Been pretty occupied

I have to apologize for not blogging as frequently as I did in the past. I`ve been extremely busy with my life.

I`ll be sitting for my FRM (Financial Risk Manager) exams in November.

Janet Yellen`s speech on inflation and monetary policy

The Federal Reserve Chair Janet Yellen spoke on inflation and monetary policy in front of an audience in the University of Massachusetts.

In her speech, she reiterated that the inflation level for instance is still below the 2.0% target which is the optimum point to spur the economy according to the Fed. Her full speech can be viewed here. 

Targeted LTROs frustrate

The European Central Bank (ECB) is giving a mere 15.5 billion euros in this month`s longer-term refinancing option (LTRO). In comparison, this was set at 73.8 billion euros in the previous period. Italian banks are set to request less than 3 billion euros worth of funds.

Reuters has a write up on this.

Unemployment claims at 267 thousand

The weekly unemployment claims gained slightly this week to 267 thousand claims.

Durable goods orders drop

Core durable goods orders were flat in September, down from a 0.4% growth in August. MarketWatch has brief write up on this.

Business confidence in Germany rises

The Ifo business climate index rose to 108.5 in September from 108.4 in the previous month.

However, the manufacturing sector continues to deteriorate. The full report can be found here. 

FOMC Lockhart`s speech

Dennis Lockhart, a Federal Open Market Committee (FOMC) member spoke at the Buckhead Rotary Club. He commented on the recent monetary policy decision which did not raise rates in September. His speech can be viewed here.

RBA Stevens`s speech on economics

Governor Stevens of the Reserve Bank of Australia (RBA) touched on economics in his speech to the House of Representatives Economics Committee. Interestingly, he expects the Federal Reserve to hike rates by Christmas.

His full speech can be viewed here.

FOMC statement: No rate hike

Last month, I wrote why the Federal Reserve cannot raise rates this month. The post can be viewed here.

The Federal Open Market Committee (FOMC)`s statement can be viewed here.

Philly Fed manufacturing index negative

The Philly Fed manufacturing index entered negative territory in September. The survey can be found here.

New home construction falls in August

Housing starts in the US fell in August to 1.13 million permits from an annualized pace of 1.16 million. Bloomberg has a write up on this.

Weekly unemployment claims down to 264 thousand

The weekly unemployment claims dropped to 264 thousand from 275 thousand recorded last week.

UK retail sales accelerates by 0.2%

Retail sales in the UK expanded at a pace of 0.2% in August. 

Other key points include: 

• The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 30th consecutive month, increasing by 0.4%.
• Compared with July 2015, the quantity bought in the retail industry is estimated to have increased by 0.2%.
• Average store prices (including petrol stations) fell by 3.3% in August 2015 compared with August 2014; the 14th consecutive month of year-on-year price falls.
• The amount spent in the retail industry increased by 0.2% in August 2015 compared with August 2014, but decreased by 0.3% compared with July 2015.
• The value of online sales increased by 7.4% in August 2015 compared with August 2014, but decreased by 2.7% compared with July 2015.  
• Revisions in this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was August 2014. More information on revisions can be found in the background notes.

The report can be found here. 

SNB monetary policy statement unchanged

The Swiss National Bank (SNB) left its monetary policy statement unchanged.

Services and primary industries contributed to New Zealand`s GDP growth

New Zealand`s gross domestic product (GDP) grew by 0.4% in the June quarter. This was mainly attributed to the increase in meat and dairy farming.

The economic report can be viewed here.

UK inflation report hearings

The video stream for the UK inflation report hearings can be found here.

US CPI

Consumer price index (CPI) was at -0.1% in August while the core CPI was 0.1%. The consumer price index report can be found here.

Average earnings index up to 2.6%

The average earnings index grew at a rate of 2.6% in September. This is a 6 year high in terms of wage growth. The full labour market statistics report for September can be found here.

Retail sales in the US increases

In a Bloomberg write up, it was stated that retail sales in the US increased as "consumers may be looking past the recent volatility in financial markets. Well, sales grew but only at a pace of 0.1% for core retail sales and 0.2% for retail sales. This is deterioration from the previous period`s growth of 0.6% and 0.7% respectively.

Zerohedge has a more critically written article on this.

ZEW indicator: EM dampens outlook

The ZEW indicator of business confidence decreased to 12.1 in September from a level of 25.0 in the previous period. Emerging markets (EM) have been said to dampen Germany`s export oriented economy while the Eurozone economy has weakened as well.

The press release can be viewed here.

