FX:
Start of the shift we see continued slight dollar weakness across major pairs (excluding the CHF). Currently I expect minimal weakness to continue into todays US equities trading day. Daily charts on the GBP and EUR starting to look topsy in the coming days, this may indicate the start of the dollar strength we've been expecting. Already the CHF is taking the lead from friday's close with continued dollar strength opposite to all the majors. Currently, the latest hour (4:00am EST) we are seeing some firming of the dollar, our hope is that this leads to range bound trading; currently all pairs are in range bound range via the ADX expect the JPY.
Risks to the GBP: current political uncertainty
Risks to the EUR uncertainty on the banking sector
Risk to the dollar: sentiment revolving around floating the yuan
The US may not be the only ones who will be contemplating more stimulus with recent uncertainty in Europe and the Japanese government considering stimulus through taxes (vs. through JGB).
Equities:
Asia closed higher up for the Asia Pacific region (ASP). The Asia momentum carried through to European trading and European equities are trading up currently. My thoughts are that US equities have plenty upside to go. Resistance is below 1200 and strong closes above may fuel the SPX to 1300. If that is the case dollar weakness will remain as long as US equities continue to rally. However, I think prices will top out below 1200 and we will get a dollar correction to the upside (currency are currently leading this trend). Amazingly the S&P managed 9% in Sept despite that historically Sept is a poor month for trading.
M&A:
Unilever and Alberto Culver, Potash and Sinochem, Wall Mart and Massmart, Santander and M&T Bank Corps, China's Bright Foods and United Biscuits.
The Netherland/UK, US, Canada, China, South Africa, Spain. It seems that the M&A, P/E, LBO recovery will be led by big multi nationals. With western corporations hurting from scaling back from the financial crises, foreign corporations are lush with cash from strong emerging market growth. Once the western countries economies show a few straight quarters of strong econ data with improved credit markets with strong consumer demand, this may help spark the M&A recovery.
Debt Markets:
Dubai reached agreements on debt restructuring. Its up coming debt offering will seek to raise $1B this week. S.M.B.R.A.M (Sheikh Mohammed Bin Rashid Al Maktoum), may say Dubai is back on track, but I would like to see how these projects get dispersed in the context of a slowly recoviering world economy. High energy prices may soften the blog but roughly 95% of Dubai's GDP is non-oil based and relies heavily on trade, tourism manufacturing and transport.
Housing prices will surely have negative effects on investor sentiment for the region. The 41,000 new houses to be added to the current housing supply will only keep prices lower.
Dubai as a financial hub imho is very feasiable with a strong world economic recovery, as long as Dubai leverages its advantage in Islamic banking and finances.
Ireland's 5 year plan: a five year plan, a historical facet of economic policy around the world. Cutting Ireland's public deficit is surely on track if one excludes the Anglo Irish Bank bailout. The deficit currently at 11% of GDP down from 14% may seem impressive for such a short period, but under EU account rules the Anglo Irish bank bailout will push the public deficit to roughly about 25% of GDP. Even though if investors follow the underlying deficit, there is still much uncertainty around the banking sector in general. Whose to say that there won't be more bailouts needed, and when will the government get paid back. All of these points to negative sentiment for the EUR.
Speaking of Pay backs AIG is preparing to return the tarp money taken from the US government. Exit stratgies and discussions are still in play
HSBC's Chairman Stephen Green steps down and the succession skips over HSBC's CEO Michael Geoghegan and goes to Douglas Flint. Geoghegan has decided to step down and the new CEO role goes to Stuart Gulliver. Challenges ahead for HSBC maintaining a Universal Banking model and continuing the Asian Platform Green and Geohegan has created.
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Alexander T. Lê
Sources:
http://uk.reuters.com/article/idUKTRE68M1F520100923
http://www.reuters.com/article/idUSTOE68Q02A20100927
http://financialadvice.co.uk/news/bankaccounts/90057-hsbc-chief-executive-set-to-move-on.html
http://online.wsj.com/article/SB10001424052748704082104575516672792665424.html?mod=googlenews_wsj
http://www.reuters.com/article/idUSTOE68Q02A20100927
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