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☆ Japan's broadening inflationary pressures test Bank of Japan's dovish stance
▼ + stars: | 2023-04-21 | by ( ) www.cnbc.com time to read: +1 min

Japan's consumer inflation held steady above the central bank's target in March and an index excluding fuel costs rose at the fastest annual pace in four decades, data showed, indicating broadening price pressure in the world's third-largest economy. "Inflationary pressure is proving stronger than expected and could last for longer than thought," said Shinke Yoshiki, chief economist at Dai-ichi Life Research Institute. "But there's still a lot of uncertainty on whether wages will rise durably and underpin consumption, which may keep the BOJ in a holding pattern." The core consumer price index, which excludes volatile fresh food, but includes energy costs, rose 3.1% in March from a year earlier, government data showed on Friday, matching a median market forecast. It followed February's increase of 3.1%, which was a sharp slowdown from January's 41-year high of 4.2%, due largely to the effect of government subsidies to soften the cost of utility bills for homes.

☆ IMF sees scope for BOJ to tweak yield target this year
▼ + stars: | 2023-04-15 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Salgado said the BOJ must keep monetary policy ultra-loose as sustainable achievement of 2% inflation is not yet in sight. Once the BOJ has confidence that Japan will see inflation and wage growth durably accelerate, it can tweak its long-term interest rate target, he said. Under its yield curve control (YCC) policy, the BOJ guides short-term interest rates at the -0.1% level and the 10-year bond yield around zero with an implicit cap of 0.5%. As long as the short-term rates remain zero or slightly negative, the BOJ can keep monetary policy accommodative even if it tweaks the yield target, Salgado said. "Our personal view is, yes," he said, when asked whether conditions could fall in place for the BOJ to tweak the 10-year yield target this year.

☆ For some US banks, it’s still a wonderful life
▼ + stars: | 2023-04-13 | by ( John Foley | ) www.reuters.com time to read: +7 min

Bank customers are still sitting on a pile of savings manufactured by pandemic-era government stimulus and curtailed consumption. Among all banks, deposit balances have fallen 5% year-on-year; to get back to their pre-Covid trend, they’d need to fall 20%. What of small banks that can’t match either advantage? Better placed within communities to soothe the nerves of mostly local customers, small banks can instill trust and loyalty while allaying fears. This edge for small banks should also insulate them from the worst effects of a deposit price war.

While money funds are not strictly gauranteed or insured, the 85% invested heavily in government securities put up some stark competition for bank deposits that have lagged central bank policy rate rises over the past 18 months - causing much political ire in countries such as Britain. But, in contrast to money funds, the average rate across all of them, according to the Federal Deposit Insurance Corporation, is still just 0.37%. That's now changing due to safety and insurance fears at smaller banks stateside - as well as the compelling alternative at money funds that appear safer against that backdrop. Of this trillion, half went to government money market funds and the other half to larger banks, they reckoned. Noting that some $7 trillion of U.S. bank deposits remained uninsured, the JPM team concluded: "A FDIC guarantee of all U.S. bank deposits would certainly help, but it might not be enough to completely stop this deposit shift."

☆ Here are Morgan Stanley's favorite quality stocks to buy as bear market nears end
▼ + stars: | 2023-03-21 | by ( Michelle Fox | ) www.cnbc.com time to read: +5 min

As investors start preparing for the end of the bear market, Morgan Stanley has identified a number of stocks it expects to outperform once the next bull market begins. He has an overweight rating on the stock and a $135 price target, which suggests about 33% upside from Monday's close. He has an overweight rating on Costco and a $520 price target, which implies a little more than 6% upside from Monday's close. Graseck has an overweight rating on JPM and a $173 price target, which implies 36% upside from Monday's close. His $155 price target suggests the stock could rally more than 20% from Monday's close.

In both the United States and Europe, the words of central bankers led investors to cut their estimates of the peak or "terminal" rate expected in the current tightening cycle. With financial conditions loosening despite rising policy rates, "central banks must...be resolute in their fight against inflation and ensure policy remains appropriately tight long enough to durably bring inflation back to target," Adrian and others wrote. The European Central Bank seems furthest from a likely stopping point. Combined, the statements mark the start of the endgame for central banks that were slow to recognize the onset of inflation last year before engaging in a record-setting round of rate increases. Central bankers long ago stopped using the word "transitory" in reference to inflation that proved faster and more persistent than any expected.