BoJ`s monetary polict statement

The Bank of Japan`s monetary policy statement can be read here. As usual, the statement is virtually unchanged.

RBA`s monetary policy minutes

The September meeting minutes can be found here, The members observed that financial markets have experienced increased volatility with the recent developments in China. Equity markets are affected the most while fixed income and foreign exchange markets are somewhat more stable.

Low interest rates would continue to support growth in Australia. Hence the rate remained unchanged at 2.0%.

China`s industrial output less than estimated

China`s industrial production growth was at 6.1%, lower than the 6.0% predicted by economists. Bloomberg has a write up on it.

US PPI flat

The producer price index indicated no growth in August. The output remained flat. The official report can be found here.

UoM consumer sentiment at a one year low

The preliminary University of Michigan consumer sentiment declined to 85.7 in September, making it a one year low. Bloomberg has a write up on on this.

Australia`s trade balance deficit shrinks

The first good news for Australia this week- the trade balance deficit was reduced to 2.46 billion in July compared to 3.05 billion in the previous period. Retail sales however contracted by 0.1%.

An in depth breakdown can be found in the trade report.

ADP non-farm employment change: 190 thousand new jobs created

The ADP report indicated that 190 thousand new jobs were created in August. Do take note that this is not the official non-farm employment change report that will be out tomorrow.

UK`s construction sector up slightly

The construction PMI (purchasing managers` index) was up slightly to 57.3 in August from 57.1 in the previous period. Any level above 50.0 indicates an expansion in the industry.

The full report can be read here.

Australian economy grows a lot slower than expected

The Australian economy grew at a pace of 0.2% in the June quarter, half of what economists were predicting. Bloomberg has a write up on the economy woes. In terms of currency, the Australian dollar dropped to a 6 year low against the greenback. By being a proxy economy to China, the Australian market is certainly feeling the heat.

The full GDP report can be found here.

New Zealand`s GDT up by 10.9%

The GDT index, the leading indicator of dairy prices was up by 10.9% on Tuesday.

UK`s manufacturing PMI down

Markiteconomics used the terms  "expansion remains subdued" in terms of UK`s manufacturing output in August. The manufacturing PMI was at a level at 51.1 compared to 51.9 in July.

RBA statement

The Reserve Bank of Australia`s monetary policy statement can be found here. The cash rate remained unchanged at 2.0%.

China`s manufacturing PMI falls

The official PMI for August fell to 49.7 compared to 50.0 in July. This is in line with the fall in oil prices. CNBC has a write up on the PMI.

Australian building approvals grew by 4.2%

Building approvals picked up by 4.2% in July. The full report can be found here.

A rate hike in September is unlikely but why are markets so jittery?

Last Monday, Stanley Fisher who is the Vice Chair of the Federal Open Market Committee (FOMC) suggested that more time is needed before a rate hike can take place. If this is coming from a senior policy maker, it pretty much sums up that a rate hike will not be a done deal next month.

In addition, another member of the FOMC, Narayana Kocherlakota mentioned in his opinion piece in the Wall Street Journal yesterday that "raising US rates now would be a mistake." He argues mostly on the basis that the inflation rate is too low. For the past 3 years, the inflation target has been missed continuously. With inflation so low, higher interest rates will push real interest rates higher. Real interest rates are interest rates net of inflation. This in turn would discourage people from borrowing money and increasing the dollar`s value even further.

The Federal Reserve is mandated by Congress to promote price stability and maximum employment but only the latter has been achieved so far. Therefore, the FOMC should loosen its policy instead. Narayana Kocherlakota brilliantly ends his article by stating that "when the public comes to doube a central bank`s commitment to its goals, the economy could land in a permanent low interest rate trap. Consequently, central banks would be less effective in fighting recessions. (Think Japan)

Now, what if rates do increase, regardless of whether it is next month or by end of 2015? An economic disaster is set to happen based where emerging markets stand to lose the most.

Two main players are to be blamed, the strength of the greenback and the simultaneous devaluation of the yuan. Since the 07-8 crisis, China has been enjoying an unsustainable growth boosted by a massive amount of debt. No other emerging market has taken on debt as the same pace as China according to Morgan Stanley`s Ruchir Sharma.

