Archive - Aug 20, 2010

At the heart of this investor uncertainty, or even confusion, is the battle between the micro-economic data and the macro-economic data. By micro-data, I mean corporate profits. Considering that 82% of U.S. companies beat expectations in the most recent earnings season, it’s understandable that investors could believe the economy is on the mend. This view is reinforced by the fact that many of those same companies raised earnings and, in some cases, revenue guidance for the remainder of 2010. The macro-data, on the other hand, is not so positive. In fact, it’s downright dismal when we look at the bleak state of the employment situation, the housing market, and bank lending not to mention shrinking GDP. While investors collectively seem not to know what to make of this spar, I offer one analogy and one explanation as to why the macro-data will dominate and destroy the micro-data. - Peak Theories Research

• Asian stocks decline, Yen strengthens on concern global growth is slowing.
• Australia's first female PM faces voter backlash at first election.
• BoJ said to be still assessing economic impact of stronger Yen.
• China shares fall on criticism of local finance vehicle.
• Euro steady above $1.28 in wake of poor US economic data.
• Oil slips below $75 in Asia as economic news renews expectations of weak crude demand.
• U.S. Budget Deficit forecast increased by CBO to $1.066 trillion for 2011.
• US jobless claims climb, Philadelphia factories slump as recovery slows.
• Aeropostale's Q2 net rose 12.9% to $43.6M helped by 9% rise in revs to $494.7M.
• Apple to shut down Quattro wireless Ad network.

Nothing like a little geopolitical ruckus to spoil the fun...the fun. Xinhua reports that hours ago, and just a day before the Bushehr nuclear reactor is supposed to go online, Iranian Defense Minister Ahmad Vahidi said that Iran had test fired a surface-to-surface missile, Qiam, footage of which was shown on state television. Surely this fits well as a time slot segue from the recent clip showing mass graves prepared for Iran's "aggressors."

Things in Europe this morning have a decidedly deja vu May feel. The EUR has plunged against all majors, touching a one month low against the dollar as John Taylor is proven correct for the nth time, having top ticked the EURUSD inflection point literally to the day. Further validating the return of European concerns fo the main stage is the fresh all time record yield on the Bund, with the future rising above 133 for the first time. There are two key reasons cited for today's weakness: the first are extremely dovish comments from ECB's Aexl Weber that the central bank should keep "unlimited lending through year end." This simply means that Bernanke's QE Lite idea is not lost on Europe, whose own little mini gold age has ended, and the continent is once again considering ways and means to kill its currency. Don't be surprised if Germany decided to throw Greece on the sacrificial altar - in that regard, the recent Spiegel article may just have been the warning shot. Additionally, there are rumors that the SNB is unwinding its hundreds of billions of EUR holding. The indirect evidence: a surging CHF, which however could merely be a return to the flught to safety of the old regime, as Europe once again realizes just how bad things truly are beneath the surface.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 20/08/10

Few people in the world know more about oil drilling disasters than Dr. Robert Bea. We would be wise to listen to what he has to say ...

Dear Pragmatic Idealist: I don't know where you get your ideas about Austrian theory, but they are completely wrong.

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