Fed hike in October

Genevieve Signoret & Alejandro Carrión

Macro Views

After prolonged agony, we have shifted our forecast for the timing of the first Fed hike to October from September. We premise this forecast on the assumption that markets will start recovering in October and U.S. macro data will continue to signal expansion, especially in the service sector.

Why the change? We think that the Fed believes that its first rate hike will cause short-term volatility, possibly sharp, and won’t want to add one more source of volatility to a market undergoing correction.

Why so soon? We believe that the Fed is very eager to start normalizing.

More details on our evolving view can be found in this week’s edition of Letter from the President: “Six questions about the ongoing volatility”, Fixed income: “Fed hike in October”, and “I agree with Tim Duy but my reasons differ”.

Next four weeks

Events in red are those most likely to shake markets.

August 27-29

  • USA: Federal Reserve annual economic policy symposium in Jackson Hole

Monday 31

  • Japan: Industrial production (Jul, flash).
  • Korea: Industrial production (Jul), consumer price (Aug).
  • India: GDP (Q2).
  • Turkey: Foreign trade (Aug).
  • Italy: Consumer price (Aug, flash).

Tuesday 1 September

  • China: Markit manufacturing PMI (Aug).
  • Korea: Foreign trade (Aug).
  • Russia: Markit manufacturing PMI (Aug).
  • Turkey: Markit manufacturing PMI (Aug).
  • Euro Area: Markit manufacturing PMI (Aug), unemployment (Aug).
  • UK: Markit manufacturing PMI (Aug).
  • Germany: Markit manufacturing PMI (Aug), unemployment (Aug).
  • France: Markit manufacturing PMI (Aug).
  • Italy: Markit manufacturing PMI (Aug).
  • Spain: Markit manufacturing PMI (Aug).
  • USA: Markit manufacturing PMI (Aug).
  • Brazil: Markit manufacturing PMI (Aug), foreign trade (Aug).
  • Mexico:Remittances (Jul), Banxico economic survey (Jul), IMEF manufacturing PMI (Aug), IMEF nonmanufacturing PMI (Aug), ordinary legislative session begins in Mexico, presidential Informe.

Wednesday 2

  • USA: Factory orders (Jul), Beige Book.
  • Brazil: Bank of Brazil monetary policy decision, industrial production (Jul).

Thursday 3

  • China: Markit services PMI (Aug).
  • Korea: GDP (Q2, flash).
  • Russia: Markit services PMI (Aug).
  • Turkey: Consumer price (Aug).
  • Euro Area: Markit services & composite PMI (Aug), ECB monetary policy decision and statement
  • UK: Markit services PMI (Aug).
  • Germany: Markit services PMI (Aug).
  • France: Markit services PMI (Aug)
  • Italy: Markit services PMI (Aug).
  • Spain: Markit services PMI (Aug).
  • USA: Unemployment claims, foreign trade (Aug), Markit services & composite PMI (Aug).
  • Brazil: Markit services & composite PMI (Aug).

Friday 4

  • Russia: Consumer prices (Aug).
  • USA: Employment report (Aug).

Monday 7

  • China: Foreign trade (Aug).
  • Japan: GDP (Q2).
  • Germany: Industrial production (Jul).
  • Italy: Consumer prices (Aug)

Tuesday 8

  • China: Consumer prices (Aug).
  • Korea: Unemployment (Aug).
  • Russia: GDP (2Q, flash).
  • Turkey: Industrial production (Jul).
  • Germany: Foreign trade (Jul).
  • France: Foreign trade (Jul).

Wednesday 9

  • India: Foreign trade (Aug).
  • UK: Industrial production (Jul), foreign trade (Jul).
  • Mexico: Consumer prices (Aug).

Thursday 10

  • Japan: Foreign trade (Jul).
  • Turkey: GDP (Q2).
  • UK: Bank of England monetary policy decision.
  • France: Industrial production (Jul).

Friday 11

  • Korea: Bank of Korea interest rate decision.
  • India: Industrial production (Jul).
  • Euro Area: Euro group meeting in Brussels.
  • Germany:Consumer prices (Aug, flash).
  • Italy: Industrial production (Jul).
  • Spain: Consumer prices (Aug, flash).
  • Mexico: Industrial production (Jul).

Monday 14

  • Japan: Bank of Japan annual rise in monetary base.
  • India: Consumer prices (Aug).
  • Euro Area: Industrial production (Jul).
  • Italy: Consumer prices (Aug).

Tuesday 15

  • Russia: Industrial production (Aug).
  • Turkey: Unemployment (Jun).
  • UK: Consumer prices (Aug).
  • France: Consumer prices (Aug).
  • USA: Retail sales (Aug), industrial production (Aug).
  • Mexico:Deadline for Mexican president to deliver 2016 budget proposal.

Wednesday 16

  • Japan: Foreign trade (Aug).
  • UK: Unemployment (Jul).
  • USA: Consumer prices (Aug).

Thursday 17

  • Russia: Unemployment (Aug), retail sales (Aug).
  • Italy: Foreign trade (Jul).
  • USA: Fed’s interest rate decision.

Sunday 20

  • Greece: General elections

Monday 21

  • Spain: Foreign trade (Jul).
  • Mexico: Banxico interest rate decision.

Wednesday 23

  • Euro Area: Markit manufacturing & composite PMI (Sep, flash).
  • Germany: Markit manufacturing, services & composite PMI (Sep, flash).
  • France: GDP (Q2), Markit manufacturing, services & composite PMI (Sep, flash).
  • USA: Markit manufacturing PMI (Sep, flash).

Thursday 24

  • Japan: Consumer prices (Sep).
  • USA: Durable goods orders (Aug), unemployment claims.
  • Brazil: Unemployment (Aug).

Friday 25

  • Euro Area: Money supply.
  • USA: GDP (Q2, 3rd estimate), Markit services & composite PMI (Sep, flash), Michigan consumer sentiment and inflation expectations (Sep, flash).
  • Mexico: Foreign trade (Aug).

Update History:

  • 2 September 2015: Thursday 15:  …to deliver 2015 2016 budget proposal.
Comentarios: No hay comentarios.