So, why are other emerging markets suffering? Emerging markets are facing a hard time as they have jumped onto the bandwagon on China`s boom. These investments are mostly funded by cheap creditfrom the US. Now, as the US economy is recovering and China`s economy is slowing down sharply, the currencies are going in opposite direction. Imagine taking a loan in USD a few years back due to the low interest rates and then investing it in China. Well, everything was fine until now.
Now, picture having to payback the loan in yuan terms when the dollar is rising, yuan dropping and the risk of an interest rate hike in the very near future that interest rates would be hiked and increasing the gap between these two currencies. A disaster, no?

Now, let`s scale this up a bit to see how severe the situation is. Corporate borrowers in the developing world have borrowed $1.3 trillion in dollar denominated bonds since 2010. The biggest borrowers are China, Brazil, Russia, Mexico and South Korea. A change in interest rates (and exchange rate) no matter how small it may seem would be a catastrophe.

The FOMC must consider all stakeholders in its rate hike decision. A moral hazard is about to take place and the next recession is set to start in China.

RBA monetary policy minutes

The RBA (Reserve Bank of Australia)`s monetary policy minutes can be found here. It is somewhat a summary of the monthly monetary policy.

UK CPI accelerates by a mere 0.1%

The consumer price index (CPI), a leading indicator of inflation grew by 0.1% in July. The other key points are:

• A smaller fall in clothing prices on the month compared with a year ago was the main contributor to the rise in inflation.
• Falling prices for food and non-alcoholic beverages partially offset the rise.
• CPIH (not a National Statistic) grew by 0.4% in the year to July 2015, up from 0.3% in June 2015.

The full report can be viewed here. 

Japan`s prelim GDP contracts

Japan`s prelim GDP contracted by 0.4%. Bloomberg has a write up on this.

TPPA will push pharmaceuticals prices up

As the Trans-Pacific Partnership (TPPA) Agreement between the United States and Malaysia is about to be finalised, there is this one disadvantage which I wanted to point out. The cost of medicine is expected to go up due to patent laws. A dozen years is required before generic copies are allowed to enter the market.

On share buybacks

A Share buybacks is a common action taken by corporations mostly to improve their ratios. In addition, a buyback is expected to push up the share price. This in turn, help executives meet their targets.

In last week`s The Economist, it was mentioned that the supply of equities may soon stop shrinking. A slowdown is expected in the second half of the year as profits have been out of steam and firms have less cash to deploy. 

The Harvard Business Review has a good article regarding this issue. 

Prelim UoM consumer sentiment down to 92.9

The preliminary University of Michigan (UoM) consumer sentiment dropped to 92.9 in August. This is the second month in a row that the index fell. Bloomberg has a write up on this.

US PPI accelerated by 0.2%

Producer prices increased by 0.2% as indicated in the producer price index (PPI) report. The full report can be found here.

French and German prelim GDP red

The French prelim GDP for the second quarter had no growth.

The full report can be found here.

In Germany, the prelim GDP grew by 0.4%. Reuters has a write up on the German economy.

New Zealand retail trade survey for Q2

The New Zealand retail trade survey for the second quarter indicated that retail sales grew by 0.1%. In comparison, the first quarter had a growth of 2.3%. The full report can be found here.

China`s fundamentals are not right

Here are a couple of issues I noticed while browsing China`s fundamentals on Bloomberg Terminal:

1) GDP growth has been static since late 2013.
2) Construction sector is down since late 2013.
3) A sharp decline in external trade since mid-2008 and it has never reached pre-crisis levels.
4) Economic activity is down since late 2008.

Total exports have dropped by 8.3% this year while imports have declined by 8.1%. These data were obtained from Bloomberg Intelligence.

US unemployment claims: 274 thousand

The weekly unemployment claims increased by 5 thousand this week to 274 thousand.

US retail sales rose in July

Core retail sales remained at a 0.4% growth while retail sales grew at a pace of 0.6% compared to a zero growth in June. Bloomberg said the rise in retail sales shows a rising demand for everything.

UK labour market

The average earnings index fell to 2.4% compared to 2.8% in the previous period. While the unemployment rate was steady at 5.3%, employment declined by 63 000 according to Bloomberg. 

Other key points include: 

• There were 22.76 million people working full-time, 352,000 more than for a year earlier. There were 8.27 million people working part-time, little changed compared with a year earlier.
• The employment rate (the proportion of people aged from 16 to 64 who were in work) was 73.4%, little changed compared with January to March 2015 but higher than for a year earlier (72.8%).
• There were 1.85 million unemployed people (people not in work but seeking and available to work), 25,000 more than for January to March 2015 but 221,000 fewer than for a year earlier.
• There were 1.01 million unemployed men, 130,000 fewer than for a year earlier. There were 838,000 unemployed women, 92,000 fewer than for a year earlier.
• The unemployment rate was 5.6%, little changed compared with January to March 2015 but lower than for a year earlier (6.3%). The unemployment rate is the proportion of the labour force (those in work plus those unemployed) who were unemployed.
• There were 8.99 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), little changed compared with January to March 2015 and with a year earlier.
• The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 22.1%, little changed compared with January to March 2015 and with a year earlier.
• Comparing April to June 2015 with a year earlier, pay for employees in Great Britain increased by 2.4% including bonuses and by 2.8% excluding bonuses.

