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• Here’s a Japan bull – Hedge Fund says new high for Nikkei coming
• $250,000 human-powered helicopter prize about to be claimed?
• Wall Street Journal: Japan Growth Strategies Fail to Impress
• Wall Street Journal: Japan’s Market Rout Fuels Debate Over Abenomics
• Asian central banks – potential for currency market intervention?
• China to scrap iron ore import licence system
• New Zealand’s manufacturing PMI yesterday: ‘Stunning’
• China braces for capital flight and debt stress as Fed tightens
• ForexLive Americas wrap: Friday sell off leaves the markets looking ugly
• Deutsche bank in trouble as capital levels “horrible” says US banking regulator
• US stock close 14 June: Try as they might to recover the early damage was done
• CFTC: Euro shorts throw in the towel
• Stocks and the dollar not giving up the farm just yet
• What’s going on in Yank land?
• And it’s gone. 1626 goes in S&P so let’s see how far it runs
• S&P nudges towards the 1626 line
• White house says G8 leaders expected to agree that growth and jobs are a priority
• Did someone order some funky metal?
• US stocks holding just off the lows
• And the FTSE price winner is Pete who got 6308.7 from a close of 6308.26

Here’s a Japan bull – Hedge Fund says new high for Nikkei coming Posted: 15 Jun 2013 12:04 AM PDT Yes, I know. Its pretty much been all doom and gloom out of Japan recently (except for the official spokespeople), so, brace yourselves, here's a Japan bull. Michael Novogratz, head of $5.5bn of macro hedge funds for Fortress Investment, "We are still constructive on the Nikkei," he said. "We are still in this hyper-volatile environment where positions are still being shed, but we think the Nikkei will make a new high at some point." … Japan has been through bouts of foreign investor enthusiasm in the past, only for disappointment to set in. "We don't think this is going to happen this time," said Mr Novogratz. "Dangerous words, right? But our understanding and our intelligence suggests things are better." Says Novogratz: The government needs to steal Mr and Mrs Watanabe's money quietly They're  going to do that through inflation They need to create inflation and yet they need to hold yields low Japan is one of the few places where people will suffer for the good of the masses Japan bull Novogratz of Fortress says market purge will pass (Financial Times is gated)

$250,000 human-powered helicopter prize about to be claimed? Posted: 15 Jun 2013 12:03 AM PDT A team of former University of Toronto engineering students tweeted on Thursday that they may have achieved the requirements for the Sikorsky Prize: Hit 3.3 metres & 65 sec on our flight. Submitted the flight to the American Helicopter Society; waiting for validation before commenting. — AeroVelo (@AeroVelo) June 14, 2013 Hmm. Well done to them if they win, well done indeed. No doubt we'll find out soon enough. Update: Canadians Claim Historic Human-Powered Helo Flight

Wall Street Journal: Japan Growth Strategies Fail to Impress Posted: 15 Jun 2013 12:02 AM PDT Article about the release of the 'third arrow' on Friday (or at least the first bit of the arrow) and its underwhelming welcome from the markets. PM Abe has been unable to convince people—and markets—that his growth strategy has substance. was little indication of the 'how' growth is to be achieved Abe says "in the autumn I will launch the second round of the growth strategy" (which will be after the July 21 upper house elections) Japan Growth Strategies Fail to Impress (The Wall Street Journal is often gated, so if you're unable to access the article try a search of Google news using the headline)