I agree with Tim Duy but my reasons differ

Genevieve Signoret

Tim Duy speculates as to what it would mean if the FOMC hiked rates by 25 basis points to 0.25–0.50% on September 17 even though inflation is below and diverging away from the 2% Fed target and no observable signs have emerged that inflation pressures are building. He argues that an initial 25 basis-point lift-off in the federal funds target range would in fact be meaningful despite its small magnitude, as it would teach us something new about the Fed’s reaction function—in particular, that the Fed had increased its confidence around its 5.0–5.2% estimate of the natural rate of unemployment. If the Fed hikes already in September even while inflation is drifting down away from the Fed target of 2%, he reasons, it can only be that the Fed is becoming convinced that the unemployment rate is nearly low enough to render consumer price acceleration inevitable. I agree with Tim that a 25-basis-point rate hike would be a meaningful market event, but my reasons differ.

I agree that, based on the unemployment rate, FOMC members figure that inflationary pressures so far invisible must be building. Up to here my thinking matches that of Tim. But, unlike Tim, I don’t think that their views on labor market slack is the primary force driving their eagerness to hike. I think it’s their strong urge to normalize.

I understand normalize to mean instigate a policy regime switch from the Fed’s current tool kit built for a liquidity trap (ZIRP plus balance sheet size) not back to the old one (a target federal funds target rate) but rather to a new, more sophisticated freshly designed one (three rates at first, including the federal funds rate; later, two).

Normalizing is a project to the Fed looming large and lengthy. They have planned it meticulously. Tested tools scrupulously. Waited for months. Now not only are staffers chomping at the bit operationally, but also FOMC members fret that hidden inflation pressures may cause an unforeseen eruption before they’ve become agile at deploying their new tools. They feel an urge to act, and step one is revive the federal funds rate. 25 basis points is all it would take; it’s enough to launch.

A thorny challenge lies ahead, however: how to communicate with markets about normalization so as to prevent an overreaction. Think back to tapering. The term referred not to tightening but rather to a gradually winding down of the monthly pace at which the Fed added new stimulus. Yet, to many market participants, tapering sounded like a euphemism for tightening. And, even for savvier ones, it spelled doom, as it meant that actual tightening now loomed closer. These thoughts triggered a tantrum.

But, just as tapering did not mean tightening, normalizing does not mean that the Fed will necessarily adopt a tight monetary stance any time soon. It will require a small lift up off the floor, but 25 basis points will do it. Beyond 25 basis points, in theory, the future path is data dependent entirely: normalization can lead to a tight stance but need not do so right away, not if macro conditions don’t warrant it.

This I think is what FOMC members mean when they urge us to stop obsessing over 25 basis points. But how to explain this to markets? Their task is tough, for three reasons:

First, although the Fed has pilot-tested its two new tools, the interest rate on excess reserves (OER) and the ON RRP facility, markets correctly note that the Fed is moving into uncharted territory.

Second, New Toolkit for Normal Times is complex: three rates at first; two later on; a target range.

Third, implementation involves a series of first-time events: an initial rate hike to a new target range with the introduction of two new rates to establish a corridor; a subsequent phasing out of one of the two new rates; passive shrinkage of the balance sheet.

I think the Fed despairs of making this market-smooth—they figure they must simply take the plunge, explaining and illustrating as they go. Markets will writhe and yelp in discomfort at first, yes, but eventually “get it” and settle down, just as they did weeks into tapering.

I must say, I sympathize with (my imagined) Fed fretting that market reactions to liftoff probably will prove tumultuous in disproportion to the wee size of the first hike. Rate hike math captures this overreaction. Think of the current rate as simply 0%. Then, any hike, no matter how small, in percentage terms is infinitely large. We’re talking about regime change here; discontinuity.

In short, Tim Duy and I agree that a 25–basis-point hike in September even while inflation’s low and drifting down would matter but differ as to why. He thinks it would tell us something new about the Fed’s reaction function. I say it would mean the Fed could contain its urge to normalize no longer. And that markets will think normalize means go all the way tight when in fact it means merely change tools. And will throw another tantrum.

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Grecia: esperamos noticias de Bruselas

Genevieve Signoret & Alejandro Carrión

Macro Views

Resumen

Tras el histórico referéndum del pasado domingo 5 de julio, la situación de Grecia empieza a vislumbrar un final. A pesar de la victoria del “No”, en los siguientes días las negociaciones se retomaron. Al inicio de la semana, se veía la salida de Grecia de la Eurozona como un escenario cada vez más probable. Sin embargo, el jueves Grecia envió a sus acreedores una propuesta que luce viable. En estos momentos, se discute en Bruselas. Pensamos que pronto— en las próximas horas—se logrará un acuerdo para un tercer rescate de Grecia.

Pobre de Grecia

Grecia lleva más de 10 días con un corralito que limita los retiros a € 60 diarios que ha mermado la actividad económica del país y la confianza. Esto ha creado una difícil situación en la que parece ser imposible evitar un colapso del sistema financiero griego si no se llega a un acuerdo durante este fin de semana.

Fue el BCE

Para estabilizar al sistema financiero, el gobierno heleno se vio forzado el a solicitar un aumento del tope de €30Mmn al BCE. Dicha solicitud fue rechazada. Fue este rechazo lo que ocasionó que se decretara continuar con el corralito a largo de la semana.

Grecia tomó su tiempo

Se esperaba que a inicios de la semana Grecia entregara un nuevo plan, sin embargo éste no llegó hasta el jueves por la noche.

Ya no es Varoufakis

También la semana pasada vimos la renuncia de Yanis Varoufakis como ministro de finanzas. Afirmó renunciar para facilitar el camino hacia un nuevo acuerdo. En su lugar fue nombrado Euclid Tsakalotos, el entonces  viceministro de asuntos exteriores y coordinador del equipo encargado de las negociaciones con los acreedores.

Grecia pide y propone

El jueves por la noche, Grecia envió su esperada propuesta de paquete que contenía una carta firmada por Alexis Tsipras dirigidas a los presidentes de la Comisión Europea, del BCE y del Fondo Monetario Internacional. En ella, se compromete a implementar las reformas propuestas de manera inmediata.

También entregó una segunda carta firmada por Euclid Tsakalotos, donde enuncia los compromisos que acepta Grecia para obtener un nuevo rescate por parte del MEDE.

