Jan 14. The trillion dollar platinum coin idea is dead…for now

–Trillion dollar platinum coin idea as an end-around play to avoid the debt ceiling was killed by Treasury and the Fed. Perhaps the zerohedge post about a sack of devalued currency being exchanged for a few boxes of beer in Belarus caused the clear light of day to prevail that currency should actually mean something.
–Bernanke speaks today at 4:30 NY time today. PPI and Retail Sales Tues.
–After early weakness Friday ten year futures traded higher. Cash yield slipped 2 to 1.87. The push toward higher rates since the Fed minutes raised the possibility of an early end to QE has abated for now. Bernanke’s comments today are likely to further suppress fears that the QE rug could be pulled. Additionally, the bite of increased payroll taxes is now becoming tangible as paychecks are rec’d in the new year, perhaps negatively impacting consumption.
–While monetary stimulus measures are being reconsidered in the EU (no rate cut) and in the US, Japan’s efforts are providing support for (asian) stocks. Nikkei is up 20% since Nov and 14% since Dec. Shanghai is up 17% since the beginning of Dec. However, China’s efforts to spur the economy aren’t without costs. Beijing is under heavy smog alerts daily. From Business Insider: “The wild card in the Chinese car industry is pollution. In Guangzhou, the nation’s third largest city, lotteries have been created by the government to cut down on auto traffic. This is certain to undermine sales. The precedent could be matched in Beijing and Shanghai, which have among the most polluted air of any huge metro areas in the world.” The same article notes that China car sales were up only 4.3 in 2012 and expected up only 7% in 2013.
–On the other hand, while Bloomberg runs the following story, “Euro Leaders Declaring Worst Is Over Turn to Economy Woes” suggesting that the crisis has been averted, euro strength will create a whole new set of competitive problems for the EU. “The worst is over” rarely if ever means that the worst is over.

Posted on January 14, 2013 at 5:21 am by alexmanzara · Permalink
In: Eurodollar Options

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