Archive - Aug 10, 2010 - Story

Just a quick update following last night's observations. AUDUSD has confirmed the break of the support of the ending triangle here, and Gold has also broken through channel support. - Nic Lenoir

• Buffett Shortens Bond-Holding Duration After Inflation Warning (Bloomberg)
• No Need for New Fed Stimulus (WSJ)
• UK RICS House Price Balance for July -8% - lower than expected: UK Economic Fears Rise As House Prices Dip (FT)
• Fed Efforts to Spur Growth May Move Markets More Than Economy (Bloomberg)
• Unemployment: What Would Reagan Do? (WSJ)
• China July Trade Surplus Surges as Imports Soften (BusinessWeek)
• China Tells Banks to Take Back Trust Firms Loans, People Say (Bloomberg)
• Incomes Fall in Most Metro Areas (WSJ)
• Shirakawa Signals Japan Recovery Withstanding Yen’s Advance (BusinessWeek)
• Housing Gauge Signals First Price Drop in a Year (BusinessWeek)

• Australia business confidence falls to lowest in 14 months on higher rates.
• British July same-store sales rise 0.5%: British Retail Consortium.
• China to close factories in energy drive; move affects 2,000 industrial companies.
• China’s July trade surplus surged to $28.73B, helped by 38.14% jump in exports.
• Mkts await outcome of Fed meeting; risky assets rise in anticipation of easing measures.
• Oil falls to below $81 as traders look to Fed for possible stimulus.
• Ambac's Q2 loss narrows to $57.6M from year-ago's loss of $2.37B.

The NFIB Small Business Report came in at 88.1, down from 89.0 but just beating the expectation of 88. Yet there was nothing optimistic in the index itself: "The Index of Small Business Optimism lost 0.9 points in July following a sharp decline in June. The persistence of Index readings below 90 is unprecedented in survey history. The performance of the economy is mediocre at best, given the extent of the decline over the past two years. Pent up demand should be immense but it is not triggering a rapid pickup in economic activity. Ninety (90) percent of the decline this month resulted from deterioration in the outlook for business conditions in the next six months. Owners have no confidence that economic policies will “fix” the economy... Bottom line, owners remain pessimistic and nothing is happening in Washington to provide encouragement. Confidence is lost. At least the “real variables” (hiring, capital spending and inventory investment) did not deteriorate substantially in July. The damage to the Optimism Index was done by expectations for business conditions for the second half – owners predict that the economy will not improve appreciably, at least on Main Street. Big banks and big manufacturers may be doing well, but the small firms are not. If this doesn’t change soon, the success of the large firms will be imperiled as well." And guess where the bulk of hiring in America comes from. The double dip recession in an ongoing depression continues to remind everyone it is not going away.

The Chinese Shanghai index was lower by almost 3% overnight after a series of disappointing economic releases out of the country. The first showed a further cooling in property prices, leaving many to speculate if the housing ponzi was not beginning to unravel/ As Xinhua reports: "Housing prices in major Chinese cities rose 10.3 percent year on year in July, down from the 11.4 percent growth in June, the National Bureau of Statistics (NBS) said Tuesday. It was the third consecutive month that China's property prices rose at a slower pace and the lowest growth rate in six months." Adding to the downward pressure was news released from the Customs Administration (which we will spread later), which indicated that "China's exports rose 38.1 percent year on year to 145.52 billion U.S. dollars in July, but the growth rate was down from the 43.9-percent surge in June, the General Administration of Customs (GAC) said Tuesday." Concluding the Asian trifecta of negative news, was the Bank of Japan's refusal to further ease its monetary policy. US futures are lower by about 0.5% although all the action in the US will be focused on the FOMC statement released early this afternoon.

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

Things are a-brewing. Chop will lead to trend within a month.