Por último, Grecia proporcionó un documento titulado “Acciones preferentes”, que contiene el plan y el detalle de las reformas que promete a cambio del rescate.

Grecia no pide condonación de deuda

En ninguno de los documentos anteriores Grecia pide que se le condene una parte de la deuda. Además, en ambas cartas, expresa claramente un deseo de permanecer en la moneda común.

La acción está en Bruselas

Actualmente, los líderes europeos están discutiendo la propuesta griega en Bruselas. Esperamos que en las próximas horas lleguen a un acuerdo.

Las próximas cuatro semanas

Events in red are those most likely to shake markets.

Monday 13

  • China: Foreign trade (Jun).
  • Japan: Industrial production (May, final).
  • India: Consumer prices (Jun).
  • Mexico: Formal Job creation (Jun).

Tuesday 14

  • Japan: Bank of Japan Monetary Policy Meeting.
  • Euro Area: European Central Bank lending survey (2Q), industrial production (May)
  • Turkey: Central Bank Report.
  • UK: Consumer prices (Jun).
  • Germany: Consumer prices (May), ZEW business survey (Jul).
  • Italy: Consumer prices (May)
  • Spain: Consumer prices (May)
  • USA: Retail sales (Jun).

Wednesday 15

  • China: Industrial production (Jun), retail sales (Jun), GDP (2Q).
  • Japan: Monetary policy decision (TransEconomics:  0.1%; no change in the annual pace of increase of the monetary base of “about 80 trillion yen”), Governor Kuroda’s press conference. 
  • Turkey: Unemployment (Apr).
  • UK: Employment report (Jun).
  • France: Consumer prices (May)
  • USA: Industrial production (Jun), Beige book.

Thursday 16

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Foreign trade (May), Consumer prices (Jun, final),  monetary policy decision (TransEconomics: no change in the 0.3% reference rate or in the €60 bn monthly pace of asset purchases). 
  • France: Foreign trade (May)
  • USA: Unemployment claims.

Friday 17

  • Russia: Retails sales (Jun), Unemployment (Jun), Investment (Jun).
  • USA: Consumer prices (Jun), U. Michigan consumer sentiment and inflation expectations (Jun, final).

Monday 20

  • Euro Area: Current account (May)

Tuesday 21 

  • Japan: Bank of Japan Monetary Policy Meeting minutes.

Wednesday 22

  • UK: Bank of England Monetary Policy Meeting minutes.
  • USA: FHFA house prices (May).
  • Mexico: Retails sales (May).

Thursday 23

  • Korea: GDP (2Q, flash). Consensus: 2.5% y/y.
  • USA: Unemployment claims.
  • Mexico: Consumer prices (Jul) (TransEconomics: 2.91%).

Friday 24

  • China: Markit manufacturing PMI (July, flash).
  • Euro Area: Markit composite, manufacturing and services PMI (July, flash).
  • Germany: Markit manufacturing PMI (July, flash).
  • USA: New home sales (June)
  • Mexico: Economic activity index (Apr), unemployment (Jun).

Monday 27

  • Euro Area: Money supply (Jun).
  • USA: Durable goods orders (Jun).

Tuesday 28 

  • UK: GDP (Q2, 1st estimate).

Wednesday 29

  • UK: Money supply (Jun), commercial bank lending (Jun).
  • USA: Monetary policy decision (TransEconomics: unchanged at 0.00–0.25% and no change in the size of the balance sheet), S&P Case-Shiller House Prices Index (May).

Thursday 30

  • Japan: Industrial production (Jun, flash).
  • Germany: Unemployment (Jul), consumer prices (Jul, flash).
  • Spain: Consumer prices (July, flash), GDP (2Q, flash).
  • USA: GDP (Q2, 1st estimate. TransEconomics2.5%).
  • Mexico: Banxico monetary policy decision (TransEconomics: unchanged at 3.00%).

Friday 31

  • Japa: Consumers prices (Jun), unemployment (Jun).
  • Korea: Industrial production (Jun). 
  • Russia: Unemployment (Jun).
  • Euro Area: Unemployment (Jun).
  • Italy: Consumer prices (Jul), unemployment (Jun).
  • USA:  Michigan consumer sentiment and inflation expectations (Jun, final).
Comentarios: No hay comentarios.

High uncertainty and larger risks

Genevieve Signoret & Alejandro Carrión

Macro Views

The week was dominated by news from Greece, which we wrote on here and here. But the U.S. jobs report also made a splash. Strong non-farm payrolls, the drop in unemployment, and flat real wages confirmed our central-scenario view that the Fed will act in September but move slowly.

Next week’s news will be dominated by… Greece! For once we haven’t a very strong view: as Genevieve writes in today’s Letter from the President:

We expect Greeks to vote “Yes” and talks to continue after Sunday 5 July but can’t be sure of this, or know how markets would react either way. Forced to guess, we’d say a “Yes” vote would spark euphoria.

In addition to goings-on in Greece and the euro area, we’ll be watching with some trepidation China’s stock market crash for any sign that our forecast assumption that China won’t suffer an all-out financial crisis might be violated.

Speaking of forecast assumptions, we have updated them. When we wrote our latest Quarterly Outlook last January, we were viewing the risk that Greece would leave the euro area as a mere tail risk. Now, of course, we identify it as a large one—one that could derail global economic recovery.

We have also revised in the direction of pessimism the subjective probabilities that we assign to our three scenarios. We now assign to our downside risk scenario a 25% probability, up from 10%. Not only Greece but also the stock market crash in China have dampened our erstwhile optimism.

Our forecast assumptions now read as follows:

Sin título

image3

Las próximas cuatro semanas

Events in red are those most likely to shake markets.

Monday 6 July

  • Japan: Bank of Japan governors meeting.
  • Germany: Manufacturing orders (May)
  • USA: Markit services PMI (Jun, final), ISM nonmanufacturing (Jun).

Tuesday 7

  • Euro Area: Markit services PMI (Jun, flash).
  • Turkey: Central Bank Report.
  • UK: Industrial production (May).
  • Germany: Industrial production (May).
  • France: Foreign trade (May).
  • USA: Foreign trade (May), commercial bank lending (May).
  • Mexico: Consumer confidence (Jun)

Wednesday 8

  • Japan: Commercial bank lending (Jun), current account (May).
  • Korea: Money supply (May).
  • Brazil: Consumer prices.