The full report can be found here. 

China`s industrial output falls to 6%

China`s industrial output growth fell to 6.0% in July, down from 6.8% in June. Reuters has a write up on China`s factory output.

US prelim unit labour costs up by a mere 0.5%

The second quarter prelim unit labour costs increased by a mere 0.5% compared to the first quarter`s 6.7% growth. Bloomberg has a write up on this while the official report can be found here.

German ZEW economic sentiment declined again

The German ZEW economic sentiment decreased by 4.9 points to 25.0. The press release can be found here.

NAB business confidence drops

Business confidence dropped according to the National Australian Bank, with key jitters resulting from China`s economic developments. The NAB business confidence index dropped to 4 after recording a level of 8 in the previous period. ABC has a write up on this.

FOMC Lockhart`s speech

The Federal Open Market Committee (FOMC) member, Dennis Lockhart who is also the President of the Federal Reserve Bank of Atlanta spoke to the Atlanta Press Club on economic progress. His speech can be found here.

China`s CPI: 1.6%

China`s consumer price index (CPI) was at 1.6% in July, thanks to pricier pork as reported by Bloomberg. This means that inflation is picking up slightly after the threat of deflation for months.

US employment situation

The non-farm payroll report indicated that 215 thousand jobs were created in July, compared to 231 thousand in June. The unemployment rate remained steady at 5.3%. Average hourly earnings saw a growth of 0.2%. This was static in June.

Bloomberg has a write up on the employment change while the official report can be found here.

BoJ monetary policy statement

The Bank of Japan`s (BoJ) monetary policy statement can be found here.

RBA monetary policy statement

The Reserve Bank of Australia`s (RBA) monetary policy statement can be found here. I`ve not had the time to read it yet as the statement is more than 60 pages.

Weekly unemployment claims: 270 thousand

The unemployment claims stood at 270 thousand this week compared to 267 thousand claims in the previous week. The report can be found here.

BoE inflation webcast

The press report for the Bank of England (BoE) inflation report can be found here.

UK manufacturing output fell in June

The UK manufacturing production grew by a mere 0.2% in June. The key points include:

• Total production output is estimated to have increased by 0.7% between Quarter 1 (Jan to Mar) 2015 and Quarter 2 (Apr to June) 2015. Manufacturing, the largest component of production, is estimated to have decreased by 0.3% between these periods.
• The largest contribution to the quarterly growth came from mining & quarrying, which increased by 6.3%, the highest since Quarter 4 (Oct to Dec) 1993.
• Total production output is estimated to have increased by 1.5% in June 2015 compared with June 2014. There were increases in 3 of its 4 main sectors, with the largest contribution coming from mining & quarrying, which increased by 6.3%.
• Manufacturing output increased by 0.5% in June 2015 compared with June 2014. The largest contribution to the increase came from the manufacture of transport equipment, which increased by 7.2%.
• Total production output is estimated to have decreased by 0.4% in June 2015 compared with May 2015. There were decreases in 2 of the 4 main sectors, with the largest contribution coming from mining & quarrying, which decreased by 3.8%.
• Manufacturing output increased by 0.2% in June 2015 compared with May 2015. The largest contribution to the increase came from the manufacture of basic metals & metal products, which increased by 4.9%.
• In the 3 months to June 2015, production and manufacturing were 9.2% and 4.8% respectively below their figures reached in the pre-downturn GDP peak in Quarter 1 (Jan to Mar) 2008.
• The preliminary estimate of GDP, published on 28 July 2015, contained an estimated increase of 1.0% for production in Quarter 2 (Apr to June) 2015. This release of data estimates that production increased by 0.7% between Quarter 1 (Jan to Mar) 2015 and Quarter 2 (Apr to June) 2015. The impact on the previously published GDP estimate for Quarter 2 (Apr to June) 2015 is less than 0.1 percentage points.

The full report can be found here. Reuters also has a write up on the industrial output. 

