Philly Fed Professional Forecaster (Read Econ Ph.D.) Survey Reveals Economic Deterioration

The latest Philly Fed professional forecaster (whose members are such resolute permabulls as Moody's Mark "How the Stimulus Worked" Zandi and BofA's Ethan "Goldman cutting estimates means I am raising mine" Harris) survey has been released and it is looking notably gloomier than before. "The outlook for growth in the U.S. economy looks weaker now than it did just three months ago, according to 36 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters see real GDP growing at an annual rate of 2.3 percent this quarter, down from the previous estimate of 3.3 percent. On an annual-average over annual-average basis, the forecasters expect slower real GDP growth in 2010, 2011, and 2013.The forecasters see real GDP growing 2.9 percent in 2010, down from their prediction of 3.3 percent in the last survey." The economists also see the chance of a negative Q3 and Q4 rising to 14% and 16.8%. So what they're really telling us is Q2 GDP was likely negative and going rapidly downhill from there.

Iran Confirms Launch Of First Nuclear Power Plant In Bushehr, Russia To Supply Reactor Fuel

Some developments out of Iran, which after 35 years in delays is set to launch its first nuclear power plant, a fact confirmed by Ali Akbar Salehi, the country's atomic energy chief. This had been preannounced by Russia, which helped build the facility located next to the city of Bushehr. More surprisingly, Russia has formally announced that it would be the country supplying Iran with reactor fuel, effectively ignoring almost 4 decades of roadblocking by the West to bring the NPP project to a conclusion. Did Russia just (in)formally announce it is joining into a new axis with Iran?

Things In Spain So Good, Banks Borrow A Mere Record €140 Billion From ECB In July

This was our feeble attempt at MSM headline creation. According to Bank of Spain data, Spanish banks were responsible for borrowing a third of all the amount lent out by the ECB in July, or €140 billion (and €130 billion net of redeposits). This number is higher than the already record €136 billion the month before. And even though it is presumably priced in, it is somewhat hilarious to think that an entire European country's banking system continues to subsist purely on the liquidity provided by the central bank: Spain continues to be locked out, joining Greece and likely Portugal in the biggest capital markets shut out in history as no matter what the National Lampoons Stress Tests (remember those?) indicate. But yes, thanks to the temporary EUR plunge to 1.16 Germany managed to pull off a record economic quarter as surging exports carried the eurozone for another month or two. All that is now over, and with the market anticipating QE2.1/3 out of our own Fed any time soon, dollar weakness will be persistently just around the corner, which effectively brings the European Golden Age to a close.

Frontrunning: Friday 13th Post Hindenburg Omen Edition

• Obama's economic tragedy - U.S. fiscal gap makes Greece look responsible (Washington Times)
• The Dodd-Frank Wall Street Reform and Consumer Protection Act: The Triumph of Crony Capitalism, Part 1 (Minyanville)
• Fed's Effort to Bolster U.S. Recovery Fails to Calm Investors (Bloomberg)
• US Farmers to Benefit From Failing Wheat Crops (FT)
• Treasury's new idea for laggard banks: we'll sit at your meeting (WSJ)
• Record German Growth Drives Euro-Region Expansion (Bloomberg)
• Americans grim over economy before elections: poll (Reuters)
• It's confirmed - Central Banks in Europe Said to Have Purchased Irish Notes; Yields Decline (Bloomberg)... And with all the lies about banking stability, one wonders why Europe's periphery continues to be completely locked out of capital markets
• Irish Banks Rattling Nerves (WSJ)
• Hungary’s Recovery Halts as Austerity Stifles Demand (Bloomberg)

Goldman's EURUSD Forecast Is Now Most Erratic Ever

One of the classic comedy themes of the year has been Goldman's series of failed recommendations on the EURUSD, where the hedge fund has had about a 1 out of 10 "success" rating (for its clients). Today, the Markets Strategist Mark Tan recaps the firm's 3, 6 and 12 month forecast on the EURUSD, which are, conveniently, 1.22, 1.35 and 1.38. That's like saying the S&P will be in a range of 950 to 1500. At least the firm is sure to "hit" its projected range.... And be sure to watch that major inflection point some time in December which send the dollar sharply lower: is Goldman implicitly saying the "real deal" QE will now come around New Year's, just after the elections and just before the government has to raise the debt ceiling regardless? One thing we agree with, as we have long claimed: look for strikes and other expressions of non-appreciation to spike once everyone is back from vacation. As Goldman says: "One of the main reasons we incorporated downside risks to our EUR/$ forecast (1.22 in 3-months) is to reflect the potential for rising political tension again. This could potentially occur as Europe returns from its summer lull and is confronted with the reality of unpopular austerity measures." What are the InTrade odds on CNBC broadcasting the next storming of the Greek parliament?

The Hindenburg Omen Has Arrived

Easily the most feared technical pattern in all of chartism (for the bullishly inclined) is the dreaded Hindenburg Omen. Those who know what it is, tend to have an atavistic reaction to its mere mention. Those who do not, can catch up on its implications courtesy of Wikipedia, but in a nutshell: "The Hindenburg Omen is a technical analysis that attempts to predict a forthcoming stock market crash. It is named after the Hindenburg disaster of May 6th 1937, during which the German zeppelin was destroyed in a sudden conflagration." Granted, the Hindenburg Omen is not a guarantee of a crash, and the five criteria that must be met for a Hindenburg trigger typically need to reoccur within 36 days for reconfirmation. Yet the statistics are startling: "Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and
usually takes place within the next forty-days." The last Hindenburg Omen occurred during the lows of 2009. Today, we just had another (unconfirmed) Hindenburg Omen. It is time to batten down the hatches - something big is coming.