Thursday 9

  • China: Consumer prices (Jun).
  • Japan: Money supply (Jun), private machinery orders (May).
  • Korea: Monetary policy decision.
  • UK: Monetary policy decision (TransEconomics: Bank Rate unchanged at 0.5% and size of Asset Purchase Program unchanged at £375 Bn). 
  • Germany: Foreign trade (May).
  • USA: Unemployment claims.
  • Mexico: Consumers prices (Jun).

Friday 10

  • PS + 1 and Iran: Deadline nuclear deal between Iran and world powers.
  • Turkey: Current account (May).
  • UK: Foreign trade (May).
  • France: Industrial production (May).
  • Italy: Industrial production (May).
  • USA: Fed Janet Yellen speaks. 
  • Mexico: Industrial production (May).

Monday 13

  • China: Foreign trade (Jun).
  • Japan: Industrial production (May, final).
  • India: Consumer prices (Jun).
  • Mexico: Formal Job creation (Jun).

Tuesday 14

  • Japan: Bank of Japan Monetary Policy Meeting.
  • Euro Area: European Central Bank lending survey (2Q), industrial production (May)
  • Turkey: Central Bank Report.
  • UK: Consumer prices (Jun).
  • Germany: Consumer prices (May), ZEW business survey (Jul).
  • Italy: Consumer prices (May)
  • Spain: Consumer prices (May)
  • USA: Retail sales (Jun).

Wednesday 15

  • China: Industrial production (Jun), retail sales (Jun), GDP (2Q).
  • Japan: Monetary policy decision (TransEconomics:  0.1%; no change in the annual pace of increase of the monetary base of “about 80 trillion yen”), Governor Kuroda’s press conference. 
  • Turkey: Unemployment (Apr).
  • UK: Employment report (Jun).
  • France: Consumer prices (May)
  • USA: Industrial production (Jun), Beige book.

Thursday 16

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Foreign trade (May), Consumer prices (Jun, final),  monetary policy decision (TransEconomics: no change in the 0.3% reference rate or in the €60 bn monthly pace of asset purchases). 
  • France: Foreign trade (May)
  • USA: Unemployment claims.

Friday 17

  • Russia: Retails sales (Jun), Unemployment (Jun), Investment (Jun).
  • USA: Consumer prices (Jun), U. Michigan consumer sentiment and inflation expectations (Jun, final).

Monday 20

  • Euro Area: Current account (May)

Tuesday 21 

  • Japan: Bank of Japan Monetary Policy Meeting minutes.

Wednesday 22

  • UK: Bank of England Monetary Policy Meeting minutes.
  • USA: FHFA house prices (May).
  • Mexico: Retails sales (May).

Thursday 23

  • Korea: GDP (2Q, flash). Consensus: 2.5% y/y.
  • USA: Unemployment claims.
  • Mexico: Consumer prices (Jul) (TransEconomics: 2.91%).

Friday 24

  • China: Markit manufacturing PMI (July, flash).
  • Euro Area: Markit composite, manufacturing and services PMI (July, flash).
  • Germany: Markit manufacturing PMI (July, flash).
  • USA: New home sales (June)
  • Mexico: Economic activity index (Apr), unemployment (Jun).

Monday 27

  • Euro Area: Money supply (Jun).
  • USA: Durable goods orders (Jun).

Tuesday 28 

  • UK: GDP (Q2, 1st estimate).
  • USA: Monetary policy decision (TransEconomics: unchanged at 0.00–0.25% and no change in the size of the balance sheet), S&P Case-Shiller House Prices Index (May).

Wednesday 29

  • UK: Money supply (Jun), commercial bank lending (Jun).

Thursday 30

  • Japan: Industrial production (Jun, flash).
  • Germany: Unemployment (Jul), consumer prices (Jul, flash).
  • Spain: Consumer prices (July, flash), GDP (2Q, flash).
  • USA: GDP (Q2, 1st estimate. TransEconomics: 2.5%).
  • Mexico: Banxico monetary policy decision (TransEconomics: unchanged at 3.00%).

Friday 31

  • Japa: Consumers prices (Jun), unemployment (Jun).
  • Korea: Industrial production (Jun). 
  • Russia: Unemployment (Jun).
  • Euro Area: Unemployment (Jun).
  • Italy: Consumer prices (Jul), unemployment (Jun).
  • USA:  Michigan consumer sentiment and inflation expectations (Jun, final).

Update History:

  • 7 July 2015: Friday 10. Deadline nuclear deal between Iran and world powers
Comentarios: No hay comentarios.

Japan IP: Trend contraction continues

Genevieve Signoret & Alejandro Carrión

Monday 29 June, Japan published its May industrial production report. The index maintained its six-month moving average (6mma) pace of year-on-year growth of –1.7%, implied by a month-on-month drop of 2.2% (both rates of change are based on seasonally adjusted data). This result marks no change from April in the six-month trend rate of contraction. However, its release surprised analysts to the downside and led Barclays to infer that “the economy slowed in Q2.”

Barclays still believes that Japan is recovering, and our own reading of the data is consistent with that view. In support of our reading, we put forth that the –1.7% trend rate of change observed in March and April marks an slight improvement over February (–1.8%).

We also note, however, that Japan’s industrial output still remains 16 percentage points lower than its pre–Great-Recession level. This fact supports our view that Japan will continue to apply extraordinary monetary stimulus for not months but years still to come.

Japan’s industrial output is still 16 ppts below that of Dec 2007. With so much slack, we anticipate years still of QE.
image2

Although Japan’s May –1.7% 6-month moving average y/y rate of change in IP is a sad number, it’s less sad than April’s –1.8%
image3

 

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Crisis en Grecia: actualización martes 30 junio

Genevieve Signoret & Alejandro Carrión

Hoy a partir de la media noche, tiempo de Europa, se venció el plazo para que Grecia pague €1.5MMn al FMI. Anticipando esta situación el primer ministro griego, Alexis Tsipras, envió al Eurogrupo una propuesta para alcanzar un acuerdo y obtener de sus socios europeos un tercer rescate.

