Hoy tendremos una decision por parte de la Reserva Federal sobre su politica monetaria. No se esperan cambios en los tipos de interes, ni tampoco se espera medidas adicionales como la recompra de activos. Pero si hubiera una sorpresa en contra de estas expectativas?

Es altamente probable que cualquier acción por la Fed tendría el propósito de seguir aleviando tension en los mercados de credito. Existe anxiedad hacía la reunión de la Fed aunque las expectativas no son muchas. La razon es que la Fed ya lleva varios meses aprobando medidas extraordinarias y agresivas para paliar la recesión llevando el tipo interes al 0-0.25% y destinando miles de millones a la recompra de activos. Ademas, los miembros de la Reserve Federal han vueltos optimistas gracias a unos indicadores “mixtos” que pueden estar signalando una estabilización. Pero la verdad es que estos indicadores estan más bien tirando a negativo. La Reserva Federal apunta a que la recuperación empiese a finales de este año, pero en mi opinion puede ser que se adelantan un poco demasiado. Es que las señales, sobre todo si te basas en los indicadores macroeconomicos, no son claras para nada.

Hoy mismo se presentó el PIB de EEUU para el primer trimestre del año. El dato fue bastante peor de lo esperado y sin embargo las bolsas reaccionan a la alza. Es que volvemos a la paradoja donde los datos negativas tiene implicaciones alcistas porque por consecuencia la Reserva Federal va bajar los intereses o aumentar medidas cuantitativas? Advierto que la ultima ves que vimos este tipo de reacciones estuvimos en un mercado profundamente bajista. La volatilidad puede ser tremenda porque este dato puede estar producindo unas expectativas en las mentes de los inversores apenas dos horas antes del anuncio de la Fed. Al final, si estos no se cumplen las ganancias del 2% que los indices muestran acualmente pueden convertirse en perdidas significativas.

O es que una fuerte bajada del primer trimeste nos hace pensar que el segundo trimestre demuestrará una mejora? En tal caso, la reacción podría ser más razonable. Estaremos muy antentos!

Estaría bien que todos las sesiones búrsatiles seguieran la misma lógica de hoy. Como podemos ver en todos los informativos, la actualidad de hoy se basa en la epidemia de la gripe porcina. Pues ojo al comportamiento de la bolsa.. Los sectores más alcistas de hoy son el Farmaceutico y el Cuidado de Salud. Pues éstas reacciones tiene su logica en el dia de hoy; una epidemia de gripe aumentaría los servicio de cuidado de salud y por otro lado aumentaría la demanda de medicamentos anti-virales como el Tamiflu. También hay reacciones más especificos en el nivel empresarial. Acciones de Pescanova y otros especificos en el sector de la nutrición también suben. Como cuando fue de los casos del gripe aviar y la “vaca loca”, la gente estaba reacio a comer pollo y carne de terrena, respectivamente.

Por el lado apuesto, por cuales apostaríamos a caer? Pues esta claro que una epidemia puede afectar a planes de viajar. El sector de las aerólineas son las que más caen en europa en estos momentos.

Ojala todos los dias los mercados siguieran esta logica, unas noticias titulares de primer plano y sus supuestos efectos directos. Muchas decisiones tomadas por emoción y miedo y pocos datos contrastables.

Hoy, en Forexpana.com, recogemos como titular, publicado en el Expansión y citando a EP, un resumen del boletín financiero emitido por el Santander.

En ello, Santander opina que puede haber un incremento en el riesgo de deflación. Y es que los datos de inflación vienen mostrando niveles historicamente bajos, ampliamente por debajo del 2% que tiene el ECB como objetivo. Esto permite al Banco Central Europeo (ECB) un margen para seguir bajando los tipos intereses y anunciar medidas excepcionales.

Tengan cuenta que en los últimos días, miembros de la ECB han declarado que puede no haber “margen” para más recortes y que intereses por debajo del 1% puede no ser bueno para el sistema interbancario. Esto pudo tener una influencia alcista sobre el euro – dolar.

Si vemos más declaraciones como el de Santander y otros títulares que apuntan a más agresividad en los recortes por el ECB, podemos ver al Euro – Dolar volver a una tendencía bajista. Cada vez parece que hay más incertidumbre sombre que actuaciones puede llevar a cabo la ECB en su próxima reunión.

jose@forexpana,
Analista de Forexpana.com

Trichet prometió que estudiarían medidas quantativas y más recortes de tipos para la próxima reunion. Esto compensó por la decepción de solo bajar 25bp cuando el mercado esperaba un recorte de 50bp.

Pero desde entonces, miembros de la ECB opinan que tal medidas son poco probables. Esto sigue decepcionando el mercado y por lo tanto vemos presión vendedor para la renta variable y el euro. Esta tendencia puede seguir si la ECB no cambia a una politica más agresiva.

The European Central Bank has decided to cut its interest rate by 25bp to 1.25% instead of the 50bp rate cut expected. This has bullish implications for the euro and bearish implications for European stocks. As a matter of fact, we saw the EUR/USD spike higher after the rate decision and at one point tested the resistance at 1.35. European stock markets also gave back some of its previous gains, but not much.

It was clear that the ECB fell short of expectations. However, the story does not end there. As analysts know so well by know, the Trichet press conference that follows the decision could be as important or more important than the decision itself. And that was the case today.

While the decision itself fell short of expectations, the Trichet statements clearly made up for lost ground. Trichet stated that the decision was by consensus and not unanimous. By all likelihood, bigger rate cuts were debated among members of the monetary policy committee. No quantitative measures were expected and none were announced. However, Trichet makes up for it by clearly indicating that any decision to apply non-standard measures will be made in the next meeting. He also affirmed that further rate cuts could be applied.

