BOJ offers liquidity to Bank Indonesia - November/December 2011 repeat? Buying US Dollar Index and Dax

MACRO: Important change in liquidity in Asia..  

This morning Bank of Japan and Bank Indonesia announced: "12 bln. USD extended bilateral swap with each other".

 

 

Time to buy DAX? Buy US Dollar? 

 

I could be pre-mature but delay in Syria response virtue of ZERO backing in UK, US and in Europe among voters to engage without UN mandate is likely to delay action…..and now this liquidity provision is significant commitment from BOJ and Japan.

 

Note also that major part of this intervention have meant the Asian central banks been: Net selling US dollar & Treasuries. If my "theory" correct this would be unwound.  (Central bank has had to sell their US Dollars bonds (due to their pegs to US Dollar) – then use proceed in FX market to sell US Dollar and buy their own domestic currency)

Dont forget in November/December 2011 Federal Reserve did same for ECB:

http://www.zerohedge.com/news/fed-opens-new-fx-swap-line-bank-japan-second-after-ecb

 

It ultimately partly turned the tide - also Bank of Japan have less Asian debt on its book than during Asian crisis and with it excess savings this makes perfect sense. It will not change lack of reform and structural issues, but could buy time before the dreaded tapering clarfied. Make no mistake: Fed must be seriously concerned about their growth and overall strategy. INR and IDR both reacting positively.. (see chart)

 

 

 

 

Trading: If this above take hold we could be in for brief rally - we are still in complicated technical pattern where either this week was low or we need to test 200 MA lower down - but risk reward wise I would buy DAX here @ 8160 with stop 100 points below.

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

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US 2nd biggest landlord is.... 4 Rent Homes.. laying off people.....

You can't make this up!  (Hat-tip Leiphs)

 

US 2^nd biggest employer is a TEMP AGENCY –   Kelly Services ( More than 550.000 people working for them in average year)……. (GE is 3^rd with 300K – WMT + 1 mio.)

 

US 2^nd biggest landlord – is American Homes 4 Rent…   (Ticker: AMH US)

 

Classic…….

 

BN) American Homes 4 Rent Said to Terminate Workers After Loss

+------------------------------------------------------------------------------+

 

American Homes 4 Rent Said to Terminate Workers After Loss (1)

2013-08-23 17:44:46.90 GMT

 

 

     (Updates with share decline in fifth paragraph.)

 

By John Gittelsohn and Heather Perlberg

     Aug. 23 (Bloomberg) -- American Homes 4 Rent yesterday fired a group of workers, with a focus on acquisition and construction staff, after the housing landlord reported a fiscal second-quarter loss, according to a person with knowledge of the terminations.

     The company, owner of almost 20,000 single-family homes, has cut about 15 percent of its workforce this year, including an earlier round of terminations before its initial public offering last month, said the person, who asked not to be identified because the information is private. The Malibu, California-based company, which raised $705.9 million in the IPO, had a net loss of $14 million, or 15 cents a share, on revenue of $18.1 million in the quarter ended June 30, according to a statement this week.

     Single-family landlords have struggled to turn a profit while acquiring homes faster than they can fill them with tenants. Hedge funds, private-equity firms and real estate investment trusts have raised more than $18 billion to purchase more than 100,000 rental houses in the past two years. American Homes 4 Rent, founded by B. Wayne Hughes, is the largest single- family landlord after Blackstone Group LP's Invitation Homes, which has spent more than $5 billion on 32,000 homes.

     American Homes 4 Rent executives Peter Nelson, Jack Corrigan, Sara Vogt-Lowell and Janice Stack didn't respond to e- mails and telephone messages seeking comment on the firings.

     The company's shares fell as low as $15.97 after the firings were reported, and were at $16 at 1:43 p.m. in New York.

Trading began July 31 at $16 a share.

 

                        'Complete Shock'

 

     Craig Smith, 55, a property-compliance inspector from Columbus, Ohio, said he received a termination notice after nine months with American Homes 4 Rent. Smith, who earned about

$50,000 a year, said he saved the company money by finding more than $7,000 in invoice errors last month alone.

     "It's a complete shock," he said in a phone interview.

"I was out working and they called me to the office and told me I was cut."

     Single-family landlords are seeking to take advantage of prices that fell as much as 35 percent from their 2006 peak and increased demand for rentals. The U.S. homeownership rate is at its lowest level in 18 years, and more than 7 million homes have been sold for a loss or lost to foreclosure since 2007, according to RealtyTrac.

     American Homes 4 Rent had 684 employees, according to a July filing. That included 244 employees dedicated to property management, marketing, leasing, financial and administrative functions; 262 people overseeing renovations; and 178 people working to identify, inspect and acquire homes.

 

                       'Capital Available'

 

     The landlord is slowing its property purchases, with plans to spend as much as $100 million a month on 800 to 1,000 additional homes, Corrigan, the company's chief operating officer, said on an Aug. 21 earnings conference call.

     "As far as being able to put money to work, I mean we could easily ramp back up to $300 million-a-month pace if we have clarity that we would have that capital available," he said. "But we don't want to get too far out over our skis."