La solicitud bajo este tercer rescate de €29.15MMn, tiene como objeto garantizar los fondos para realizar el pago de los diversos vencimientos de deuda comprendidos entre 2015 hasta el 2017, causó que el Eurogrupo convocara a una teleconferencia en la cual los ministros de finanzas discutieron la petición del gobierno griego.

No queda claro si Tsipras está dispuesto a negociar con Europa y cancelar su llamado al referéndum o simplemente busca culpar a Europa de su situación para fortalecer el llamado que ha hecho a los ciudadanos griegos a votar por el No.

Por su parte, la canciller alemana, Angela Merkel, ha expresado que no habrá ninguna negociación a no ser de que se suspenda el referéndum o hasta conocer el resultado de éste. Además afirmó que toda negociación se suspenderá si en el referéndum del domingo triunfara el No. Ante esta situación, diversos líderes europeos han hecho el llamado a la ciudadanía griega a votar por un Sí.

Hoy Grecia se ha convertido en la primera economía desarrollada en declararse en un estado de impago con el FMI, perdiendo así todo acceso al capital disponible de dicha institución. Por su parte, Christine Lagarde tendrá que informar de la situación a la junta de directores del FMI, iniciando así un proceso en el que Grecia podría ser expulsado de la organización internacional si no realiza los pagos correspondientes.

Sin embargo, el impago al FMI no tendrá mayor repercusión en su calificación de deuda, pues, al ser una institución pública ante la que se ha declarado el impago, las calificadoras no lo pueden clasificar como un default. Solamente la calificadora S&P ha degradado la nota crediticia de Grecia de CCC a CCC-.

Y así en medio de la incertidumbre transcurrió un día más en una Grecia, donde los bancos han permanecido cerrados y se ha impuesto un control de capitales que limita las transferencias de dinero al extranjero y los retiros de efectivo a solo €60. Mientras tanto, los ministros de finanzas de la zona euro suspendieron su reunión para reanudarla el miércoles por la mañana pues al no haber alcanzado ningún acuerdo.

Comentarios: No hay comentarios.

Crisis en Grecia: actualización lunes 29 junio

Genevieve Signoret & Alejandro Carrión

Las negociaciones entre Grecia y sus acreedores llegaron a su fin el viernes pasado por la noche, cuando el ministro de finanzas griego abandonó la mesa de discusión en Bruselas para regresar a su país. Poco tiempo después, el primer ministro, Alexis Tsipras, sorprendía al mundo anunciando un referéndum programado para el próximo domingo 5 de julio en el cual los ciudadanos griegos decidirán si se aceptan las condiciones impuestas por los acreedores de Grecia para la entrega de los últimos €7.2MMn correspondientes al segundo rescate.

El anuncio del referéndum hace que se dispare la incertidumbre sobre el desenlace final de Grecia, ya que no será hasta después del 30 de junio, fecha límite de pago al FMI de €1.5MMn, que se conocerá si ganó el Sí o el No. Por lo tanto, el ministro de finanzas griego, Yanis Varoufakis, solicitó una extensión del plazo de las negociaciones y de la fecha límite del pago. Sin embargo, el sábado 27, el Eurogrupo[1] emitió un comunicado en el que afirma tomar nota de la decisión de Grecia de realizar un referéndum pero negarse a conceder la extensión de las negociaciones una semana más.

Por su parte, el BCE se reunió nuevamente el sábado 27 con los ministros de finanzas de los países miembros de la eurozona para discutir el tema de Grecia y generar un plan que garantice la estabilidad financiera de la zona del euro en el evento de un impago. En su comunicado del 28 de junio, el BCE anunció mantener el techo de €89MMn aprobado el viernes 26 para la línea de asistencia de liquidez de emergencia a la banca de Grecia (ELA), así como su firme propósito de utilizar todos los instrumentos permitidos por su mandato para garantizar dicha estabilidad.

La respuesta del gobierno heleno no se hizo esperar: anunció el cierre de los bancos desde este lunes hasta después de la realización del referéndum, el 5 de julio, con el fin de evitar que continúe la constante fuga de depósitos que los bancos griegos han experimentado desde noviembre pasado. Se trató del primer paso para implantar un control de capitales que permitiría el cambio a una nueva moneda si se llegara a dar el caso de que Grecia abandone el euro.

La suerte está echada: sin un cambio en las posturas por parte de los acreedores o de Grecia, parece inminente el impago al FMI. Sin embargo, ésta no es ya la única cuestión en juego. El referéndum parece estarse interpretando más como un voto sobre la permanencia de Grecia en el euro que sobre si  aceptar las condiciones del rescate.

Sea cual sea el resultado, los panoramas esperados no se ven nada alentadores.

Por un lado, si gana el Sí, podría significar la caída del gobierno de Alexis Tsipras y el inicio de una crisis política que resultaría en un nuevo gobierno que tendría que negociar nuevamente un plan con sus acreedores. Por el otro, si gana el No, la salida del euro por parte de Grecia será inminente y la incertidumbre sobre el futuro heleno y la estabilidad financiera europea e internacional será aún mayor.

La cuestión sobre la permanencia en el euro ha divido a la población. Incluso el gobierno ha anunciado que pedirá a los ciudadanos votar No. Sin embargo, cerca del 70% de la población griega quiere permanecer en la unión monetaria a pesar de los sacrificios que se tengan que hacer. Y así, mientras se da el desenlace final en esta auténtica tragedia griega, la volatilidad en los mercados financieros se ha disparado.

 

[1] Club de los ministros de finanzas de los países miembros de la eurozona.

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Greece and US jobs: offsetting forces on UST rates this week

Genevieve Signoret & Alejandro Carrión

Macro Views

Para español favor de desplazarse hacia abajo.

As we publish this blog entry, Greece is in flux. Its government has called for what may be an unconstitutional referendum to be held on the deal being offered by its creditors. But now rumors are coming in that creditors have taken the deal off the table. Stand by—and expect market turbulence till this is sorted out). We continue to expect an agreement to emerge, but not a definitive one. We think that Greece will need a third bailout, one with debt reduction. We also perceive the risk of a Grexit to be rising sharply.

Besides an unfolding of the Greek crisis, the main market event next week is the U.S. labor report. The consensus and we expect unemployment to have ticked back down a notch in June to 5.4% and for payrolls to have risen by more than 200,000. If so, we’ll feel even more secure in our view that the Fed will act in September.