These statements should please the markets or at least meet expectations. The ECB monetary policy will continue to be on the “easing” side although perhaps too gradually for some. Trichet did not hesitate to point out that the ECB has lowered rates by 300bp since October 2008. The change of policy did not start as early as in the U.S. and many now believe that the ECB is playing catch-up.

With one event risk out of the way, stocks resume the rally that was in place since early March. The Euro/Usd should maintain the price range of 1.30-1.35… for now.

As the week winds down, the markets could be faced with an overwhelming amount of data to digest.  This could lead to signficant volatility and sudden price swings.   However, there is not the same level of uncertainty as in recent months.  From this perspective and following the recent three-week stock market rally from the lows, there could be a bias towards the upside.  The level of uncertainty is not as high because we are starting see more concrete expectations for the following event risks.

Investors are looking for specific, coordinated measures to come out of the G-20 meeting.  However, investors are also aware that no major agreements are likely to come out of the meeting and that at most we could probably hope for some general framework.  Ideally, the markets want some decisions on new regulation of the financial markets.

The market is expecting for a 50 bp rate cut from the ECB.  This will likely happen as the Euro Zone is faced with serious economic problems.  But lot’s of attention will be on the Trichet statements.  Important announcements could be made and investors will be eager to know if the central bank will purchase private debt.  Again, this is not so much expectation as it is hope for additional catalysts.

Therefore, both the G-20 meeting and the ECB rate decision have potential to surprise to the positive side for stock markets. It is more likely for these events NOT to be short of expectations.  If they are, stocks could turn dramatically to the downside.

Same goes for the Employment Report as investors already have low expectations for employment figures.  However, if we use Wednesday’s ADP report as a leading indicator we could be in for a negative surprise.  The ADP report was much worse than expected in terms of job destruction.

As we could see, the second quarter is off to a busy start, not to mention that the earnings season will start next week.  Corporate earnings will probably be as important as ever (since the crisis started) for signals of any indication that a recovery is in the works.

The EUR/USD experienced a tremendous rally following the Treasury’s plan to spend over a trillion dollars in long-term Treasury debt, mortgage backed securities, and other debt. The currency pair spiked approximately 700 pips, a tremendous move. The question posed was whether the move would be sustained. Quantitative easing does not tend to be as effective as directly lowering interest rates, however, the currency pair remained near 1.37 for a few days. The stock market rally and rising oil prices could have helped that level be sustained. Now, we are seeing the EUR/USD finally retreat. Now the Federal Reserve has to rely on additional quantitative easing and additional stimulus measures in order to boost the economy. There will likely be a “wait and see” period to see the effectiveness of this measures and whether conditions improve in the credit markets and financial markets stabilize. The big question mark returns to the Euro Zone. Some analysts are starting to anticipate another rate cut next week. It is unlike for the ECB to announce quantitative easing measures and for this reason some analysts could be considering a steep rate cut. An IFO economist even believes that the ECB should lower rates by 100bp in the next meeting. This would surely be aggressive by ECB measures and the surprise could be a healthy boost for the markets. The EUR/USD will likely experience selling pressure until that meeting takes place. I suspect a move towards 1.30-1.31 where it will find heavy support.

It was not really my intention of compiling videos that explain the credit crisis.  However, I will occasionally come across a video that I believe does a good job of simplifying or pointing out the key elements of the current crisis.

I also noticed that my previous posts with such videos generate a good amount of traffic.  Thus, there is demand for this information as people are looking to understand the basis of the credit crisis or just want to further their knowledge of the situation.

I recently discovered the following video, which does a good job and can be found at www.crisisofcredit.com.  I embed the 11minute video below for your convenience.

These two other videos are also really good…

http://themarketanalyst.wordpress.com/2008/10/01/a-step-by-step-explanation-of-subprime-derivatives-as-seen-on-cnbc/

http://themarketanalyst.wordpress.com/2008/10/01/the-best-explanation-of-the-subprime-crisis/

In times of financial crisis, economists look for indicators that attempt to measure credit risk or as some call it, the “fear factor.”

Lately, many references are made to the TED Spread and this posts attempts to look deeper into this indicator.  Wikipedia defines the TED spread as the difference between the interest rates on interbank loans and short-term U.S. government debt (“T-bills”).

The TED spread is caculated as the difference between the 3month T-bill interest rate and the three month LIBOR.  The 3 month T-bill is considered to be practically risk-free since it is backed by the good faith of the U.S. government.  The LIBOR reflects the credit risks between commercial banks lending to each other.  Therefore, the difference could be considered a risk premium.

Historically, the TED spread was 0.3% on average.  This number increased during the credit crisis with a spike in September and then again to more than 4 in October 2008!  Large international banks were previously considered almost as risk-free as the U.S treasury, but now we see how banks have become fearful of lending to each other.

Long-term TED spread chart

Real-time TED spread

‘Ted Spread’ Reflects Rise in Global Anxiety

Similarly, the following blog post points out a spike in the difference between the overnight Libor rate and the fed funds target rate, the concept is the same: Econbrowser: Understanding the TED spread

Global stock markets are currently plummeting and it appears that the Wall Street open will not fair any better. We could see the stock market halted later today if down limits are hit. The futures already touched the limit low and the Wall Street open will be key. There could easily be authentic panic taking over and driving the markets to closure. N. Roubini has already predicted this would happen and he has just cited that the decline of the futures this morning is proof that stock markets will close.

Take a look at what the current limits are in this CNBC article, How Futures Numerical Trading Limits Work

The currency markets are showing huge deleveraging with the “carry trades” being massively unwinded.

This market move could also be related to another Roubini prediction, that 30% of hedge funds will enter bankruptcy. Could these stock market declines be massive liquidation by hedge funds?