Update on Citadel

The Wall Street Journal  has an excellent write up on Citadel and the hedge fund`s boss, Ken Griffin.The fund survived the 2008 crisis after disastrous losses and is now expanding aggressively. Ken Griffin said it took him some 3 years to make back the losses.

Ben Bernanke, the former Federal Reserve Chair is a part-time consultant in the hedge fund.

Other interesting bits about his hedge fund include:
- The leverage ratio is 7:1. For every $1 invested by customers, Citadel borrows $7.
- An ex-Amazon employee with a machine learning background was hired as the mathematical techniques have applicability in financial markets.

The interview with Ken Griffin can be found here.

Unemployment rate in Australia increases to 6.3%

The unemployment rate in Australia increased to 6.3% in July compared to a rate of 6.1% in June. The employment change however indicated a positive growth, with 38.5 thousand new jobs were created. The labour force report can be found here.

The Australian dollar is expected to depreciate against major currencies after today`s hike in unemployment.

UK services industry signals strong growth

The services PMI (purchasing managers index) was at a level of 57.4 in July, a tiny drop from June`s 58.5. Any level above 50.0 indicates an expansion in the industry.

However, employment rose at the slowest rate since 2013. The full report can be found here.

New Zealand unemployment rate rises to 5.9%

The unemployment rate rose to 5.9% in the June quarter compared to 5.8% recorded in the previous period. In addition, 7000 more people were employed in the second quarter, bringing the employment change to 0.3%.

The labour report can be found here.

GDT index down

The GDT index dropped to -9.3%.

UK construction output slows down in July

The UK construction PMI dropped to 57.1 in July after hitting a level of 58.1 in June. Residential building expanded at the slowest rate since mid-2013. The full report can be found here.

In addition, Reuters has a write up on the construction industry as well.

WSJ: Foreigners frosty on Australian debt

The Wall Street Journal has an article today regarding Australian bonds. (note: this article is for paid subscribers)

Basically the article highlighted the woes Australia is currently facing which include:
- plunge in commodity prices.
- increase in unemployment.
- risk of a property bubble.

The Australian dollar has declined sharply against the US dollar while the yield advantage over US Treasurys is getting narrower. These in turn, are discouraging foreign purchases of Australian bonds.

RBA rate statement

The cash rate remained unchanged at 2.00% while the Reserve Bank of Australia`s (RBA) rate statement can be viewed here.

Australia`s trade balance deficit widens

The trade balance deficit widen to 2.93 billion in June compared to 2.68 billion in the previous period. This is however better than what economists were predicting. The full report can be found here.

Australia`s retail trade up by a bit

Retail sales accelerated by 0.7% in July compared to a 0.4% growth in June. The full report can be found here.

UK manufacturing PMI up slightly

The manufacturing PMI (purchasing managers index) increased slightly to 51.9 in July after recording a level of 51.4 in June. Reuters has a write up on the manufacturing industry.

The full PMI report can be found here.

China`s manufacturing PMI at a two year low

China`s manufacturing PMI (purchasing managers index) dropped to 47.8 in July, indicating a contraction. What is worrying is that both domestic and foreign demand have dropped. The full report can be found here.

Late day jolts in China stocks

The Wall Street Journal has a write up on what has been the force in driving late day jolts. The two factors identified were:

1) Afternoon margin calls from lenders.
2) Presence from authorities.

Australian PPI grew by 0.3%

Producer Price Index (PPI) in Australia recorded a growth of 0.3% in the June quarter. In comparison, the index rose by 0.5% in the first quarter. The full report can be read here.

New Zealand business outlook pessimistic

The ANZ business confidence index dropped to -13.5 in July compared to -2.3 in June.

The full report can be found here.

US economy grows by 2.3% in the second quarter

The US advanced GDP for the second quarter grew at a pace of 2.3%. The official GDP report can be found here.

Bloomberg has a write up on the GDP data as well.

China`s manufacturing PMI slows down

China`s manufacturing PMI (purchasing managers index) was at a level of 50.0 in July compared to 50.2 in June. This is a 5 month low according to Bloomberg.

Advanced report for US goods trade balance

The advanced report for US goods trade balance indicated a deficit of $62.3 billion in July. The report can be found here.

Weekly unemployment claims at 267 thousand

The US weekly unemployment claims rose a little to 267 thousand compared to 255 thousand claims last week. The press release can be found here.

Australian building approvals falls by -8.2%

Building approvals suffered a sharp contraction by 8.2% in June. The full report can be viewed here.