☆ IMF urges BOJ to let long-term yields rise, be ready to raise rates
▼ + stars: | 2023-01-26 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

It's more to balance some of the impact on the real economy against the impact on financial markets," IMF Japan Mission Chief Ranil Salgado said on Thursday. "Given the two-sided risks to inflation, more flexibility in long-term yields would help to avoid abrupt changes later. This would help better manage inflation risks and also help address the side-effects of prolonged easing," the IMF said in a statement issued after the policy consultation. EYING THE EXITThe IMF said the BOJ could also consider options such as targeting a shorter-term yield or the pace of its bond buying. The BOJ surprised markets in December by doubling its allowance band for the 10-year yield to 0.5% above or below zero.

☆ Davos 2023: China recovery could be very quick -IMF's Gopinath
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +2 min

DAVOS, Switzerland, Jan 18 (Reuters) - China could see a sharp recovery in economic growth from the second quarter onwards based on current infection trends after the dismantling of most COVID-19 restrictions, IMF Deputy Managing Director Gita Gopinath said on Wednesday. "We expect growth in China to come back, to rebound," Gopinath told Reuters in an interview at the World Economic Forum in Davos. Economists polled by Reuters see Chinese growth in 2023 at around 4.9%, with some of them recently upgrading forecasts to around 5.5%. "But if growth in China comes in much more strongly, which is a possibility, then we could see another spike in oil prices or energy prices," she said. Reporting by Alessandra Galloni and Mark John in Davos; Editing by Catherine EvansOur Standards: The Thomson Reuters Trust Principles.

☆ Foreign investors pour $925 mln into Egypt since Wednesday
▼ + stars: | 2023-01-16 | by ( ) www.reuters.com time to read: +2 min

CAIRO, Jan 16 (Reuters) - Foreign investors transferred more than $925 million dollars into the Egyptian foreign exchange market in the three days since its currency sharply depreciated last week, Egypt's central bank said in a statement on Monday. Additional foreign currency from local sources, remittances from Egyptians working abroad and tourism also flowed into the market over the past three business days, the central bank statement added. Banks were able to fulfil more than $2 billion in requests by Egyptian importers over the past three days, in addition to the requests other clients, the central bank statement added. Goods began backing up in Egyptian ports after the central bank placed restrictions on imports in February. Last month the central bank removed those restrictions, and importers have been scouring for dollars to get their goods released.

☆ Egypt's pound keeps falling on black market ahead of IMF meeting
▼ + stars: | 2022-12-09 | by ( Patrick Werr | ) www.reuters.com time to read: +3 min

Deputy Finance Minister Ahmed Kouchouk said on Wednesday he expected the IMF board to approve the package at the meeting. In a statement issued by the cabinet on Friday, Kouchouk reiterated that the agreement with the IMF aimed to achieve a flexible exchange rate. Dealers on the black market were selling dollars for 32 to 33 pounds compared to the official rate of about 24.6 to the dollar. "However we do not expect a devaluation to the 32-34 handle as now implied by the London listings or the black market." Since early November, the central bank has been allowing the official rate to weaken incrementally by an average of about 0.01 pounds per day.

☆ IMF staff recommends Turkey raise rates, boost central bank independence
▼ + stars: | 2022-11-04 | by ( ) www.reuters.com time to read: +1 min

NEW YORK, Nov 4 (Reuters) - Turkey should tighten monetary policy and give its central bank more independence, a mission from the International Monetary Fund (IMF) said on Friday. "To address (Turkey's) challenges, the mission recommended early policy rate hikes accompanied by moves to strengthen the central bank's independence," said the IMF in a press release. "Such moves would help reduce inflation more durably and allow reserve buffers to be rebuilt over time." The IMF staff statement comes after the mission visit to Istanbul and Ankara last month. Reporting by Rodrigo Campos in New York Editing by Karin Strohecker and Matthew LewisOur Standards: The Thomson Reuters Trust Principles.

