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FASB’s change of accounting rules for banks will make financials trade higher
Posted on April 3rd, 2009 No commentsYesterday FASB changed its accounting rules as to how banks should value their assets on their balance sheet. This could potentially lead to 20% earnings in the upcoming earnings season.
Calendar
Economic Data Releases Country Time (GMT) Name Expectation Prior Comment US 12:30 Nonfarm Payrolls (MAR) -660K -651K US 12:30 Unemployment Rate (MAR) 8.5% 8.1% US 16:00 Ben Bernanke talks on FED bal. sheet
What’s going on?
Theme Comment G20: Shock and awe on the stimulus part. Equities liked it, but the bond market is looking dizzy (down). How much more of this, before it vomits? Crack-down on tax havens should be a negative for CHF.
FASB: Voted to agree on allowing “significant judgment” in pricing illiquid assets. A positive for financials, which in many cases could state earnings 20% higher due to this decision. Our take: This is not a time to be short, but options are preparing for considerable downside in especially financials.
ECB: Only a cut of 25 bps. – still reluctant to move to QE. EUR positive.
FX
FX Daily stance Comment EURUSD 0/- Risk of further slippage down to 1.3380-90 before rebound. Below sees 1.3325 EURJPY 0/- Struggled to breach 135.0. Ranging lower 132.5-134.5 USDJPY 0 Lack of momentum abv 100 suggests consolidation to 99.10-20 before higher GBPUSD 0/- Correction could extend down to 1.4635-50 or 1.4580 before next leg up AUDUSD 0 May have seen temp top at 0.7230. Ranging 0.7075-0.7175 before higher
Equities
Equities Daily stance Comment DAX 0/- Sell at the break of4350 targeting 4261. S/L at 4410. FTSE 0/- Sell at the break o f4106 targeting 3955. S/L at 4150. S&P500 0/- Nasdaq100 0/- Nikkei225 0/-
Futures
Commodities Daily Stance Comment Gold(XAUUSD) 0/- Below trendline support, but EUR strength supportive. Sell below 891. Silver(XAGUSD) 0/- Slowly edging lower. Sell for a test of the 12.60 area. Stop above 13.05. Oil (CLK9) 0/+ G20 supportive. Buy on dips towards 51 and target 53. Stop below 50.
FX Options
FX-Options Comment EURUSD As would be expected, vols have come off after the ECB announcement and with the move up in spot. Expect spot to gradually move higher into next week. AUDUSD Vols exploded with the breach of .7200 in Asia. Front end premiums have shifted in favor of AUDUSD Calls. Look for spot to trade higher into next week. USDJPY We continue to see steady buying of topside options. 1MTH 105.50 were bought at 18% in over 300MM. Look for spot to grind up to 100.50…with gap risk above 101.00. Related Posts:
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General Balance Sheet, Ben Bernanke, Bond Market, Downside, Economic Data Releases, Forex Options, Ftse, Futures Commodities, fx options, Stimulus, Tax HavensLeave a Reply
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