These two main market events, Greece and the US jobs report, should offset each other. Hence we see the yield on a 10-year U.S. Treasury bond ending June and quarter 2 at 2.45%. This is just two basis points down from today’s closing rate of 2.47%. For more details on our rate outlooks, see our fixed income edition of La Carpeta Negra here.

Al publicar esta entrada de blog, Grecia se encuentra en una encrucijada. Su gobierno ha convocado a lo que podría considerarse un referéndum inconstitucional sobre el acuerdo ofrecido por sus acreedores. Pero ahora hay rumores de que esos mismos acreedores han retirado la oferta. Esperen turbulencias en el mercado hasta que esto se resuelva. Seguimos pensando que se alcanzará un acuerdo, pero no uno definitivo. Creemos que Grecia necesitará un tercer rescate, uno con reducción de deuda. También percibimos un creciente riesgo de que Grecia abandone la zona euro.

Además de la evolución de la crisis griega, el principal evento que afectará el mercado la próxima semana será el reporte laboral de EE UU. El consenso general, con el que concordamos, es que el desempleo bajó un punto en junio a 5.4% y que las nóminas aumentaron en más de 200,000. Si fuese así, nos sentiríamos más seguros con nuestra perspectiva de que la Fed tomará medidas en septiembre.

Estos dos eventos principales del mercado, Grecia y el reporte laboral de EE UU, debieran compensarse mutuamente. Por consiguiente, prevemos que el rendimiento de los bonos del Tesoro de EE UU a 10 años que vencen en junio y el segundo trimestre será de 2.45%. Ello es sólo dos puntos base menos que la tasa de cierre actual de 2.47%. Para mayor información sobre nuestras perspectivas de tasas, vean nuestra edición de renta fija de La Carpeta Negra aquí.

Las próximas cuatro semanas

Events in red are those most likely to shake markets.

Monday 29 

  • Japan: Industrial production (flash).
  • UK: Money supply (May), commercial bank lending (May).
  • Germany: Consumer prices (Jun). 
  • Spain: Consumer prices (Jun, flash).

Tuesday 30

  • Korea: Industrial production (May). Consensus:-3.69%
  • Turkey: Foreign trade (May).
  • Euro Area: Greece’s bailout expires, loan to IMF due, consumer prices (Jun), unemployment (May).
  • UK: Real GDP (1Q, 3rd estimate), balance of payments (1Q). Consensus 6.4%
  • Germany: Unemployment (Jun).
  • Italy: Consumer prices (Jun, flash).
  • PS + 1 and Iran: Deadline for nuclear deal between Iran and world powers.
  • USA: Consumer confidence (Jun), S&P Case-Shiller House Prices Index (Apr). Consensus for the house price index: 5.61% y/y.
  • Brazil: Primary budget balance (May).

Wednesday 1 July

  • Japan: Bank of Japan Tankan (2Q). Consensus: 13, last quarter 12.  Markit manufacturing PMI (Jun, final).
  • Russia: Markit manufacturing PMI (Jun). Consensus: 50.3, last month 50.2. 
  • Turkey: Markit PMI (Jun).
  • Euro Area: Markit manufacturing (Jun, final)
  • UK: Markit manufacturing PMI (Jun).
  • Germany: Markit manufacturing PMI (Jun, final). Consensus: 51.9, last 51.9.
  • France: Markit manufacturing PMI (Jun, final). Consensus: 50.5, last 50.5.
  • Italy: Markit manufacturing PMI (Jun).
  • Spain: Markit manufacturing PMI (Jun).
  • USA: ISM manufacturing (Jun), Light vehicles sales (Jun). Consensus: $17.8 Mn, last $17.71.
  • Brazil: Markit manufacturing PMI (Jun), foreign trade (Jun).
  • Mexico: Remittances (May), IMEF manufacturing PMI (Jun), Consensus: 52, last 52.4. IMEF nonmanufacturing PMI (Jun). Consensus: 51.4, last 51.1.

Thursday 2

  • Korea: Current account balance (Jun).
  • USA: Unemployment rate (Jun) and nonfarm payrolls. Consensus: unemployment rate 5.4% (May: 5.5%); nonfarm payrolls 228k (May: 280K). Factory orders (May). Consensus: -0.2% m/m
  • Brazil: Industrial Production (May).

Friday 3

  • Japan: Markit PMI services (Jun).
  • Turkey: Consumer prices (Jun). Consensus: 8% y/y.
  • Euro Area: MFI Interest rates (May), Markit services and composite PMIs (Jun, final), retail sales (May).
  • UK: Markit PMI services (Jun).
  • Germany: Markit services and composite PMIs (Jun, final).
  • France: Markit services and composite PMIs (Jun, final).
  • Italy: Markit services and composite PMIs (Jun, final).
  • Spain: Markit services and composite PMIs (Jun, final).
  • Mexico: Gross fixed investment (Apr). Consensus: 5% y/y. Banxico economic survey, Banamex survey.

Monday 6

  • Japan: Bank of Japan governors meeting.
  • Germany: Manufacturing orders (May)
  • USA: Markit services PMI (Jun, final), ISM nonmanufacturing (Jun).

Tuesday 7

  • Euro Area: Markit services PMI (Jun, flash).
  • Turkey: Central Bank Report.
  • UK: Industrial production (May).
  • Germany: Industrial production (May).
  • France: Foreign trade (May).
  • USA: Foreign trade (May), commercial bank lending (May).
  • Mexico: Consumer confidence (Jun)

Wednesday 8

  • Japan: Commercial bank lending (Jun), current account (May).
  • Korea: Money supply (May).
  • USA: Federal Open Market Committee minutes.
  • Brazil: Consumer prices.

Thursday 9

  • China: Consumer prices (Jun).
  • Japan: Money supply (Jun), private machinery orders (May).
  • Korea: Monetary policy decision.
  • UK: Monetary policy decision: Consensus: 0.5%, last 0.5%. 
  • Germany: Foreign trade (May).
  • USA: Unemployment claims.
  • Mexico: Consumers prices (Jun).

Friday 10

  • Turkey: Current account (May).
  • UK: Foreign trade (May).
  • France: Industrial production (May).
  • Italy: Industrial production (May).
  • USA: Fed Janet Yellen speaks. 
  • Mexico: Industrial production (May).

