April 20. Chicago baseball
–US stock averages pulled back between 1.2 and 1.6% on Friday. The curve ended a bit flatter on the day, with the ten year yield DOWN 3 bps to 184.5 and 2’s UP 2 bps to 50. So 2/10 was down 5 bps to 134.5 while red/gold pack spread fell over 3.5 to close just above 113. US economic data continues to come in disturbingly weak, with Chicago Fed’s National Activity Index today, expected +0.15. CFNAI has been negative for the past three months; there haven’t been four negative releases since late 2010. The schedule is light this week, with housing data Wed and Thursday, and Durables Friday. Earnings releases and the situation in Greece are likely to be dominant themes.
–China’s actions to stem the surge in stocks while providing additional liquidity for the real economy is another challenge. After Friday’s liberalization of short selling rules, which took some of the air out of equities, on Sunday the PBoC cut reserve requirements. From the WSJ on Sunday: “China’s central bank cut the reserve requirement on bank deposits by one percentage point, in a move to free up funds for loans to struggling companies.” The Hang Seng index fell 2% today, with Shanghai Comp -1.6%. There is also a story on ZH that says the PBoC may allow Chinese commercial banks to post some of their local bond holdings for cash loans. Layering debt over debt. Seems to be working for Greece…
–Crude oil up 50 cents this morning and holding above $57 near this calendar year high. So if, as our central bank indicated, the drop in oil prices was a net benefit to the US economy, (with Q1 GDP expected around 0), what will the impact be as oil actually rises?
–Finally, in Chicago Cubs baseball….”The woman not only caught a baseball in her beer, but then immediately recognized it was her moment, raising said beer to the sky and then chugging it down.” http://www.huffingtonpost.com/2015/04/19/baseball-beer-hero-status-yes_n_7096112.html