FOMC statement

The FOMC (Federal Open Market Committee) statement for the month of July can be found here. Economic growth is said to be expanding at a moderate growth.

Bloomberg has a concise write up on this and mentioned that the terms "further gains in the job market" and "declining unemployment" indicate a reduction in labour slack.

RBNZ Wheeler`s speech

The Reserve Bank of New Zealand (RBNZ) Governor Wheeler spoke earlier today at the Tauranga Chamber of Commerce. He touched on the issue of inflation and monetary policy. His full speech can be read here.

Conference Board: Consumer confidence in the US declines

The CB (Consumer Board) confidence index declined to 90.9 in July after a slight improvement in June. The full report can be found here.

UK second quarter GDP grew by 0.7%

The preliminary GDP for the second quarter in the UK grew by 0.7% compared to a 0.4% growth in the first quarter. The other key points include:

• Output increased in 2 of the main industrial groupings within the economy in Quarter 2 (Apr to June) 2015. Services increased by 0.7% and production increased by 1.0%. Construction growth was flat. In contrast agriculture decreased by 0.7%.

• GDP was 2.6% higher in Quarter 2 (Apr to June) 2015 compared with the same quarter a year ago.

• In Quarter 2 (Apr to June) 2015, GDP was estimated to have been 5.2% higher than the pre-economic downturn peak of Quarter 1 (Jan to Mar) 2008. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) 2009, the economy shrank by 6.0%.

• The preliminary estimate of GDP is produced using the output approach to measuring GDP. At this stage, data content is less than half of the total required for the final output estimate. The estimate is subject to revision as more data become available, but these revisions are typically small between the preliminary and third estimates of GDP.

• All figures in this release are seasonally adjusted.

The full GDP report can be found here. 

US core durable goods orders grew by 0.8% in July

Core durable goods orders grew by 0.8% in June, the second time in 2015. Bloomberg mentioned "while the US economy is moderately positive, the global economy remains relatively stagnant."

German business confidence up

Business confidence in Germany increased in July to 108.0 after a 2 month drop. Reuters has a write up on the Ifo business climate.

French and German PMI red

The French manufacturing PMI (purchasing manager`s index) fell to 49.6 in July compared to 50.4 recorded in the previous period. The German PMI fell to 51.5 compared to 51.9 in the previous period. The Greece issue has adversely affected the economy of members of the euro area.

Trading floor has a write up on these PMI numbers.

China`s manufacturing PMI at a 15 month low

China`s manufacturing PMI (purchasing manager`s index) was at 48.2 in July, down from 49.4 in June. A level below 50.0 indicates a contraction. This is the lowest level in 15 months.

In addition, Bloomberg mentioned that this has caused the Australian dollar to reach a 6 year low. This is due to the fact that the Australian economy tends to move in parallel to China`s. The PMI report can be found here.

Surprise trade deficit for New Zealand

New Zealand recorded a deficit of 60 million in the month of June compared to a surplus of 371 million a month earlier. Other key points include:

• Fruit helps quarterly exports rise 0.4 percent 
• Quarterly imports rise 0.4 percent
• Trade deficit shows little change in June 2015 quarter
• Monthly exports at highest June month value
• Monthly imports rise 9.0 percent
• Trade deficit in June 2015 is $60 million
• Exchange rate movements

The full report can be viewed here. 

US weekly unemployment claims down

Weekly unemployment claims dropped to 255 thousand this week compared to 281 claims made last week.

UK retail sales contracts by 0.2%

Retail sales entered negative territory in June by contracting at a rate of 0.2%. The other main points include:

• Year-on-year estimates of the quantity bought in the retail industry continued to show growth for the 27th consecutive month in June 2015, increasing by 4.0% compared with June 2014. This was the longest period of sustained year-on-year growth since May 2008, when there were 31 periods of growth.
• The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, continued to show growth for the 28th consecutive month, increasing by 0.7%. This is the longest period of sustained growth since consistent records began in June 1996.
• Compared with May 2015, the quantity bought in the retail industry was estimated to have decreased by 0.2%. Falls were reported by predominantly food stores, other stores, household goods stores and petrol stations.
• Average store prices (including petrol stations) fell by 2.9% in June 2015 compared with June 2014. This is the 12th consecutive month of year-on-year price falls with all store types reporting decreases. The largest contribution came once again from petrol stations which fell by 10.0%, the 22nd consecutive month of year-on-year falling prices in this store type.
• In June 2015, the amount spent in the retail industry increased by 0.9% compared with June 2014, but decreased by 0.1% compared with May 2015. Non-seasonally adjusted data show that the average weekly spend in the retail industry was £7.1 billion, unchanged from the previous month and the June 2014 figure.
• The value of sales made online in June 2015 increased by 1.4% compared with May 2015 and accounted for 12.4% of all retail sales. Online sales increased by 11.4% compared with June 2014.
• Revisions in this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was June 2014. More information on revisions can be found in the background notes.

