Archive - Aug 27, 2010

Q2 annualized came at 1.6%, slightly higher than the revised consensus of 1.4%, and lower than Zero Hedge's expectation of 1.8%. The fact that this was 0.8% lower than the first number is completely lost on Hal9000. We anticipate the final revision to this number will be sub 1%. And why are we looking at Q2 anyway - isn't the upcoming negative Q3 print a little more important? We can't wait for the CNBC clown to gloat that the number has beat his 0.5% estimate (which was established two days ago - where was he when the original 2.4% number came out?)

Two days ago, in Mort Zuckerman Laments "The End Of American Optimism", Takes His Criticism Of Obama To A Whole New Level, we assumed out that Mort's critique of Obama, his policies, and his economic team had reached a level that would likely not be surprassed for a long time. Boy were we wrong - one short day later Mort comes out with The Most Fiscally Irresponsible Government in U.S. History: Current federal budget trends are capable of destroying this country. "The United States simply seems to lack a system that can fund the government that the people say they want. We are good at crises, but we do not seem to be good at tackling chronic problems. Obama must know that if he doesn't address this, he will be the president who drove us toward a debt crisis. And so too must Congress, for both have now participated in the most fiscally irresponsible government in American history." Scathing does not do it justice...

• The beginning of the end of the dollar? Banks Back Switch to Renminbi for Trade - A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China. HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency. (FT)
• SEC vows more action, [and arguably less porn, regulatory capture, criminal negligence and gross incompetence] (FT)
• Gold's Evangelist: With gold a fashionable hedge against turbulent times, one billionaire is doing everything he can to get his hands on the actual stuff (BusinessWeek cover story)
• Banks’ Self-Dealing Super-Charged Financial Crisis (ProPublica)
• Bernanke, Trichet Economic Paths May Diverge at Jackson Hole (Bloomberg)
• All Eyes on Bernanke's Speech From on High (Barrons)
• Hoenig Says He Changed Jackson Hole Guest List to Discourage `Group Think' (Bloomberg)
• Kan to Speak on Steps to Boost Japan Economy, Curb Strong Yen (Bloomberg)
• UK economy grows at fastest pace in nine years (Telegraph)
• The Fallacy of ‘Bailing Out’ U.S. Cities and States (Rick's Picks, h/t Robert)

Faros Trading looks at an imminent QE episode less from a monetary stimulus, and more from a game theory perspective, in which the firm sees the interference by other central banks and governments as long overdue for retaliation by the Fed. "At some point the Fed’s gloves have to come off; and given the recent Employment data, Durable Goods data, Housing data and Manufacturing data, we feel that the US has come to a point where diplomacy must end. The rules have changed and the US must change with them. The Fed should announce further quantitative easing measures on a grander scale, and the government should voice concern over the strong dollar, currently made so by many of our intervening trading partners." After all in the global race to the bottom, it's every man for himself. Alas, we are pretty confident that Faros is missing one key thing - once everyone switches from an even make believe cooperate stance to one of guaranteed defection, it is pretty much game over, as the CBs begin to actively lock each othe out. But since things are headed that way anyway, might as well go out guns blazing...

So, S&P finally gets around to Cutting Ireland’s Rating on the Cost of Bank Support, and of course Irish officials balk... Let's drill down into the facts.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 27/08/10