ECB allots EUR529.53 Bln in 3-Year Refinancing Operation
ECB’s 3-Year LTRO Allotment beats expectations
ECB’s 3-Year LTRO Volume was forecast at EUR450 Bln
ECB’s 3-Year LTRO Volume higher than EU489.19B in first offer
ECB’s 3-Year LTRO Allotment highest ever at an LTRO\
Number of particpating banks over 800 as compared to 530 in Dec opeartion

Details
Source Goldman Sachs

Banks take out ECB “funding insurance” The ECB has today – through its long-term refinancing operation (LTRO) – fully allotted €529 bn of 3-year funds to 800 banks. Together with the first auction, the ECB has now injected €1 trn of 3-year funds into the system. This is an extremely high amount and equals, for example, 131% of total (249% unsecured) European bank bond maturities in 2012 and 72% (130%
unsecured) for 2012 and 2013 combined. European banks are now effectively pre-funded through to 2014.
Funding stabilized, revenues supported Large take-up is an important positive. Key reasons are: (1) banks are now largely insulated from shocks in the funding market, having prefunded through 2014; (2) Consequently, the costs of bank and sovereign funding have now been detached; (3) pressures for forced deleveraging should reduce (first evidence of this is visible in the recent ECB loan data); (4) deposit pricing pressures should fall (this too is already taking place), resulting in a positive revenue effect.
Country aggregates in coming weeks While the focus is on the aggregate take-up, we see country aggregates as arguably more important. Over the course of the next weeks, we will get disclosure of country aggregates where we expect the Spanish and Italian take-up figures to be high.

Those who are interested in tracking LTRO should do the followin:

1. Monitor the details here
2. Go to Twitter and use a hashtag for #ECB
3. Use bloomberg, Reuters, MNI, Dowjones to monitor news
4. We will provide a quick update when news released
Thanks
C3X

SPX as we have all the time been suggesting is going to rise once 1335 held 10 days back and now once 1370 was broken, we expect more upside. We dont care much for how much has it already risen and how long has it gone without correction nor do we care for those who say that this market is manipulated. Of course they manipulated but who cares as long as you can be on the right side. The question looking at last evening tape was whether markets have now run aground? This is the 10th time you will be asking this. But this time there are divergences which you *must* take note off. So step into our pit and score a few points.

Charts and analysis for subs who have followed the broader trends in February and am hoping they would take some time off to ponder the Febraury trends and markets. It was a maze through which we all together debated and traded our way out.

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Bunds charts indicate status quo but we take note of daily stochs breaking out a few hours before ECB operation. Do the bond managers know something that we dont?

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Interesting few hours left before we see ECB announce its refin operation details. If you have not read yesterday posts on ECB LTRO opeartion, please do now on what to watch for.

C3X

Please dont scream. The comments are in pink.

In addition to Gold charts, we add the following charts which are just brainstorming and debating the next move and trend. Useful to put your brains to work at times when you are not trading.

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2 months into the year and its time to take a step back and analyse the macro and then end the analysis for today with a quick glance at the technical setups which have been tracking our trends all through second and third week of Feb.

Lots to analyse and so lets dive straight in.
German IFO packs a punch

The March Ifo business climate for German industry and trade strongly rose from 108.3 to 109.6. This significant increase was mainly caused by the forward looking expectations component. The trend-setting business climate for manufacturing also posted a solid gain (from 13.4 to 14.3). The Ifo business climate has risen four months in a row. Its five-months moving average rose for the first time since July 2011 (see chart below). Ifo signals the mini recession to end soon. This upswing signal is quite reliable. If the five-months moving average of Ifo goes up, 90% of these upswing signals are followed by a sustained upward movement in industrial production. The risk that Ifo gives a false signal is thus only 10%. Furthermore, Ifo does not contradict the German purchasing mangers’ index (PMI) for manufacturing. Despite its yesterday’s surprising decline, the decisive four-months moving average of the PMI is pointing upward. A four months smoothing of the PMI makes sure that the share of false signals is below 10%.

n Q4, German GDP declined by 0.2% on Q3. The rise in survey based leading indicators supports our view that GDP should not fall again in Q1. However, the still unresolved sovereign debt crisis will not allow for a classical strong recovery in the remainder of the year. For 2012 as a whole, we expect the German economy to rise moderately.

US Manufacturing
US industrial production was unchanged in January as a weather-related decline in energy output dragged the headline number down. The key manufacturing sector, however, expanded 0.7% on top of upward revisions to earlier months, underscoring that it remains at the forefront of the economic recovery.

The January report on US industrial production disappointed only at first sight. True, overall production was flat, falling short of expectations of a significant gain. But unseasonably mild weather played a major role, resulting in a 2.5% decline in output at utilities. After a string of ever milder months, energy production is now 7.5% below the year-ago level. Once the weather normalizes, this should lend support to industrial production in the coming months. More interesting than the headline number is that the core manufacturing sector increased outpit by 0.7%. Moreover, this comes after a strong 1.5% gain in December that was revised up from 0.9%. The numbers are in line with the uptrend in the ISM manufacturing index and
the sizable increase in payrolls and hours worked at factories in January. Among the industry groups, the 6.8% increase in auto production stands out. The 2.2% gain for machinery is also noteworthy, as a setback could have been expected in January after the phasing-out of bonus depreciation at the end of 2011 had boosted demand. All in all, manufacturing has picked up momentum (chart), and is now expanding at a solid
pace as demand from both consumers and businesses has improved. Nevertheless, production is still about 5% below the pre-recession level.

EU Manufacturing
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Technical Analysis
Gold

We will continue to trade our currency models and portfolio will be updated with new trades.

Do take time to pour over our performance sheet as this is one of those months where we were in a spot of bother but subs would have learnt one of the key lessons on trading when you have your back to the walls.

Performance for week 25 feb 2012

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See you tmrw

C3X