Wall Street Journal: Japan’s Market Rout Fuels Debate Over Abenomics Posted: 15 Jun 2013 12:01 AM PDT An article from the Wall Street Journal (The Wall Street Journal is often gated, so if you're unable to access the article try a search of Google news using the headline to this post) is a good summary of the debate over the current and future impact of 'Abenomics' and the turmoil in Japan's markets. Proponents of Abenomics say the policies are starting to have the intended effects on the real economy, and that current market turbulence is "no reason to believe that Abenomics is doomed to fail" Critics say the optimism generated by monetary and fiscal steps unveiled earlier is unwarranted and is receding – that the strategies failed to deliver bold plans needed to fundamentally overhaul the economy Others argue it is too early to deliver a verdict either way. The latest market rout, they say, has more to do with a shift in global market sentiment prompted by signs of a possible winding down of the easy money policy in the U.S. and little to do with Abenomics or domestic economic conditions. “It’s a real stretch to try to explain the stock-market decline in terms of disappointment over Mr. Abe’s growth strategy,” said Koichi Fujishiro, an economist for Dai-Ichi Life Research Institute. “This is all happening in the context of global market weakness.” - There you go – plenty of views. Choose one. (Or, if you're a trader, perhaps dont get bogged down on any of them (or ignore them all), stay flexible and trade both sides of the market). Japan’s Market Rout Fuels Debate Over Abenomics

Asian central banks – potential for currency market intervention? Posted: 15 Jun 2013 12:00 AM PDT An article from Reuters (via The South China Morning Post): Asian central banks seen entering currency markets if Fed tapers off, says: 'Asia’s central banks are likely to use heavy currency intervention as their weapon of choice in dealing with regional market turbulence but high debt levels will make them more reluctant than in the past to raise interest rates if tensions escalate' At present, though, central banks see the market gyrations as reflective of a balancing by investors of their global portfolios, Not the start of a full scale Asian exit But if these proves to be an incorrect view, there is a higher risk of capital flight So far capital flight has been significant, but only a small fraction of inflows into Asia since 2009 Indonesia raised overnight rates this week as its currency hit its lowest in 4 years More at the article

China to scrap iron ore import licence system Posted: 14 Jun 2013 11:59 PM PDT Item from last week – so not new news, just a bit of weekend catch-up: China plans to scrap its decade-old iron ore import licensing system this year From unnamed sources This could cut costs for Chinese steel mills by eliminating licensed middlemen charging commissions for imports Opens up access to iron-ore, especially for smaller mills May reduce the pricing power of iron-ore miners as pricing should become more transparent Of the major-traded currencies this could be most impactful on the Australian dollar. There could be bearish implications as it reduces the pricing power of iron-ore miners, but of course, any reduction in prices could spur increased demand (of course, there are other factors at work in the Chinese demand for resources). More: Bloomberg and Reuters

New Zealand’s manufacturing PMI yesterday: ‘Stunning’ Posted: 14 Jun 2013 07:01 PM PDT The BNZ-Business New Zealand performance of manufacturing index for May hit its highest level in nine years (yesterday’s post here), a result BNZ economist Doug Steel says is "Stunning … And we do not say stunning lightly.” Reading of 59.2 vs. 55.2 in April highest since June 2004 “PMI readings do not get much bigger than this, even globally in better times than prevail offshore at present,” Steel said. Canterbury rebuild is a major positive factor, with construction demand very strong Rising Asian demand boosted food and beverage sector Improving consumer sentiment nervousness about the Australian economy, which takes nearly half of NZ's exports More at the article: Manufacturing boost ‘stunning’

China braces for capital flight and debt stress as Fed tightens Posted: 14 Jun 2013 06:56 PM PDT Just in case you are having too nice a time on the weekend, here AEP to warn of the latest potential diabolical development he sees: 'China appears increasingly worried that monetary tightening by the US Federal Reserve could trigger capital flight from the People's Republic and set off a Chinese corporate debt crisis.' AEP goes on: Capital inflows have slowed sharply May have begun to reverse as investors grow wary of emerging markets. Foreign exodus from Chinese equity funds were the highest since early 2008 (for the week ending June 5) Withdrawal Hong Kong funds were the most in a decade Total credit in Chinese financial system may have reached 221pc of GDP "Chinese corporate debt burdens are much higher than those of other economies and much of the liquidity is being used to repay debt and not to finance output," And there's more. I make light of AEP and his articles sometimes, but he is always worth a read, this article especially. China braces for capital flight and debt stress as Fed tightens