     American Homes 4 Rent owned 19,825 properties for an investment of $3.4 billion as of July 31, according to its earnings statement. About 56 percent of the company's homes were leased as of June 30.

     The company had $921.4 million of cash and cash equivalents as of the end of June.

     American Homes 4 Rent raised $75 million in additional stock sales along with last month's IPO. The IPO's underwriters also plan to exercise an option to buy 6.6 million more shares for $106 million, Chief Executive Officer David Singelyn said on the earnings call. The company had planned to raise $1.25 billion in its IPO, according to an initial prospectus in June.

 

For Related News and Information:

American Homes 4 Rent Shares Fall After $705.9 Million IPO NSN MQVCDQ6JTSEA <GO> American Homes 4 Rent Raises $705.9 Million in U.S. IPO NSN MQTUE66TTDSM <GO> Housing and construction data: HSST <GO> World real estate indexes: RMEN <GO> Stories on U.S. real estate: TNI US REL <GO> Top Bloomberg real estate stories: TOPR <GO>

 

--Editors: Daniel Taub, Christine Maurus

 

 

 

Chart from Me…

 

 

 

 

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Please visit our website at www.saxobank.com

 

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Tapering's a temporary sideshow, expect more QE in 2014 not less

Dear All,

The full edited version incl. our own model prediction….

http://www.tradingfloor.com/posts/taperings-temporary-sideshow-expect-qe-2014-less-88981208

One of the major calls we have for the balance of 2013 is the dramatic change to employment. The combination of depressed participation rates and weak "real growth" plus Obamacare and bad jobs, leads our models to predict a big reversal on the recent trends with surprising implications for quantitative easing and new lows in yields.

QE's not dead
it may go against the grain but there is more QE coming in 2014, not less. Tapering is a temporary sideshow which will be replaced by disinflation and zero growth in 2014, a theme I will return to in greater depth next week.

This is our new predicted model which is based onEconomophysics done by a collaborator of mine. Note how the trend is almost exploding higher:

In the chart below, the link is Danish and  comes from one of the most respected cyclical analyst here, Svend Jørgen Jensen.

The top line refers to the Conference Board's 'Help wanted' online index' and below that are employment levels.

 

What point do the charts show? It is that the top leads and it has turned down.

http://www.conference-board.org/data/helpwantedonline.cfm 

http://www.demetra.dk/ugeoverblikket/usa-annoncering-efter-arbejdskraft/

 

http://www.demetra.dk/ugeoverblikket/usa-arbejdstid-pr-uge/

Pundits tend to forget that in an economy, it's not the amount of people working which makes up GDP but the amount of hours worked. Obama-care with its 30-hours rule is forcing the retail and service industry to reduce their employment contracts below 29 hours per worked to reduce the costs of Obamacare.

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Please visit our website at www.saxobank.com

 

This email may contain confidential and/or privileged information.
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MACRO TREND CHANGE - HIGHER unemployment rate for balance of 2013 / and into 2014

 

One of the major calls we have for balance of 2013 is the DRAMATIC change to employment – the combination of depressed participation rate and weak "REAL GROWTH" – plus Obamacare and bad jobs, leads our models to predict a big reversal on the recent trends. The below further supports this assumption.

 

Conclusion:  There is MORE QE coming – not less in 2014 – tapering is temporary side-show which will be replaced by dis-inflation and zero growth in 2014. I'm working bigger piece on these issues for next week but thought this important enough to share with you..

 

This is in Danish and from one of the most respected cyclical analyst here  Svend Jørgen Jensen….. Its shows in top section: Conference Board Help wanted online index and below employment… point:  The top leads and its turned down…

 

 

 

http://www.conference-board.org/data/helpwantedonline.cfm

 

http://www.demetra.dk/ugeoverblikket/usa-annoncering-efter-arbejdskraft/

 

 

 

http://www.demetra.dk/ugeoverblikket/usa-arbejdstid-pr-uge/

 

 

Pundits tend to forget that in an economy it's not the amount of people working which makes up GDP – but the amount of HOURS WORKED. Obama-care with its 30-hours rule is forcing retail- and service industry to reduce their employment contracts below 29 hours per worked to reduce cost of Obama-care….!!!!

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Please visit our website at www.saxobank.com

 

This email may contain confidential and/or privileged information.
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Stress Indicators: Financial conditions tight & risk is getting close to OFF levels

Dear All,

 

Attached the weekly batch of chart on the economy – a few "stand outs":

 

Financial Condition – US Real rates

 

 

Remarkable hike in real rates – This will not only hurt housing sector but also give signal for MORE QE not less….

 

We often use AUD vs. JPY as leading risk indicator. AUD represent commodity & Asian growth (via China link) and JPY has been favorite funding currency. Clearly there is warning signal as we are back to November 2012 level – or back to zero in Abenomics terms.

 

 

Our favorite growth indicator – makes no real sense as if anything growth is coming down, but recent "improvement in China" seems to drive it.

 

 

Slovenia is back at  March level – warming up for a busy Q4 event calendar for the EU?

 

 

US Index a critical point – wedge breaking or?

