and 1.25M overseas, including 670,000 Prius cars in the U.S., due to issues with the steering column and water pump. The move follows a recall of 7.43M vehicles last month over faulty power-window switches. "Unless the (latest) defects turn out to be very complicated," says Satoshi Yuzaki of Takagi Securities, "the cost...shouldn’t affect their earnings too much."

New York opens investigation into power utilities. With over 130,000 New York State residents still without power following Superstorm Sandy, Governor Andrew Cuomo has created a commission to investigate the area's utilities over their handling of the storm and to recommend reform. "It has to be overhauled and you need a new system," Cuomo said. NY power companies include ConEd (ED), CH Energy (CHG) and National Grid (NGG).

Vale gets caught in Chinese bias for state-owned companies. Vale (VALE) has spent around $2B on a fleet of mega-ships to carry its iron ore from Brazil to China, but the latter won't let them in, possibly due to the opposition of a Chinese shipping-industry group dominated by a state-owned company. It's a blow to Vale's global distribution strategy and illustrates the blurred line between China's government enterprises and the country's regulators.

KAR Auction Services ends auction - of itself. KAR Auction Services (KAR) has ended its attempts to sell itself following the breakdown of negotiations with P-E firm Clayton Dubilier & Rice over price and other transaction terms, Reuters reports. The vehicle auction company, which has a market cap of $2.38B, is 78%-owned by a group of P-E firms, including Goldman Sachs Capital Partners (GS).


Top Economic & Other News

Yen slumps after Japanese PM offers to call early elections. The yen was -0.8% vs the dollar premarket U.S. time after Japanese PM Yoshihiko Noda offered to dissolve parliament on Friday and hold early elections next month if the opposition agrees to pass a bill that will allow the government to issue debt - and thereby avoid running out of money - and back electoral reform. With Noda's Democratic Party slumping in the polls, it's expected to lose any election.

Anti-austerity strikes sweep Europe. Millions of workers in Europe are on strike to protest austerity as part of a "European Day of Action and Solidarity." Spanish and Portuguese unions are carrying out their first coordinated general strike, while organizations in Greece, Italy, France and Belgium planned stoppages or demonstrations. The question is whether the protests will have any significant effect on economic policy - so far, they haven't.

Budget deficit soars in October. While concerns about the fiscal cliff grow, so does the budget deficit, jumping 22% on year in October to $120B and above forecasts of $114B. Expenditure increased 16% to $304B while receipts climbed 13% to $184B.

Mexico's Senate backs major job-market shakeup. Mexico's Senate yesterday passed a historic labor-market reform bill that makes it easier to hire and fire staff, and shorten labor disputes. The government hopes the measures will create up to 400,000 jobs a year and cut the number of workers in the black market, which is estimated to cost Mexico as much as $15B in lost taxes each year.


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Today's Markets:

In Asia, Japan flat at 8665. Hong Kong +1.2% to 21442. China +0.4% to 2055. India closed.
In Europe, at midday, London -0.5%. Paris -0.3%. Frankfurt -0.3%.
Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.6%. Crude +0.2% to $85.58. Gold -0.1% to $1723.80.


Today's economic calendar:

7:00 MBA Mortgage Applications
8:30 Producer Price Index
8:30 Retail Sales
10:00 Business Inventories
10:30 EIA Petroleum Inventories
2:00 PM FOMC minutes


Notable earnings before today's open: AG, ANF, SPLS, TYC
Notable earnings after today's close: DRYS, IOC, LTD, NTAP, NTES, PETM, SB, SZYM, VELT, WSM

See full real-time earnings coverage »



Source : Wall Street Breakfast

The Misdirection of Currency Wars

WEDNES DAY, NOVEMBER 14, 2012
Marc Chandler

http://2.bp.blogspot.com/-C-Z0zhveoi...sdirection.jpg

(This is a summary of my views on "currency wars" that was the topic of the recent panel discussion at SIBOS in which I participated)


A standard ploy of magicians and politicians is called misdirection. The audience is distracted from the real movement by a feint. “Currency war,” which has become the title of books, articles and conferences, is such a misdirection.

Some officials, notably Brazilian Finance Minister Guido Mantega, have been leading the charge that through pursuing unorthodox monetary policy, the U.S. has sparked powerful forces that destabilize the emerging market economies through capital flows, driving the currencies sharply higher.

Emerging Markets

It is indisputable that international capital movement is volatile and that the accommodative monetary policy in the U.S., and other developed economies, has shifted interest rate differentials more in favor of emerging markets. This shift has likely spurred private capital flows. That is both a common ground and a point of departure.

Capital inflows into the emerging markets are driven by a number of considerations, not just interest rate differentials. Consider, for example that growth differentials and higher returns on investment have also been attracting investment flows, especially in recent years.

The general investment climate is shaped in part by the risk appetite of investors. The risk-on and risk-off matrix has shifted in recent years, not as much by the pursuit of U.S. monetary policy as by the shifting response to the European debt crisis.

