Recap 3-12-12

Main Items:

  • Bloomberg notes that 13 of the 19 largest US banks may announce dividend and stock buyback increases following the stress tests, which are expected to be released this week. In total, bank capital returns may jump 30% this year. WFC could wind up showing the largest increase, followed by Citi
  • China Trade Balance dropped to -31.5bn in Feb vs -5.4 exp and +27.3 prev.


  • Brazil extends IOF taxation on foreign loans from 3 to 5 years

Upcoming Data:

  • Tues: FOMC, BoJ, ZEW Survey, US Retail Sales
  • Wed: UK Unemployment, EU CPI,
  • Thurs: SNB, EU Employment, US PPI, Jobless Claims, Philly Fed
  • Fri: Quadruple Witching, quarterly share rebalance for the S&P indicies

Commentary – some disparate items:

The big Chinese Trade balance miss got a lot of news play, but as some good research elsewhere suggests, it appears to be driven more by seasonality and price changes rather than a real drop off in trade.

Citi reports that Federal Reserve data shows US Commercial Banks have added about $77bn of UST and Agency securities to balance sheets in the first 2 months of the year. This compares to $67bn added in all of 2011

The Economist had a summary of its interview with Ray Dalio of Bridgewater this weekend. The article noted that even though Bridgewater has a large army of analysts, (Paul Volcker thought they had more than the Federal Reserve) Dalio admitted that he got roughly 1/3rd of his calls wrong, and attributes a big part of his success to managing the risk of bad calls. Given their success, this suggests to me that a ~70% hit rate over the long run is a reasonable bogey for macro punters.