University of Michigan Consumer Confidence came modestly higher than expected and limped higher off the lowest levels of the year. However, aside from this apparently positive event (accoding to some media pundits), there are two worrying things shifting rapidly. Consumer outlook for the economy (as opposed to current conditions) dropped to their lowest of the year with the largest 3-month drop in 11 months (so much for hope?); and inflation expectations soared by the most in 17 months.
Peripheral stock indices continued to outperform today, as market participants reacted to yet another reiteration of support for ECB’s pledge to do all necessary to defend the Eurozone. As a result, banks in Europe are trading up with decent gains, with health care sector in the red given its traditional appeal as a safe-haven investment. German DAX continues to consolidate above the key 7000 mark, being driven higher by Daimler and Deutsche Bank. Looking at other asset classes, there is visible outperformance in the short-end of the curve, with the in-focus Spanish 2s tighter by around 20bps mark. The ongoing speculation of an intervention in the bond market also weighed on the German Bund, which underperformed its US counterpart. USTs come off overnight highs to trade little changed, with the move attributed to deal related selling. In the FX market, the EUR continued to re-price risks surrounding what is inevitable an unlikely scenario of a Eurozone break up. To the upside, resistance levels are seen at the 55DMA line at 1.2395 and then at 1.2400, which is also an intraday option expiry for the session.
Organic growth is slow and painful (Boo!), central bank money fast, cheap and with few strings attached (Yes!)…And anyway, QE and other supports have already been priced in… Can’t change the programme.
No exactly fireworks, but anything that isn’t totally bad these days is good to have.
Good news, but then not so good news?! So, no QE, after all?
Not much life. Nor conviction.
Barely a pulse.
Can you feel it?
Last week was a scratch in terms of events, if not in terms of multiple expansion, as 2012 forward EPS continued contraction even as the market continued rising and is on the verge of taking out 2012 highs - surely an immediate catalyst for the New QE it is pricing in. This week promises to be just as boring with few events on the global docket as Europe continues to bask in mid-August vacation, and prepare for the September event crunch. Via DB, In Europe, apart from GDP tomorrow we will also get inflation data from the UK, Spain and France as well as the German ZEW survey. Greece will also auction EU3.125bn in 12-week T-bills to help repay a EU3.2bn bond due 20 August held by the ECB. Elsewhere will get Spanish trade balance and euroland inflation data on Thursday, German PPI and the Euroland trade balance on Friday. In the US we will get PPI, retail sales and business inventories tomorrow. On Wednesday we get US CPI, industrial production, NY Fed manufacturing, and the NAHB housing index. Building permits/Housing starts and Philly Fed survey are the highlights for Thursday before the preliminary UofM consumer sentiment survey on Friday.
Otherwise… No titbits…
Nada. Rien. Nichts. Nothing.
"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained" - Ben Bernanke, March 28, 2007
"I don’t think student loans are a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government" - Ben Bernanke, August 7, 2012
Please mark your calendars accordingly as yesterday the Chairman just guaranteed that student loans will be cause for the next "financial stability issue."
Retail gasoline prices in the U.S. Midwest were as much as 50 cents higher than in the rest of the country. By Monday, the price of a gallon of regular unleaded jumped 13 cents from last week in Detroit to settle at $3.99. The spike in retail gasoline prices follows a series of pipeline spills in Wisconsin and refinery shutdowns in Chicago and elsewhere. The impact of the string of industrial incidents on consumers in the region may be short-lived, but retail prices rarely decline as fast as they increase. The 'cluster of bad luck' leaves refineries shut down at a time when the region is using "summertime gasoline," a blend not manufactured very much outside of the Midwest.
BS At The BLS Leads To Profitable Short Opportunities As Hopium Smokers Get High Off Of Depreciated Dime Bags Of Manipulated EupSubmitted by Reggie Middleton on 08/06/2012 08:12 -0500
Rosy econ data + low valuations in markets + cure to European debt crisis, Abercromie & Fitch, Aeropostale, etc. a screaming buy?
The unconscionable behavior of the political class should be thought of as a contagious disease that infiltrates any industry that comes within influence of the state. Government contractors, lobbying associations, favored corporations, and even the press all seek to use the monopolized power of government to further their own interests. Instead of attempting to roll back stifling regulations, many of these firms simply wish to get in on the spoils of the great extortionary scheme. The results are always the same. Politicians pretend to be saving the people from cold-natured capitalism while politically-connected businessmen and bankers act as if their commercial success is completely of their own doing. The hidden truth is both act in tandem to fleece the average taxpayer.
The week ahead brings a batch of Q2 GDP prints, which will provide guidance on the strength of activity in that quarter, as well as a bunch of business survey data which will offer insights into the strength of momentum at the start of Q3. Starting with the GDP data, the main attraction is likely to be the print from the US. Goldman expects a below trend print of 1.1%qoq, vs the consensus at 1.5%qoq. The Q2 print from the UK is expected to be negative. While only a few Q2 prints have been published so far, only China has recorded a recovery on Q1. The consensus expects soft prints for the business surveys out this week. The Euroland flash PMIs are expected to be unchanged, leaving them at levels consistent with a continued contraction in activity. The German IFO is expected to fall slightly, as is the Swiss KoF. There are no consensus expectations for the China flash PMI, however if it does not pick up from current levels around 48, questions over the extent/effectiveness of stimulus in China will remain.
President Obama ruined my morning coffee
The smoke from the exploded bus carrying Israeli tourists was still billowing and yet Israeli PM Netanyahu had already declared that "Iran is responsible for the terror attack in Bulgaria, we will have a strong response against Iranian terror." Perhaps that statement was a little premature: as footage released by Bulgarian police indicates, the suspected suicide bomber is Caucasian, and was in possession of a Michigan driver's license, supposedly a fake one, but why anyone in Bulgaria would be carrying a fake Michigan ID is just a little confusing.