Archive - Mar 2, 2010 - Story

Today's Breakfast with Dave has an updated perspective on the contraction of the US consumer, after yesterday's income and spending update. And good news for Amazon: Americans are finally rememberizing how to read good. "While people did spend more on luxury items and things to help them improve their mood during these tumultuous times, there was still very much a frugal ‘stay at home’ cocooning theme in the spending report. For example, there was less spending activity on sports events (-0.7%), amusement parks (-0.3%) and movie theaters (-4.2%). Instead, people spent more money on books (+2.1%), cable (+0.9%) and television sets (+0.7%)."

RANsquawk 2nd March US Morning Briefing - Stocks, Bonds, FX etc.

When Goldman Sachs writes extended treatises on the impact of snowfall and makes regression analyses of NESIS snowfall scores with payroll impacts, you know Goldman economists i) take their cure from Larry Summers' public caveats, ii) have an extended sense of humor, and iii) have way too much free time on their hands. We share the following GS essay on the second derivative impact of snowfall on the economy, but here is the punchline: "Our models suggest a small decline in payrolls without incorporating the special impact of the snowstorms, or the boost from temporary Census hiring.  Adding approximately 30,000 Census hires suggests unchanged or slightly positive payrolls; subtracting the snowstorm effects suggests a payroll number in the -50,000 to -100,000 range. Our forecast of a decline of 100,000 payroll jobs assumes an impact at the higher end of this range.  Despite this, we are inclined to think the risk remains on the side of a still bigger impact from the snowstorm itself, for two reasons:  1) the larger effects observed in as-first-reported data suggest that lags in reporting itself could be part of a snowstorm’s effect, 2) both the high-impact January 1996 snowstorm and the February 2010 storm hit slightly earlier in the month than others, and this difference in timing might be important in terms of the impact on new hires added to payrolls in the survey week." Since Larry Summers, who one may venture has a pretty good advance look at the NFP #, has warned snowfall will not be "additive" to the NFP per se, any substantial downside surprise will merely be attributed to the vagaries of mother nature, which has put global warming on hold for the time being.

The lock-step inverse relationship between the dollar and the stock market appeared to take the day off Monday. Pre-opening, the dollar had backed off slightly in the face of new rumors of a Greek rescue package. Stock futures and oil firmed in reaction. Gold refused to get out of bed. As U.S. markets opened, the dollar began to firm on the lack of any details of the rumored package. The dollar rally failed to even dent the rally in stocks and crude. Around noon, the dollar (DXY) rally topped out and the greenback began to weaken. Stocks and crude did not appear to even notice. - Art Cashin

Some traders claimed that other assets did not react to the dollar rally because of its relative level. The DXY rally failed to reach the levels it hit in the hours after the Discount Rate hike. It was a nice theory but failed to explain the afternoon selloff in crude that accompanied further weakness in the dollar.

• Greece in no rush to sell bonds, debt chief says (Bloomberg)
• Greece puts bond sale on hold as it hopes bail out will let it borrow at sub-7% (Guardian)
• Banks raise pay as U.K. efforts to cut bonuses fail (Bloomberg)
• John Crudele: Hey Washington! Economy has us very worried (Post)
• Hedge funds move to euro after Greek CDS trading is the now the "old trade" (Reuters)
• Sovereign CDS trading to be probed by EU (Bloomberg) as shorting euro is now borderline illegal

• Asian stocks climb on US consumption, improving economic outlook, semiconductor sales.
• Australia raises benchmark rate to 4% as recovery withstands debt concerns.
• Brazil stocks gain as commodities, metals surge.
• Colombia eyes up to $800M 2010 debt issues.
• EU sets clock ticking on Greece as Merkel talks near.
• Global semiconductor sales surprisingly rose 0.3% in Jan from the previous month.

RANsquawk 2nd March Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 2nd March Morning Briefing - Stocks, Bonds, FX etc.

This is one of those poetic justice moments. After Toyota was dragged through hell and back (aka Congress) over a sticky accelerator issue, now it is the turn of the automotive division of the US government, better known as General Motors. The reason: the company "is recalling 1.3 million compact cars in North America to address a power steering problem that has been linked to 14 crashes and one injury, the company said on Tuesday." We can't wait to see GM's brand new consultant Fritz Henderson (paid the miserly stipend of $3,000/hour) sweat tungsten-filled bullets before Congressional grillings because after all in America justice is blind, especially when it comes to such things as past and potential car accidents, even if the unionized labor consortium in question is a protectorate of a feudal, post-capitalist, communist state (Toynbee is hopefully spinning in his grave).