Monday 13

  • China: Foreign trade (Jun).
  • Japan: Industrial production (May, final).
  • India: Consumer prices (Jun).
  • Mexico: Formal Job creation (Jun).

Tuesday 14

  • Japan: Bank of Japan Monetary Policy Meeting.
  • Euro Area: European Central Bank lending survey (2Q), industrial production (May)
  • Turkey: Central Bank Report.
  • UK: Consumer prices (Jun).
  • Germany: Consumer prices (May), ZEW business survey (Jul).
  • Italy: Consumer prices (May)
  • Spain: Consumer prices (May)
  • USA: Retail sales (Jun).

Wednesday 15

  • China: Industrial production (Jun), retail sales (Jun), GDP (2Q).
  • Japan: Bank of Japan Monetary Policy Meeting and statement, Governor Kuroda’s press conference. 
  • Turkey: Unemployment (Apr).
  • UK: Employment report (Jun).
  • France: Consumer prices (May)
  • USA: Industrial production (Jun), Beige book.

Thursday 16

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Foreign trade (May), Consumer prices (Jun, final),  monetary policy decision. 
  • France: Foreign trade (May)
  • USA: Unemployment claims.

Friday 17

  • Russia: Retails sales (Jun), Unemployment (Jun), Investment (Jun).
  • USA: Consumer prices (Jun), U. Michigan consumer sentiment and inflation expectations (Jun, final).

Monday 20

  • Euro Area: Current account (May)

Tuesday 21 

  • Japan: Bank of Japan Monetary Policy Meeting minutes.

Wednesday 22

  • UK: Bank of England Monetary Policy Meeting minutes.
  • USA: FHFA house prices (May).
  • Mexico: Retails sales (May).

Thursday 23

  • Korea: GDP (2Q, flash). Consensus: 2.5% y/y.
  • USA: Unemployment claims.
  • Mexico: Banxico Monetary Policy Meeting.

Friday 24

  • China: Markit manufacturing PMI (July, flash).
  • Euro Area: Markit composite, manufacturing and services PMI (July, flash).
  • Germany: Markit manufacturing PMI (July, flash).
  • USA: New home sales (June)
  • Mexico: Economic activity index (Apr), unemployment (Jun).

Update History:

  • 29 June 2015: Added spanish translation. 
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Greece accord seems nigh

Genevieve Signoret & Alejandro Carrión

Macro Views

We seem to be on the verge of a Greece accord

As we put the final touches on this blog entry, the Wall Street Journal writes, “Greece and its creditors appear to have taken a step toward agreement in acrimonious negotiations aimed at preventing the European Central Bank and other international lenders from pulling the plug on funding that keeps the country’s financial system afloat.” If today’s meeting does not end in agreement, watch for capital controls in Greece and an eventual Greek exit from the euro area.

Even with an agreement, the story won’t end here. We anticipate a third bailout program for Greece, this time with debt reduction. For two simple reasons: no one wants a Grexit, and Greece won’t ever be able to pay its debt.

We revise down U.S. GDP for 2015; watch PMIs

We revise our 2015 forecast for U.S. GDP to 2.0% from 3.0%, because of weak first-half numbers. We continue to expect moderate growth on average in the USA over the next 18 months, with more moments of disappointment (sputtering).

We expect the slew of purchasing manager indices (PMIs) due out in the next few weeks to reinforce our view that global growth is picking up. Nonetheless, as for the USA, we expect the trend for global growth over the next 18 months to be slightly accelerating but not smooth. We think forecasters will again overshoot in their growth forecasts for 2016, then later again find themselves revising down.

Janet Yellen will now be obsessed

Last week’s FOMC statement and Janet Yellen’s subsequent press conference confirmed our view that the federal funds rate will rise to just 0.75% by the end of 2015 and 1.5% by the end of 2016. We are with the consensus in thinking that the first hike will come in September.

Janet Yellen’s burning obsession now will be to teach markets how to interpret the first Fed hike. To ward off market turbulence, she needs markets to believe her when she drops obvious hints that rates will remain low for long.

Remember! Normalization is merely moving away from a zero interest rate policy (ZIRP). It is perfectly compatible with maintaining a loose stance for a long time.

We revamp this research blog

Thank you for the patience you have showed while we’ve planned our revamping of this research blog. We think we’ve come up with a great plan!

The first change occurs today. As you know, besides this research blog, which covers macro fundamentals for global investors, we have a sister blog, La Carpeta Negra, where we share data and views on asset classes and update readers on our strategies for investors in global markets. Until this week, our popular annotated calendar of political and economic events apt to move markets called Macro Views appeared each week as an entry in La Carpeta Negra. Yet this calendar has a macro fundamental focus, not a market focus. So, this week, we’ve moved Macro Views over from La Carpeta Negra to Timón Económico.

This is just the (small) beginning of an ambitious overhaul of how we share our macro research with the global investment community and clients. Do stop back often over the next several weeks to watch the New Improved Timón Económico emerge.

Las próximas cuatro semanas

Events in red are those most likely to shake markets.

Monday 23 June

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Special Eurozone leaders meetign at Brussels.
  • USA:  Exisitng home sales (May)
  • Mexico: Retails sales (Apr).

Tuesday 23 

  • China: Markit manufacturing PMI (Jun, flash).
  • Japan: Markit manufacturing PMI (Jun, flash).
  • Euro Area: Markit services PMI (Jun, flash), Markit manufacturing PMI (Jun, flash), Markit composite PMI (Jun, flash).
  • USA: Durable goods orders (May), FHFA house prices (Apr), Markit manufacturing PMI (Jun, flash)new home sales (May), Fed Governor Powell speaks on monetary policy in Washington.

Wednesday 24

  • Japan: Monetary policy meeting minutes, small firms survey (Jun), service producers prices (May).
  • Germany: IFO Business Survey (Jun).
  • France: GDP (1Q, final).
  • USA: GDP (1Q, final). Consensus -0.7% q/q sa.
  • Mexico: Consumers prices (fortnightly), economic activity index (Apr).

Thursday 25

  • USA: Unemployment claims, personal income (May), Markit services PMI (Jun).
  • Brazil: Unemployment rate report (May).

