It’s Monday Again: Draghi has a position, Oil rally has no legs, US out of consumers (US Economy & Markets, The week ahead Feb 18-21, 2014)

Oil is charging faster than ever before as Brent at $110 looks at being under investigation soon, even as the rate setting London FX Market has snared all material banks. Bonuses at Credit Suisse were rebadged after derivatives issued on their own derivative exposure of $12 Bln as part of the risk awards to employees were disallowed in Capital and the Banks, happy enough with CoCos being allowed. Credit Suisse used the awards to divert $17 Bln of toxic risk from its balance sheet and the regulator objected to the implicit CS guarantee on the securities issued to employees

Either way bonuses are up at more banks with role based allowances seemingly getting past no harm no foul verifications and will allow a new slab in base salaries while from all accounts they will change each quarter as role based allowabnces, allowing banks to get questioned on whether they are masking variable bonuses, but still fair game with UBS and Barclays joined by Foreign Banks in London. Foreign Banks in the US, which as of date still hold 20% of all US Financial assets come under the new Fed umbrella from Today.

Earlier, the capital regulations for Foreign Banks have already been postponed, and are likely to be postponed further as the Fed comes under pressure of US based banks who would be facing regulatory uncertainty overseas. Under current regulations, banks with assets in the US would allocate separate Capital in the US to hold their US assets and if that is indeed allowed to exist , it would be ideal national regulation to imitate across many other national jurisdictions also applicable to US banks. Within US, All Global assets of the US based banks and all capital qualifies for the Fed, while for the Foreign Banks all Foreign assets ( i.e. all assets in the US)( have to be shored up by risk Capital held in a US structure. The Fed had earlier mandated a limit of Banks with more than $10 Bln in assets which has been further eased to $15 Bln

Retailers report full quarter results in a week from now except for Llowes’ that reported expected dismal quarter sales and profits last week.

British PPI was reported today when the US markets opened after the Presidents Day weekend and the healthy inflation, supported German solitary rushes in European reports yesterday as the BOJ liquidity of worth $650 Bln did nothing to break the Euros rush back up to year end 2013 levels, Draghi out of a similar move to infuse economic capital into European Banks which continue to report negative credit growth. HSBC and StanC also get ready to report year end balance sheet and more detailed Financials are due from Deutsche Bank The Euro will also be alone as the Aussie has started back from 86 cent lows against the US Dollar and the Pound looks ugly at highs of 1.65 ( this week at 1.62) and needs to correct but probably not t o my choice levels near 1.5 before it starts a new run . The European surplus is a great show at 33.2 Bln higher by 60% over the last month, and unless someone is serious about a banking union and some more political union, there is unlikely to be more liquidity

The week’s Treasury data reports large outflows auided by $18 Bln of buying in Foreign Bonds by US investors. Foreign investors also sold out US bonds leading to a total outflow of $51 Bln this month’s report

Existing Home Sales report Friday after the Housing Starts data on Wednesday and all signs point to more contraction in Mortgage business this year but with the fall having lasted more than six months and the overall gap to 2007 peaks or even any efficient recovery in housing still back a few million homes, most would expect the housing starts and home sales data to start perking up and the reports are critical as they show how much of yearly growth can still continue to show up Housing starts will stay near the 1 M mark and Existing sales near a 5 M run rate it reached last month

The NAHB Index showed up unexpectedly lower by 10 points this morning. E-Commerce too, may be hot in India and Asia ( up 100% in both India and China) but back home remains near a secular bottom at 3.5% growth

Equities have completed the correction after 2013 ended on highs with all short interest obliterated, and  Soros’ and Allianz may also be exited from all his reported 13 F Shorts on the SPY , and you and me should definitely be long on US equities now as the economic sentiment also sank easy down to lows ahead of the snow lifting in April

The Dow’s in its first trades of the week is already trading at 16100 levels and today’s FOMC minutes release showing details of whats doing well in the recovery and how more taper may not be the answer will both more than likely add to the euphoric sentiment

Good news out of Korea in January data was again followed by great improvenents in China with the Year of the Horse FDI scoring a 16% growth on year with China looking buoyant despite the PBOC cutting up $7.9 Bln in liquidity as the credit rush focused on real estate continues. The retail sales buoyancy in China on yearly data is mostly because of the small base of branded retail, which continues to enthuse all Global MNCs including some from Europe US trade dat will thus remain buoyant and with the Treasury Budget also on the up and up , some of the Executive Action in the SOTU might not transpire after all

Coke was down 1% and Pepsi 4% after US volumes dipped but (FastFT) Chevron’s down 9% on the year already. Einhorn seems to be jst playing safe in Anadarko and as of now it does not look like one of those Greenlight Capital attacks where he has been forced to exit from GMCR , not wholly unlike Bill ackman and the retailers. Apart from Caterpillar, we showed you the best squeeze for Portfolios not looking for ,emons this year, namely Starbucks, Amazon and the others from non tech as Hedge Funsds probably try to corner more tech before Apple comes back in vogue in the second half of the year. Liberty Global is indeed a great pick for Mr Buffett

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