PLEASE Note - This is not research and is not intended as such. This has been prepared by individuals on the sales/trading desks of the Securities Division. This material does not represent a formal or official view of Goldman Sachs as the views expressed herein are solely those of the author(s), which may differ from those of Global Investment Research. All prices are indicative only. All references to “we/our” refer to the observations of the sales and trading desk.

NY ROUNDUP – Friday, March 28, 2014
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COMMENTS

Equities have a soft rally to end the week and the NASDAQ continues to underperform. We’re almost to the end of Q1 and SPX/NASDAQ are unchanged for the year. To some extent, given the poor data, a more hawkish FED and China weakness might be a marginal victory, but let’s hope Q2 brings a bit easier trading environment (and some better weather). Closes SPX +0.46% to 1857.55; DJIA +0.36% to 16,323.06; NASDAQ +0.11% to 4155.76.
The VIX is down 0.1 to 14.52.
USDJPY has an aggressive rally in the NY session, +0.6% and nearly breaking 103. With Japanese fiscal year end we have seen some interest to reestablish long USDJPY positions. The rest of FX was relatively quiet; USDCAD traded down almost to 1.10 but we have seen a decent rally back today, closing 1.1060. EURUSD struggled overnight but is going to end marginally higher despite the week CPI data; busy week next week with the ECB and NFP on deck.
A quiet day to close out the week in Treasuries, with 10s closing 3bps higher on the day. Flows in cash were skewed to better selling of 10s by fast money and the front end by real money. In swaps we saw short-covering and receiving in 10s, while in vol we saw better buying of gamma from fast money accounts.
WTI leads crude higher once again in the morning as concerns persist that Cushing stocks are nearing tank bottoms --- Wednesday’s DOE report showing inventory at 28.5mm bbls and Genscape data yesterday showing another 1.1mm bbl draw. Despite the early morning strength, prompt WTI finished only 20c higher on the session while Brent finished flat. Note that the arb is nearing recent cycle highs, closing at -$6.36/bbl.
Monday brings US NFP and Unemployment, Chicago PMI, Manuafacturing ISM and Prices Paid, Construction Spending, ADP, and Factory Orders; Manufacturing PMIs for China, various European countries, and various Asia economies, Canada, Brazil, and Mexico; Composite and Services PMI for the Eurozone, the UK, Germany, France, and Brazil; CPI for the Eurozone and various European countries; GDP for various European countries and Canada; Retail Sales for the Eurozone, Germany, Australia, and Norway; Unemployment for the Eurozone and Germany; Construction PMI for the UK and Germany; Australia Trade Balance; Japan IP and Tankan Survey; and Brazil IP. In terms of policy, central bank meetings will take place at the ECB, RBA, COPOM, and the RBI. GS Research acknowledges there is a chance the ECB cuts rates but it is not our base case scenario. GS is expecting a 25bp hike in Brazil and no change from the RBA or RBI. Additionally, Mexico and Colombia will publish minutes.

HIGHLIGHTS

Reuters: Fed's George wants end to zero rates, does not say when
Bloomberg: Banxico’s Carstens Says Emerging-Market Decoupling a Mirage
Reuters: Euro zone banks slow crisis loan returns as extra cash falls
U. of Michigan Consumer Confidence: 80.0 – lower than expected. Consensus 80.5. Previous 79.9.

CURRENCIES
[table=448]
CrossLowHigh
USD/EUR1.37161.3774Close:1.3752
JPY/USD102.2900102.9800Close:102.8064
JPY/EUR140.3100141.6600Close:141.3742
USD/GBP1.66101.6650Close:1.6645
GBP/EUR0.82550.8282Close:0.8262
CHF/USD0.88500.8889Close:0.8868
CHF/EUR1.21791.2199Close:1.2195
USD/AUD0.92370.9269Close:0.9253
CAD/USD1.10121.1078Close:1.1055
NZD/USD0.86510.8689Close:0.8659
TRY/USD2.18452.1970Close:2.1885

CURRENCY VOL
[table=385]
Cross1m RR1m Vol1y RR1y Vol
AUD/USD0.808.252.559.85
BRL/USD1.3010.944.5013.62
CAD/USD0.307.260.957.22
CLP/USD1.309.603.3010.70
EUR/CHF-0.302.730.254.28
EUR/GBP0.305.770.586.97
EUR/JPY1.109.052.2511.10
EUR/USD0.556.301.087.47
GBP/USD0.305.500.707.10
MXN/USD1.058.333.8011.09
TRY/USD2.9012.706.7514.18
USD/CHF-0.407.08-0.988.69
USD/JPY0.408.200.8510.00