Friday 26

  • Japan: Consumer prices (May), unemployment rate report (May).
  • Euro Area: Money supply (May), EU heads of state and government meet in Brussels.
  • UK: Bank of England’s Carney speaks in London.
  • USA: U. Michigan consumer sentiment and inflation expectations (Jun, final).
  • Mexico: Foreign trade (May), unemployment rate (May).

Monday 29 

  • Japan: Industrial production (flash).
  • UK: Money supply (May), commercial bank lending (May).
  • Germany: Consumer prices (Jun). Although Eurostat will publish full euro zone inflation rates based a unified methodology the next day, because of the weight that Germany has in the euro area and in ECB decision making, the release of Germany’s rate has a stronger likelihood to move markets (through inflation and rate expectations).
  • Spain: Consumer prices (Jun, flash).

Tuesday 30

  • Korea: Industrial production (May).
  • Turkey: Foreign trade (May).
  • Euro Area: Consumer Prices (Jun), Unemployment (May).
  • UK: Real GDP (1Q, third estimate), balance of payments (1Q).
  • Germany: Unemployment (Jun).
  • Italy: Consumer prices (Jun, flash).
  • USA: Consumer confidence (Jun), S&P Case-Shiller House Prices Index (Apr).
  • Brazil: Primary budget balance (May).
  • Mexico: Public sector budget balance (May).

Wednesday 1 July

  • Japan: Bank of Japan Tankan (2Q), Markit manufacturing PMI (Jun, final).
  • Russia: Markit manufacturing PMI (Jun).
  • Turkey: Markit PMI (Jun).
  • Euro Area: Markit manufacturing (Jun, final)
  • UK: Markit manufacturing PMI (Jun).
  • Germany: Markit manufacturing PMI (Jun, final).
  • France: Markit manufacturing PMI (Jun, final).
  • Italy: Markit manufacturing PMI (Jun).
  • Spain: Markit manufacturing PMI (Jun).
  • USA: ISM manufacturing (Jun), Markit manufacturing PMI (Jun, final), light vehicles sales (Jun).
  • Brazil: Markit manufacturing PMI (Jun), foreign trade (Jun).
  • Mexico: Remittances (May), IMEF manufacturing PMI (Jun), IMEF nonmanufacturing PMI (Jun).

Thursday 2

  • Korea: Current account balance (Jun).
  • USA: Employment (Jun), unemployment claims, factory orders (May).
  • Brazil: Industrial Production (May).

Friday 3

  • Japan: Markit PMI services (Jun).
  • Turkey: Consumer prices (Jun).
  • Euro Area: MFI interest rates (May), Markit services PMI (Jun, final), Markit composite PMI (Jun, final), Retail sales (May).
  • UK: Markit PMI services (Jun).
  • Germany: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • France: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • Italy: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • Spain: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • Mexico: Gross fixed investment (Apr), Banxico economic survey, Banamex survey (Fortnightly)

Monday 6

  • Japan: Bank of Japan governors meeting.
  • Germany: Manufacturing orders (May)
  • USA: Markit services PMI (Jun, final), ISM nonmanufacturing (Jun).

Tuesday 7

  • Euro Area: Markit services PMI (Jun, flash).
  • Turkey: Central Bank Report.
  • UK: Industrial production (May).
  • Germany: Industrial production (May).
  • France: Foreign trade (May).
  • USA: Foreign trade (May), commercial bank lending (May).
  • Mexico: Consumer confidence (Jun)

Wednesday 8

  • Japan: Commercial bank lending (Jun), current account (May).
  • Korea: Money supply (May).
  • UK: Record of the 24th Financial Policy Committee meeting.
  • USA: Federal Open Market Committee minutes.
  • Brazil: Consumer prices.

Thursday 9

  • China: Consumer prices (Jun).
  • Japan: Money supply (Jun), private machinery orders (May).
  • Korea: Bank of Korea monetary policy decision.
  • UK: Monetary Policy Committee decision: target interest rate and assets purchase target. TransEconomics: no change.
  • Germany: Foreign trade (May).
  • USA: Unemployment claims.
  • Mexico: Consumers prices (Jun).

Friday 10

  • Turkey: Current account (May).
  • UK: Foreign trade (May).
  • France: Industrial production (May).
  • Italy: Industrial production (May).
  • USA: Fed Janet Yellen speaks in Cleveland. Her main job now is to train markets not to overreact to the first Fed hike by emphasizing that rate will likely remain low for long.
  • Mexico: Industrial production (May).

Monday 13

  • China: Foreign trade (Jun).
  • Japan: Industrial production (May, final).
  • India: Consumer prices (Jun).
  • Mexico: Formal Job creation (Jun).

Tuesday 14

  • Japan: Bank of Japan Monetary Policy Meeting.
  • Euro Area: European Central Bank lending survey (2Q), industrial production (May)
  • Turkey: Central Bank Report.
  • UK: Consumer prices (Jun).
  • Germany: Consumer prices (May), ZEW business survey (Jul).
  • Italy: Consumer prices (May)
  • Spain: Consumer prices (May)
  • USA: Retail sales (Jun).

Wednesday 15

  • China: Industrial production (Jun), retail sales (Jun), GDP (2Q).
  • Japan: Bank of Japan Monetary Policy Meeting and statement, Governor Kuroda’s press conference. We expect further quantitative easing over the next 18 months, though probably not at this meeting.
  • Turkey: Unemployment (Apr).
  • UK: Employment report (Jun).
  • France: Consumer prices (May)
  • USA: Industrial production (Jun), Beige book.

Thursday 16

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Foreign trade (May), Consumer prices (Jun, final), European Central Bank rate announcement. TransEconomics: no change this time, but, just as for Japan, we expect an increase in quantitative easing in the euro area over the next 18 months.
  • France: Foreign trade (May)
  • USA: Unemployment claims.

Friday 17

    • Russia: Retails sales (Jun), Unemployment (Jun), Investment (Jun).
    • USA: Consumer prices (Jun), U. Michigan consumer sentiment and inflation expectations (Jun, final).

Update History:

    • 23 June 2015: Added four-week calendar of events most likely to shake markets
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Revamping

Genevieve Signoret & Moisés Arizpe

We’re revamping our macro research reporting process. Meanwhile, Timón Económico is on pause.

We’ll resume publication on June 15.

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