ForexLive Americas wrap: Friday sell off leaves the markets looking ugly Posted: 14 Jun 2013 01:29 PM PDT ECB’s Asmussen says feel the power of OMT Canadian April manufacturing sales -2.4% vs +0.3% exp, 4th fall in 5 months US Q1 current account widens to -$106.1bn vs -$109.7bn exp US May PPI rises to 1.7% from 1.4% exp y/y, Energy prices get most of the blame. US May industrial output 0.0% vs 0.2% exp. Capacity utilisation falls to 77.6% from 77.9%  Japan and China reduce treasury holdings by $14bn each. Total foreign buying falls $54.5bn  G8 leaders draft says vulnerabilities remain for world economy in 2013 US June consumer sentiment crumbles to 82.7 vs 84.5 exp EU document cites actions on direct bank recapitalisations, EU sources say €60bn of ESM to be put aside for recapping  US ECRI index rises to 131.3 vs 130.9 prior IMF lowers US growth to 2.7% from 3.0% in 2014, leaves 2013 forecast unchanged BOE’s McCafferty notes improving animal spirits IMF’s Lagarde ignores the figures and announces US recovery is gaining ground, then she gives us her insights on Fed tapering Detroit defaults on debt White house expects G8 to agree that growth and jobs are a priority and to reign in tax cheats Euro shorts chuck in the towel while the cheese squad gets peckish The US rolled into town in fairly quiet circumstances. The early figures didn’t add much to events and it wasn’t until the IMF report lowering US growth forecasts that things picked up. USD/JPY fell out of bed from 95.11 and didn’t hit the floor until 94.42. It managed to clamber back up into bed at 94.75 before falling out again as Nikkei futures tripped up and went down like a sack of spuds. This time the floor was at  94.25 but the pair had had enough sleeping and went downstairs to test 94.00. It managed 2 pips lower before spending the rest of the day annoying everyone between 94.00 and 94.50. EUR/USD spent the European session crawling down to 1.33 before spending the US session crawling back up again. It managed to reach 1.3350 before a touch of vertigo saw it skitter back down to 1.3313. A couple of pills and a glass of water later and it was on it’s way again but then decided to make case camp for the weekend between 1.3330/40. A late run has taken us to 1.3350 but the dizzy spells are back and we’re at 1.3345 GBP/USD was still walking the tightrope at 1.5700 but needed more practice as it kept falling off. We look to close out the day above though as we touch a session high of 1.5710 AUD/USD  went away for the weekend after falling from 0.9656 but didn’t lock the door at 0.9600 so someone got in and kept the price below for the afternoon. 0.9570 was the lowest we got with 0.9600 capping any attempt higher. We finish down at 0.9585 Swiss pairs went Jack and Jill, down the hill, on the risk off sentiment with the euro falling below 1.2300 to 1.2277 and the dollar from 0.9253 to 0.9196. Both recovered seemingly unharmed with the euro moving back into 1.2300 and the dollar back into 0.9200 but the euro looks to close a few pips under 1.2300 US stocks opened in the red and at one point looked to be heading for the trap door. We steadied in the late afternoon but attempts at a recovery were too much and we close the week down. Thank you to all the fantastic readers for your thoughts, comments, charts and making it a pleasure to work here. Hope you all have a spiffing weekend.

Deutsche bank in trouble as capital levels “horrible” says US banking regulator Posted: 14 Jun 2013 01:28 PM PDT FDIC vice chairman Thomas Hoenig has branded Deutsche banks capital levels as horrible in an interview with Reuters. “It’s horrible, I mean they’re horribly undercapitalized, they have no margin for error” said Federal Deposit Insurance Corp Vice Chairman While the calculations run under the Basel III accord allow lenders to seem well capitalised, the FDIC has used a stricter calculation. DB has obviously fought back by pointing to the rules from Basel III which they say makes them ..now one of the best capitalized banks in the world after our capital raise,” In a further twist the FDIC has stressed that Hoenig was speaking in a personal capacity and that the agency did not comment on individual banks. After all this time you wouldn’t think we would still be having arguments on how to keep track of banks books. The market has ignored this so late in the day but I can see this issue coming back into the lime light when the next round of stress tests are run.