FLOWS (BONDS, EQUITIES, COMMODITIES)
US BONDS – 10 YR UST Down -0-11 at 100-08 YTM 2.721% 30 YR UST Down -0-12 at 101-13+ YTM 3.547%
DJIA Up +58.83 at 16,323.06 (+0.36%) S&P Up +8.58 at 1,857.62 (+0.46%) NASDAQ Up +4.53 at 4,155.76 (+0.11%)
GOLD Up +0.70 at 1,295.70 (0.06%) WTI Up +0.28 at 101.56 (+0.28%)

AMERICAS
[table=98%]
Date TimeEventConsensusActualPrevious
03/28/14 08:30Personal Income0.30%0.30%0.30%
03/28/14 08:30Personal Spending0.30%0.30%0.20%
03/28/14 08:30PCE Deflator MoM0.10%0.10%0.10%
03/28/14 08:30PCE Deflator YoY0.90%0.90%1.20%
03/28/14 08:30PCE Core MoM0.10%0.10%0.10%
03/28/14 08:30PCE Core YoY1.10%1.10%1.10%
03/28/14 09:55Univ. of Michigan Confidence80.58079.9


Reuters: Fed's George wants end to zero rates, does not say when. “A top Federal Reserve official who has often warned of the risks of keeping U.S. interest rates too low for too long said on Friday she wants to see how winding down the Fed's massive bond-buying stimulus goes before setting out any path for rate hikes. "I don't think it would be fair to say I have a date in mind or a path in mind," for the appropriate timing of the Fed's first rate increase, Kansas City Federal Reserve Bank President Esther George told the Central Exchange. "We are in a place now where we have to be very careful and think about how we are beginning to withdraw stimulus." With the Fed on track to ending its bond-buying program in the fourth quarter, she told reporters later, it is too early to set any schedule for raising rates.”
Bloomberg: Banxico’s Carstens Says Emerging-Market Decoupling a Mirage. “Emerging markets haven’t decoupled from developed nations and must take steps to protect their economies from the effects of potential capital withdrawal, according to Mexican central bank Governor Agustin Carstens. “The hypothesis of emerging-market economies decoupling was more a mirage than reality,” Carstens said today in a speech hosted by the Economic Club of New York. “The main risk to emerging markets is to be confronted with sudden massive
capital reversals, which so far have not happened.” The primary challenge for emerging-market economies is stimulating growth without compromising economic stability amid
worldwide volatility, Carstens said.”

Reuters: Brazil grows wary of Venezuela under Maduro, reduces support. “Brazil, Latin America's biggest economy and diplomatic power, has toned down its support for Venezuelan President Nicolas Maduro because of disappointment over how he is handling mounting economic problems and opposition-led street protests. The shift, while subtle, has deprived Maduro of some of the regional backing he wants at a time of food shortages, high inflation and political uncertainty in the OPEC nation. Broadly speaking, Brazilian President Dilma Rousseff remains an ally of Maduro. While Rousseff is more moderate, both are part of a generation of leftist Latin American presidents who grew up opposing pro-Washington governments and believe they are united by a mission to help the poor.”

WORLD

Reuters: Euro zone banks slow crisis loan returns as extra cash falls. “The pace at which euro zone banks are repaying their crisis loans to the European Central Bank has slowed significantly as extra cash in the system reaches critically low levels. Banks will return 1.558 billion euros ($2.14 billion) to the ECB on April 2, a lot less than this week's repayments of 18.909 billion euros and also far below the 9 billion forecast in a Reuters poll. Over the past three weeks, banks repaid in total around 40 billion euros, driven in part by the expiry of some of the sovereign bonds that they had bought with the cheap money. Lenders have also been shaping up their balance sheets for the review the ECB is making of their assets before it takes over banking supervision.”
Bloomberg: Global Growth at Risk as Ukraine Adds to Known Unknowns. “Known unknowns are multiplying in a new threat to global economic expansion. While economists Mohamed El-Erian of Allianz SE, Allen Sinai of Decision Economics Inc. and Morgan Stanley’s Joachim Fels see growth speeding up this year, mounting geopolitical strains in Ukraine and elsewhere are prompting them to turn more guarded about the outlook. “There is a significant tail risk that’s growing for the world economy,” said Sinai, chief executive officer of the New York-based consultant. He sees a 10 percent chance of a global recession triggered by escalating tensions between Russia and the U.S. and Europe over Ukraine. The crisis in Crimea isn’t the only concern financial markets must grapple with.”