Bloomberg  mentioned that "persistently low inflation and stronger wage growth are leaving Britons with more pounds to spend and helping them support expansion". The full report can be viewed here. 

WSJ: Hedge funds are preparing for a big short

The title sounds similar to Michael Lewis`s "The Big Short" and the concept remains the same. The Wall Street Journal reported that hedge funds are preparing to make huge returns in case the market tanks.

As with Michael Lewis`s book, hedge funds can make a bet that a bond defaults by buying credit-default swap (CDS) contracts. Here are two other ways mentioned by the Journal on how to profit from a bearish market:
- Buy a put option on an ETF.
- Increase cash holdings.

The full article can be found here.

New Zealand`s cash rate cut by 25 basis points to 3%

The Reserve Bank of New Zealand (RBNZ) cut the cash rate by 25 basis points to 3.0%. In the statement, it was stated although the New Zealand dollar has depreciated by significantly since April, more is necessary given the weakness is export commodity prices.

The statement can be found here.

MPC votes remain

The Monetary Policy Commitee (MPC) Bank Rate votes remained unchanged.

The meeting minutes for July can be found here.

RBA Stevens: Issues in economic policy

The Reserve Bank of Australia Governor Stevens delivered a speech at the Anika Foundation Luncheon regarding the issues in economic policy. He touched briefly on Greece and China.

His full speech can be read here.

Australian CPI up by 0.7%

Consumer price index (CPI) grew by 0.7% this quarter compared to a 0.2% growth recorded in the previous period. The inflation report can be found here.

Bloomberg has a write up on the CPI as well.

Dodd-Frank creators say the American banking system is better off

One of the reasons why I like the Wall Street Journal is that it offers multiple views on a particular issue. Also in today`s issue, there`s a write up saying the banking system is better off thanks to the statute. 

The legislation sponsors, former Senator Christopher Dodd and former US Representative Barney Frank sat down with the WSJ for a question and answer session. The article can be found here. 

Wall Street Journal claims Dodd-Frank is a failure

Today marks the 5th year anniversary since the Dodd-Frank Act was signed by President Obama. The Wall Street Journal had a write up stating that this has been a failure so far. The article mentions that instead of aiming at Wall Street, it hit Main Street hard. In addition, the law is said to have crushed small banks, restricted access to credit and planted the seeds of financial stability.

The statute was intended to "end too big to fail" and "promote financial stability".

The Wall Street Journal article can be found here.

Australian Monetary Policy Minutes

A slight red flag in this month`s statement, the term "average" was used to describe the economic growth of Australia`s major trading partners. It was noted that the US economy was stronger while China was somewhat weaker.

Members also noted that the recent volatility in the Chinese equity markets and potential spillovers from developments in Greece would require close monitoring.

The full statement can be found here.

Janet Yellen`s testimony

The FED Chair, Janet Yellen testified before the Senate Banking Committee. Her full testimony can be found here. She noted that while wage growth has picked up, it still remained subdued, consistent with other indicators of slack.

C-span has a video feed of her testimony.

US unemployment claims down this week

The weekly unemployment claims fell to 281 thousand this week compared to 296 thousand previously.

Webcast of the ECB press conference

The video feed can be streamed here.

ECB monetary policy decision

The European Central Bank (ECB) kept the minimum bid rate at 0.05%. The full report can be found here.

Greek bailout approved

The Greek government debt crisis was passed. Bloomberg has a write up regarding the bailout.

New Zealand CPI 0.4%

Inflation increased in New Zealand for the June quarter. The consumer price index (CPI), a leading indicator of inflation grew to 0.4% compared to a negative growth of 0.3% in March.

Other key points include:

• Quarterly rise of 0.4 percent on higher petrol prices
• Quarterly non-tradable inflation lowest since the December 2009 quarter
• Annual inflation at 0.3 percent influenced by housing-related costs
• CPI analytical series
• Seasonally adjusted CPI rise of 0.3 percent in the quarter 
• Field prices now collected electronically

The full report can be found here. 