US stock close 14 June: Try as they might to recover the early damage was done Posted: 14 Jun 2013 01:05 PM PDT S&P -9.84 pts or -0.6% to 1626.52 Dow -107.13 pts or -0.71% to 15068.95 Nasdaq -21.93 pts or -0.64% to 3423.44 US 10′s  2.13% -2 bp

CFTC: Euro shorts throw in the towel Posted: 14 Jun 2013 12:39 PM PDT Weekly Futures market speculative positioning data from the CFTC as of the close on Tuesday 11 June EUR net short 8k vs short 52k JPY net short 73k vs short 83K prior GBP net short 54K vs short 78K prior CAD net short 36K vs short 40K prior NZD net long 3K vs long 6K prior CHF net short 21K vs short 26K prior Dollar Index net long 43K vs 44K prior Gold  net long 59k vs long 61k Aus to follow as I need to get my calc out. AUD net short 63k vs short 59k prior As I’m in charge tonight I’m adding cheese on to this ‘ere report.  It’s a basic fund-emmental and should get the respect it is due. Cheese net shorts 62 vs short 424 prior (and no, I haven’t missed off the “k”)

Stocks and the dollar not giving up the farm just yet Posted: 14 Jun 2013 11:49 AM PDT USD/JPY is attempting to put some daylight between it and oblivion at 94.00 climbing to 94.40 Stocks are putting in a concerted effort as the S&P comes from the lows at 1623.96 to 1629.72. It looks like it want to have a go at getting back in the green but it may be a little too much too late. Cable is itching to close the week out above 1.5700 while EUR/USD is already out partying for the weekend after parking up mid 1.3330′s

What’s going on in Yank land? Posted: 14 Jun 2013 11:15 AM PDT Any US traders about? Do you guys still cane it to the very end or are you clock watching like the rest of us? Obviously it’s the weekend already in the UK and Europe and it can feel like watching paint dry sometimes. While I’m at it, how many Europeans and crazy Asian area traders are still active?

And it’s gone. 1626 goes in S&P so let’s see how far it runs Posted: 14 Jun 2013 10:28 AM PDT Low of 1624.54 If the Dow has a fumble though 15,000 we could could be closing off the week looking awfully ugly. Nikkei futures -230

S&P nudges towards the 1626 line Posted: 14 Jun 2013 10:22 AM PDT 1626.63 the low as US stocks continue to look poorly. USD/JPY nipped down to 93.98 before reversing to 94.43. Now at 94.30. I don’t know if we’re seeing profit taking, squaring up for the weekend or whether we’re getting a genuine bout of risk off. Probably a bit of everything.

White house says G8 leaders expected to agree that growth and jobs are a priority Posted: 14 Jun 2013 10:01 AM PDT Expects G8 to make important progress on illegal tax evasion and legal tax avoidance Us will work to improve the ability of tax authorities and law enforcement to identify real people behind shell companies Wants to turn international tax competition from turning into a lose-lose situation. If they get on the Bushmills they’ll get bugger all done

Did someone order some funky metal? Posted: 14 Jun 2013 09:50 AM PDT Here you go. This is how Adam is warming up for his Rock fest

US stocks holding just off the lows Posted: 14 Jun 2013 09:27 AM PDT S&P is down 5.52 points to 1630.84. Should we get a slide further into the US session look for 1626 as a level to hold.   Nikkei futures continue to weigh on USD/JPY which is holding around 94.20 after another dip to the lows at 94.09 EUR/USD is off form the high at 1.3350 to 1.3316 and GBP/USD falls back once again from 1.57 to 1.5676 AUD/USd has failed twice now in the 0.9650/60 area and is pushing towards the days lows at 0.9573

And the FTSE price winner is Pete who got 6308.7 from a close of 6308.26 Posted: 14 Jun 2013 09:05 AM PDT And just in before the bell as well, lucky boy. That was certainly easier than working out Adams compo Pete, if you send your name, address and shirt size to info (at) forexlive (dot) com Well done you and tough cheese to everyone else.

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