In a recent speech, Federal Reserve Chairman Bernanke cited research by the IMF and others that concluded that monetary policies of the advanced economies were not the dominant drivers of private savings into emerging markets. He went further and noted that capital flows into emerging markets have slowed considerably over the past couple of years, and even as the U.S., Europe and Japan continued to ease monetary policy.

If the cry of “currency war” is a misdirection, what exactly is it trying to distract our attention from? Many emerging market countries want to have currency valuations that economists argue are below fair value. They do so to promote exports and bypass domestic structural obstacles to growth.

Under-valued currencies in and of themselves may attract foreign capital flows anticipating currency appreciation. Moreover, purposefully weak currency strategies often leave developing countries more vulnerable to inflation, and more sensitive to the monetary policies of other countries.

Currency Flexibility

The U.S., through numerous administrations, and in various declarations of the Group of Seven industrial nations, has consistently advocated greater currency flexibility. Such flexibility would allow greater independence in the conduct of monetary policy and offer greater insulation from external developments.

This, of course, applies not only to Brazil, but also to China, the world’s second largest economy. A more flexible currency regime would help officials refocus their economy from one driven by external demand to one led by domestic consumption. It would allow the Chinese people to enjoy a greater share of their country’s economic success and prowess.

Brazil’s finance minister claimed that the U.S. was being selfish in pursuing monetary policy without taking into account the impact of such a policy on other countries. Yet, the real selfishness and beggar-thy-neighbor policies are not the easing of the U.S. and other advanced economies, but the reluctance of many emerging countries to allow their currencies to appreciate in the face of stronger growth, capital inflows and larger reserve positions.

Monetary Policy

Even if there are costs for developing countries from the easy monetary policy of the advanced economies, there are also benefits. Part of the reason why the economies of many developing countries have slowed is that their exports to the U.S. and Europe have decreased as those economies have decelerated.

Easier monetary policy, which has taken on an unorthodox characteristic given that policy rates are near zero, is meant to help fuel a recovery in aggregate demand. Stronger U.S. and European growth would stimulate trade as well as underpin growth in emerging markets.

Aggressive monetary policy in the face of weak domestic economies is not the equivalent of a currency war. To the contrary, the fact that some developing economies insist on having under-valued currencies is more directly recognizable as shots in a currency war. Such policies can be associated with costs, such as greater sensitivity to inflation and limits on the independence of their own monetary policies. There are various drivers of capital flows to emerging markets, and those capital flows do not appear to be correlated with U.S. or European monetary policies.

It is interesting to note that, for the better part of the past four months, as the Federal Reserve signaled, and then pursued QE3+, the European Central Bank announced its Outright Market Transactions and the Bank of Japan expanded its asset purchase program in both September and October, the Brazilian real has been largely flat. The dollar has largely been confined to a BRL2.00-BRL2.05 trading range, though has strengthened recently.

Investors recognize that there are a number of emerging market countries, such as Mexico, Poland, Turkey and South Africa, which have embraced currency flexibility to a greater extent. They have increased the capacity of their own capital markets to absorb inflows as well as absorbing a greater part of their own domestic savings.

U.S. Dollar and Chinese Renminbi

There is another dimension to debate about currency wars. Many observers argue that the U.S. dollar is in an inexorable decline and that it will be increasingly supplanted by the Chinese renminbi. On the other hand, China itself is not above deflecting criticism of its rigid currency regime by criticizing the international monetary regime and the role of the dollar.

The internationalization of the Chinese renminbi has been more bluster than substance. The role of the renminbi in the world economy remains minor. The numerous swap lines that China arranged with many developing countries, which captured the imagination of many critics of the U.S., have not been used. Few countries have chosen to add the renminbi to their reserves.

The Dim Sum market, the offshore renminbi market in Hong Kong, a special administrative region of China, is dominated by Chinese state-owned companies, banks and property companies. Renminbi in Hong Kong is not fungible with renminbi onshore. The currency requires special authority to be used within China itself. Outside of Chinese trade with Hong Kong, most of Chinese trade continues to be conducted in U.S. dollars.

There has been some diversification of reserves away from the dollar and euro in recent years. However, it has not gone to the Chinese renminbi, but to the Australian and Canadian dollars. The kind of transparency and flexibility that an international currency requires still seems beyond the ken of Chinese officials.

More Rhetoric than Politics

Currency wars then, in either expression, seem to be more in the realm of rhetoric than politics. There has been a long and sustained push from the developed countries to get emerging markets to embrace more flexible currency regimes. The adoption of unorthodox monetary policy by the U.S., Europe and Japan may, on the margins, increase such pressure but few have capitulated. Instead, they have developed a host of other tools, such as macro-prudential policies, to blunt the impact. China may one day provide the world’s key currency, but that day is not in sight, and the role of the dollar as the numéraire continues.