☆ Former Treasury Secretary Larry Summers urges Fed to keep hiking rates
▼ + stars: | 2022-11-01 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +3 min

New York CNN Business —Former US Treasury Secretary Larry Summers said on Tuesday that the growing chorus of economists and politicians urging the Federal Reserve to pause its aggressive rate hikes in order to fight inflation are misguided. Those critics say that the Fed could throw the economy into recession, but Summers argued there’s a much greater risk to the economy that the Fed is not doing enough to bring down prices. On oil windfall taxes: On Tuesday, Summers also pushed back after President Joe Biden floated the possibility of punishing the oil industry for high prices by imposing a windfall profit tax. The profits are a windfall of war,” Biden said from the Roosevelt Room, alongside Treasury Secretary Janet Yellen and Energy Secretary Jennifer Granholm. “I think it would discourage investment in oil which ultimately mean higher oil prices.”

☆ Egypt interest rate hike step in right direction, IMF official says
▼ + stars: | 2022-10-31 | by ( ) www.reuters.com time to read: +2 min

REUTERS/Mohamed Abd El GhanyDUBAI, Oct 31 (Reuters) - Egypt's move to raise interest rates is a step in the right direction and a flexible exchange rate will help protect its economy from shocks at a time of tightening global financial conditions, an International Monetary Fund official said. Egyptian authorities pledged a "durably flexible" exchange rate in conjunction with a staff-level agreement for a $3 billion IMF extended fund facility. The central bank also raised interest rates by 200 basis points in an out-of-cycle meeting. "The measures that the central bank took last week in hiking interest rates. He said the $5 billion for FY2022-23 would be in addition to the extension of Gulf states' deposits in Egypt's central bank.

☆ Egypt's pound sinks further against dollar after flexibility pledge
▼ + stars: | 2022-10-30 | by ( ) www.reuters.com time to read: +2 min

CAIRO, Oct 30 (Reuters) - Egypt's pound fell about 4% to 24 against the dollar as trading resumed on Sunday, Refinitiv data showed, after authorities committed to a flexible exchange rate under an International Monetary Fund support deal. The pound slid about 14.5% to 23 against the dollar on Thursday after they pledged a "durably flexible" exchange rate in conjunction with a staff-level agreement for a $3 billion IMF extended fund facility. Egypt's currency has been held steady or allowed to depreciate only gradually following previous sharp devaluations in 2016 and this March. It has weakened about 34.5% against the dollar so far this year. It introduced a mandatory requirement for importers to use letters of credit, leading to a sharp slowdown in imports and bottlenecks at ports.

☆ Egypt's currency slides to record low after new FX regime unveiled
▼ + stars: | 2022-10-27 | by ( ) www.reuters.com time to read: +2 min

CAIRO, Oct 27 (Reuters) - Egypt's currency slid by more than 14% to a record low against the dollar on Thursday, Refinitiv data showed, after the central bank said it had moved to a "durably flexible exchange rate regime" and raised interest rates by 200 basis points. Egypt is trying to secure a new loan from the International Monetary Fund after its economic woes deepened due to the war in Ukraine. The fund has long been urging Egypt to allow greater exchange rate flexibility. Shortly after the central bank statement was issued, the pound weakened rapidly to around 22.5 to the dollar from an opening level of 19.67, data from Refinitiv showed. The central bank said it would continue to announce inflation targets "along the predetermined disinflation path that began in 2017".

☆ IMF sees Japan's currency intervention as 'signaling' move with short-term impact
▼ + stars: | 2022-10-13 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Panth said Japanese authorities likely intervened last month with the view that the yen's "pretty sharp" moves could dampen corporate investment and hurt consumer confidence. "It was a fairly small amount given how liquid the market is," Panth said, referring to the size of Japan's intervention. Panth said he had not seen anything so far that suggests the yen's value is deviating from Japan's economic fundamentals. When looked at historically, the impact of these kinds of interventions doesn't last very long," he said. The intervention was a one-time event so far of relatively small magnitude in a deep market."

We're initiating a position in Estee Lauder (EL), buying 75 shares at roughly $224.37 each. After not chasing Tuesday's higher open on Wall Street, we're putting some cash to work in the afternoon in a Club Bullpen stock that we have owned in the Trust in the past. We are calling up Estee Lauder from our Bullpen watch list. When the pandemic hit and department stores temporarily closed their doors, Estee Lauder pivoted quickly and built out direct-to-consumer channels like e-commerce. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio.

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