China`s trade deficit shrinks

The trade deficit in June reduced to 46.5 billion compared to 59.5 billion in May. Bloomberg has mentioned that this is due to the rise in exports. Exports in June rose for the first time in four months.

Tech glitch: NYSE suspended for nearly 4 hours

The New York Stock Exhange (NYSE) was suspended for nearly 4 hours due to a tech glitch. CNN has a coverage on this.

Interestingly around the same time, even the Wall Street Journal had issues. Politico has covered the issue in its post.

UK official bank rate unchanged

The Bank of England held the official bank rate steady at 0.5%. The report can be found here.

June inflation increases in China

Inflation in China was up in June. The consumer price index (CPI), grew by 1.4%. Reuters has a write up on the inflation data.

Australian labour force

The Australian unemployment rate climbed to 6.0% in June compared to 5.9% in May. In terms of new jobs being created, a mere 7 300 new openings were available last month. A stark difference compared to May, when 40 000 new jobs were created.



The labour force report can be found here.

FOMC minutes

The Federal Open Market Committee (FOMC) released its minutes earlier this morning. It is a pretty long report and Bloomberg has a summarised version.

UK annual budget

UK`s annual budget was unveiled yesterday. The video feed can be obtained from the Parliament`s web feed. According to the Wall Street Journal, the Bank of England`s fiscal worries ease.

US trade deficit increases marginally

The trade balance deficit in May stood at 41.9 billion compared to a deficit of 40.7 billion in April. The full report can be found here.

UK industrial output up in May

According to Reuters, the industrial output was up in May due to the strong oil and gas production. However, the manufacturing production dropped to -0.6% compared to -0.4% in April. 

The main points of the report includes:

• Total production output is estimated to have increased by 2.1% in May 2015 compared with May 2014. There were increases in 3 of the 4 main sectors, with the largest contribution coming from mining & quarrying, which increased by 7.3%.
• Manufacturing output increased by 1.0% in May 2015 compared with May 2014. The largest contribution to the increase came from the manufacture of transport equipment, which increased by 11.0%, due to a rise in the manufacture of air & spacecraft and related machinery.
• Total production is estimated to have increased by 0.4% in May 2015 compared with April 2015. There were increases in 3 of the 4 main sectors, with the largest contribution coming from mining & quarrying, which increased by 4.9%.
• Manufacturing output decreased by 0.6% in May 2015 compared with April 2015. The largest contribution to the decrease in manufacturing came from basic metals & metal products, which decreased by 3.7%.
• In the 3 months to May 2015, production and manufacturing were 9.2% and 4.6% respectively below their figures reached in the pre-downturn gross domestic product (GDP) peak in Quarter 1 (Jan to Mar) 2008.
• In this release, the earliest period open for revision was April 2015, in line with the National Accounts revisions policy. There was no impact on previously published GDP estimates resulting from revisions to this period

The full report can be obtained here. 

RBA statement

The cash rate was left unchanged at 2.0%. There is no change in the monetary policy. The full statement can be found here.

NZIER down

The NZIER report shows that the New Zealand economy is losing momentum. Profitability levels are expected to drop among other things. The full report can be read here.

Bursa Q2 recap

The second quarter has been a disaster for Bursa. On 29 June, the index dipped below 1700 points. The companies that represent the index have been falling in term of prices. In addition, CIMB is offering 11% of its work force the VSS (voluntary separation scheme) while Axiata plans to trim its work force by 20%.

Historical data was obtained from Yahoo Finance.

Greece`s Finance Minister resigns

After yesterday`s referendum, Finance Minister Varoufakis announced that he resigned in a blog post.  In addition to that, his blog contains useful posts which you may want to follow.

In the money call warrants (Week 28)

I`ve not written about warrants for 10 weeks since my last post in April . I am not particularly comfortable with where the market is heading and to me, having integrity and being ethical is of utmost importance. This is the reason why I have not sold my research reports yet to subscribers.

Nevertheless, I have compiled a list of call warrants that are in the money this week.

No	Call Warrant	Discount rate (%)
1	Berjaya Auto CD	3.57
2	Berjaya Food WA	1.52
3	Borneo Oil WB	2.26
4	Cahya Mata Sarawak CI	5.77
5	Cliq Energy WA	9.09
6	Managepay Systems WA	7.02
7	MISC CV	5.17
8	N2N Connect WA	7.01
9	Westports CJ	7.91

Note that the N2N WA is an American styled call warrant which means it can be converted on any date up to expiry. The trading idea is to buy the warrant, convert to the money share and either collect the difference between acquisition cost and market value or hold it for more capital gains.