ECONOMIC/POLITICAL EVENTS EXPECTED FOR MONDAY:
[table=98%]
Date TimeCountryEventGS ForecastConsensusPrevious
03/31/14 18:30AustraliaAiG Perf of Mfg Index --48.6
03/31/14 19:00AustraliaRPData/Rismark House Px MoM --0.00%
03/31/14 23:30AustraliaRBA Cash Rate Target2.50%2.50%2.50%

No New Zealand Releases

03/31/14 00:00JapanVehicle Production YoY --14.50%
03/31/14 01:00JapanHousing Starts YoY 4.80%12.30%
03/31/14 01:00JapanAnnualized Housing Starts 0.954M0.987M
03/31/14 01:00JapanConstruction Orders YoY --15.20%
03/31/14 19:50JapanTankan Large Mfg Index 1916
03/31/14 19:50JapanTankan Large Non-Mfg Index 2420
03/31/14 19:50JapanTankan Large Mfg Outlook 1314
03/31/14 19:50JapanTankan Large Non-Mfg Outlook 1517
03/31/14 19:50JapanTankan Small Mfg Outlook -3-1
03/31/14 19:50JapanTankan Small Non-Mfg Outlook -31
03/31/14 19:50JapanTankan Large All Industry Capex 0.00%4.60%
03/31/14 19:50JapanTankan Small Mfg Index 41
03/31/14 19:50JapanTankan Small Non-Mfg Index 64
03/31/14 19:50JapanLoans & Discounts Corp YoY --2.33%
03/31/14 21:30JapanLabor Cash Earnings YoY -0.10%-0.20%

03/31/14 05:00EurozoneCPI Estimate YoY 0.006--
03/31/14 05:00EurozoneCPI Core YoY 0.80%1.00%
03/31/14 02:45FranceGDP YoY 0.80%0.80%
03/31/14 02:45FranceGDP QoQ 0.30%0.30%
03/31/14 02:00GermanyRetail Sales YoY 0.80%0.90%
03/31/14 02:00GermanyRetail Sales MoM -0.50%1.70%
03/31/14 05:00ItalyCPI NIC incl. tobacco MoM 0.20%-0.10%
03/31/14 05:00ItalyCPI NIC incl. tobacco YoY 0.40%0.50%
03/31/14 05:00ItalyCPI EU Harmonized MoM 2.30%-0.30%
03/31/14 05:00ItalyCPI EU Harmonized YoY 0.40%0.40%
03/31/14 04:00NorwayRetail Sales W/Auto Fuel MoM 0.40%0.10%
03/31/14 04:00NorwayCredit Indicator Growth YoY 5.60%5.70%
03/31/14 04:00NorwayNorges Bank Daily FX Purchases --0M
03/31/14 03:00SwitzerlandKOF Leading Indicator 2.052.03

03/31/14 04:30United KingdomNet Consumer Credit 0.7B0.7B
03/31/14 04:30United KingdomNet Lending Sec. on Dwellings 1.5B1.4B
03/31/14 04:30United KingdomMortgage Approvals 75.0K76.9K
03/31/14 04:30United KingdomMoney Supply M4 MoM --0.30%
03/31/14 04:30United KingdomM4 Money Supply YoY ---0.30%
03/31/14 04:30United KingdomM4 Ex IOFCs 3M Annualised --1.60%

03/31/14 09:00United StatesISM Milwaukee --48.59
03/31/14 09:45United StatesChicago Purchasing Manager 58.559.8
03/31/14 10:30United StatesDallas Fed Manf. Activity --0.3

03/31/14 08:30CanadaGDP MoM 0.40%-0.50%
03/31/14 08:30CanadaGDP YoY --2.30%
03/31/14 08:30CanadaAverage Weekly Earnings YoY --2.50%
03/31/14 10:00CanadaBloomberg Nanos Confidence --58