 

 

 

 

 

 

 

 

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Please visit our website at www.saxobank.com

 

Steen's Chronicle: MENA and Egypt are like an upside down Europe

 

 

London, August 21, 2013

MENA and Egypt are like an upside down Europe

 

By Steen Jakobsen

 

Commenting on Egypt is not something I take lightly, particularly when the death toll there continues to rise. The Middle East and North Africa (MENA) is a difficult region to comment on in general. You cannot apply the usual economic models when doing your research, but have to make a careful assessment of evidence on the ground and by observing the evolution of long-term general trends.

 

MENA is losing momentum despite the strong growth in oil-producing countries. MENA is now divided into two halves: the north versus the south. This is not unlike in Europe, just with a bit of role reversal.  In Europe, the north looks healthy and must figure out how to dig the south out of its economic woes. In MENA, it's the south trying to keep the north out of political trouble as they fear the risk of a spillover from the rising tide of popular demand for democracy and more political accountability for the predicaments of their economy and society. That's probably not the diplomatic version, but it is the reality of the situation.

 

Until recently, few countries in MENA even operated with three to five-year budgets. The growth policy, more often than not, has simply been driven by oil prices, the need to hastily create jobs and satisfy the most basic material needs of the population. This worked for a time for MENA when there was no political volatility. But with the opening of the political dimension, the game has changed and MENA governments aren't prepared for the challenges, having failed to reform economically or politically before their economies peaked in 2007, This leaves economic and political systems in place that are dominated by transfer incomes. Again, this is not unlike the EU. 

 

Egypt is about to lose its financial aid and probably also military aid from the US due to conditions in the Camp David accord with Israel. Meanwhile, neighbouring countries with an enormous interest in seeing a stable outcome have quickly donated USD 12 billion in aid to Egypt to mainly secure the purchase of wheat, as Egypt remains one of the world's biggest  wheat importers (mainly from the US).

 

For a non-emotional observer, Egypt is a paradox. A democratically elected president and government have been overthrown by the same military that removed the dictator Hosni Mubarak. Fast forward only one year and the democracy mandate has been diluted. The main political factions are now entrenched with nowhere to go. A compromise looks impossible as returning the democratically elected Mohamed Morsi to office will not happen.

 

The inability to deal with new paradigms for young countries shouldn't be a surprise if we take the historical perspective. Historically, newly born countries will swing like a pendulum from one extreme to another as they search out some kind of equilibrium. The old democracies of Europe are a product of centuries of evolution through all manner of political regimes. But despite this knowledge, we insist new democracies adopt higher democracy standards almost overnight. Look no further than Iraq and Afghanistan to find major failures in giving these economies the time to grow, learn and adopt this difficult task of creating a smoothly functioning political economy.

 

In terms of the market impact from Egypt, I doubt the oil price is more than perhaps USD 2 higher due to the geopolitical risk. The real risk is not having the Suez Canal open, which all involved parties, including the US, want to secure. Should they fail, it would mean USD 20 to USD 25 of extra premium on top of the current geopolitical risk. The stock markets in the region are a different story. The equity market in Egypt is still trading, although it's 60 per cent lower compared with its peak in 2007. However, the capitalisation of these markets is smaller than most S&P 500 companies.

 

Looking at a map, I'm concerned that the northern part of the MENA region is now in deep turmoil. Syria, Jordan, Egypt and the Palestinian territories are going from bad to worse economically. Add to this the headlines of cash shortages in Iran and we have a region that is highly flammable, both economically and politically. Few companies, despite the oil, are willing or able to risk putting people on the ground in these countries for now. Tourists are no-shows and the capital flight from northern MENA will continue to flow to the UAE and its commercial centre of Dubai, where already bubble-prone economies could become even more leveraged.

 

I find it hard to reconcile headlines of Egypt spinning out of control with Bloomberg's main MENA story from yesterday: "Dubai sees need for tallest office tower amid 45% vacancy." It turns out that the negative emerging markets story now carries over to real estate. Elsewhere, Abu Dhabi's central business district vacancy rate is at  38%, while Mumbai is at 25%. Compare this with Moscow's central business district vacancy rate of 15%. The fact that more people want to do business in Moscow based on this metric clearly tells us that MENA is at risk of losing a competitive edge, driven by its oil riches as long as there is no true handover from government-owned companies to the private sector.

 

To keep MENA afloat, the south ‒ like Europe's north ‒ will need to provide more money, guidance and mediation. History also tells us that long-term solutions need to be driven by respect, understanding and economic incentives coming from MENA – not from Europe or the US.

 

I remain confident that both Egypt and the rest of MENA will move to a better place, but before MENA finds a common voice and resolve to deal with not only Egypt, Syria, Jordan, the Palestinian territories, Iraq and Iran, we will be adding to this list of countries.

 

The loser in the short and medium-term is the population and the democratic process, which started in earnest last year. But I remain positive on MENA's long-term prospects as I firmly believe in the micro economy. The individual person, the small company that wants to do better, be faster and more transparent will prevail despite the institutional headwinds.

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Please visit our website at www.saxobank.com

 

This email may contain confidential and/or privileged information.
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