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Updated
September 2, 2010
Good morning,
Next BU on Tuesday! Today at 11:30 AM ET, I’ll be appearing on CNBC’s The Call discussing why retail investors are avoiding stocks and buying bonds. Today at 12:20 PM CT, I’ll be appearing on WBBM 780 Radio’s Noon Business Hour discussing the outlook for tomorrow’s US employment data. Tonight at 7:30 PM ET, I’ll be appearing on CNBC’s the Kudlow Report discussing the outlook for the mid-term elections.
With the ECB leaving rates unchanged and mixed global economic data, the markets are going to be back filling ahead of tomorrow's US employment data. The greenback is stronger against most major currencies with the US dollar index up at 82.45 with a range of 82.30 to 83.59. The 3mth LOIS continues to soften at .10538 and 3mth Libor is at 0.2944. 1yr OIS are: US at .215%, UK at .5409%, EU .6125%, JP .074%, Cad 1.034%, Aus 4.555% and NZ is 3.295%. The 1yr spread between US/UK is -32.59; US/EU is -39.75, US/JP +14.1, US/CA -81.9, US/AU -434.0 and US/NZ -308.0. The 5yr European CDS are all lower again today: Germany 41.49, Greece 922.50, Hungary 356.5, Ireland 326.5, Italy 210.5, Portugal 305.5, Spain 22.50 and UK 67.5.
9:00 FCIC Hearing: Too Big To Fail (Bernanke, Bair)
9:00 Fed Conference: REO & Vacant Properties
10:00 Factory Orders
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet Global equities are mixed with the FE following the big rally in the US yesterday. S&P futures are up 2 pts at 1083.50. Commodities are mixed with gold at 1248.0, crude is $73.73, nat. gas is $3.745, and home heating oil is at $2.0330. The CRB is at 268.57. Wheat is at 6.825 and corn is at 4.31. US 10 yr note is at 2.615% and the 2yr note at 0.505% with the spread to 211. US/Ger 2yr spread is 9.6. The TED spread is at 16.96, the VIX is at 23.90, and the CVIX is at 12.49. Baltic freight index is up 28 at 2741 and Philly semiconductor index (SOX) closed at 316.75. The jump in the ISM manufacturing was perhaps foreshadowed by the rebound indicated from the Baltic Freight Index. AM MO: After a big rally in Risk-On trading, today we're dealing with a bit of a hangover as the newsflow is not nearly as consistently positive as yesterday. ECB's Trichet said they will extend unlimited loan offerings into 2011 and has no intention of signaling any change in rates. Separately, the EU is going to limit short sales of stocks and government debt. US jobless claims were 472k and 3k lower than expected.....but not below 265k needed to keep this rally in Risk-On going. Just for Fun: Read Ben Bernanke's prepared testimonyto the US Financial Crisis commission. Another Day, another Govt Distorted Data Set: Yesterday, the auto industry released their August sales numbers and they were ugly. Compared to 2009, August 2010 sales plummeted 21% with General Motors Co., Toyota Motor Corp. and Honda Motor Co. all reporting declines of 25% or more. Ford Motor Co. was the tallest pygmy in the group as its sales only dropped 11%. Why such large year-over-year drops? Cash-for-clunkers, of course! In 2009, this was a stimulus program that thought it was a good idea to take perfectly functional cars and destroy them for a subsidy between $3,500 and $4,500. As the data shows, the program was wildly successful in this purpose as 680,000 units were taken away as sales were moved forward from 2010 to 2009. Like existing home sales, auto sales have been distorted and the process has jumbled decision making not only on the consumer, but also on the producer. Jobless Claims: Our Jennifer Lee writes, "U.S. initial claims fell 6k in the August 28 week, a little disappointing but a drop is a drop and this is the second in a row so we'll take it. At 472k, this leaves the # of first-time claimants at the lowest level in two months and also tugged the 4-week moving average a bit lower. Continuing claims also dropped for the 2nd week in a row and is at an 8-week low of 4,456k, which is over 2 million below the peak. There was also some relief for those on extended benefits......the all-inclusive figure fell 390k in the survey week of August 14 to 9,661k after breaching the 10 mln mark for the first time since the spring. The Bottom Line: The U.S. labor market remains weak; tomorrow's payroll report is unlikely to change that view. But maybe the 1.8% drop in nonfarm productivity, the largest in almost four years, will push companies to ramp up their hiring....at some point."
Andy
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