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Daily US Opening News And Market Re-Cap: August 19

Tyler Durden's picture




 

From RanSquawk:

  • European equities remained under pressure during the session weighed upon by growing signs of a faltering global economic growth together with August options expiry in the European indices
  • CHF and JPY remained the major beneficiaries of risk-aversion, whereas commodity-linked currencies generally traded lower
  • After breaching the key USD 1,800 per ounce level yesterday, spot Gold continued its ascent towards the USD 1,900 technical level amid risk-aversion
  • EU's Rehn said the EU may draft legislation for joint Eurobonds, however gave no timetable for the draft legislation
  • EU Commission said collateral agreement between Finland and Greece is being examined by the Eurozone, adding that Finland is the only country to request Greece collateral. Meanwhile, Austrian finance minister said the Finnish deal to get a 20% cash collateral on Greek loans is unacceptable

Market Re-Cap
 
European equities remained under pressure during the session weighed upon by growing signs of a faltering global economic growth together with August options expiry in the European indices. The Eurozone 10-year government bond yield spreads widened across the board in early trade, however as the session progressed the Italian/German and Spanish/German spreads narrowed partly on the back of market talk of the ECB buying in the Italian and Spanish government bonds. Elsewhere, the USD-Index lacked any firm direction, however it did trade in negative territory for a vast majority of the session, which in turn provided support to EUR/USD and GBP/USD. EUR/USD received further strength following comments from EU’s Rehn that the EU may draft legislation for joint Eurobonds. In other forex news, CHF and JPY remained the major beneficiaries of risk-aversion, whereas commodity-linked currencies generally traded lower. In other news, WTI and Brent crude futures remained in negative territory over demand concerns emerging from fragile economic growth outlook for top energy consumers. Also, after breaching the key USD 1,800 per ounce level yesterday, spot Gold continued its ascent towards the USD 1,900 technical level amid risk-aversion.
 
Moving into the North American open, the economic calendar remains thin, however markets will watch carefully any comments on monetary policy from Fed’s Dudley and Pianalto later in the session.
 
Asia Headlines:
 
According to Chinese vice president, Xi, Chinese economy will not have a hard landing, and reiterated that Beijing will pursue proactive fiscal policy, and prudent monetary policy. Meanwhile, according to a Chinese researcher, Liu Yuhui, China could see some structural adjustment in the monetary tightening measures in the current half of the year, including selective easing. In other news, according to a PBOC adviser, Li Daokui, China should be prepared for more hot-money flows and greater inflationary pressures which may result from a third round of US quantitative easing. (RTRS/Shanghai Securities News/National Business Daily)
 
US Headlines
 
Fed’s Fisher said he still sees positive momentum in the US economy but recovery is a “slow slog”. Fisher expects positive growth in the US economy in the third quarter, adding that Fed policymakers pay no attention to political attacks on the central bank. (RTRS)
 
In other news, Citigroup cut its 2011 US GDP growth forecast to 1.6% from 1.7%. Also, JPMorgan cut its Q4 US GDP estimate to 1.0% from 2.5%, and cut its Q1 2012 GDP estimate to 0.5% from 1.5%. (Sources)
 
Elsewhere, Fed’s balance sheet shrank to USD 2.842trl in the week ended August 17th from USD 2.856trl in the week ended August 10th. Meanwhile, Fed’s overall holdings of US marketable securities kept for overseas central banks rose by USD 8.825bln in the week ended August 17th, to stand at USD 3.485trl. (RTRS)
 
EU and UK Headlines:
 
ECB’s Stark said Eurobonds are a false solution, adding that it would provide wrong incentives. He also said Eurobonds would treat the symptoms but not address the cause of crisis. Stark said neither doubling the EFSF funds, nor the ECB pumping more money into the system would work. He further said that size and speed of ECB’s bond purchases will depend on how long market tensions continue. Stark finally said that Eurobonds “are the transfer union”. (RTRS)
 
In other news, S&P's Hinrichs sees no German rating change in the next two years. (WAZ) Elsewhere, Spain will announce further austerity measures today aimed at fending off debt market attacks while avoiding drastic cuts which may damage the ruling Socialists’ chances in November’s general election. (RTRS)
 
•    UK Public Finances (PSNCR) (Jul) M/M -5.6bln vs. Exp. -8.0bln (Prev. 21.0bln, Rev. to 20.4bln)
•    UK Public Sector Net Borrowing (Jul) M/M -2.0bln vs. Exp. 0.2bln (Prev. 12.0bln, Rev. to 12.4bln) (RTRS)
 
EQUITIES
 
European equities remained under pressure during the session weighed upon by growing signs of a faltering global economic growth together with August options expiry in the European indices. In equity specific news, Barclays shares came under pressure following market talk that co. might be poised to launch a rights issue. Moving into the North American open, equities continue to trade in negative territory, with basic materials and financials as the worst performing sectors.
 
FX
 
The USD-Index lacked any firm direction, however it did trade in negative territory for a vast majority of the session, which in turn provided support to EUR/USD and GBP/USD. EUR/USD received further strength following comments from EU’s Rehn that the EU may draft legislation for joint Eurobonds. In other forex news, CHF and JPY remained the major beneficiaries of risk-aversion, whereas commodity-linked currencies generally traded lower.
 
Elsewhere, according to the New York Fed, the SNB tapped the Fed for extra USD as it drew down on its special swap lines for foreign central banks. The USD 200mln transaction was the first time the SNB has used the swap lines since they were reopened in May 2010. (RTRS)
 
COMMODITIES
 
WTI and Brent crude futures traded lower with risk-off trade following lacklustre US economic data adding to concerns surrounding global growth, allied with continued Eurozone debt worries.
 
Oil & Gas News:

•    Libyan rebels seized an oil refinery in the city of Zawiyah and took control of Sabratha further west on the main highway from Tripoli to Tunisia as NATO aircraft struck targets in the capital.
•    Iran resumed natural gas exports to Turkey after a week-long halt following an explosion on the pipeline, the Iranian Oil Ministry's website, reported today.
•    The EU could decide to toughen sanctions against Syrian President Al-Assad’s government today imposing a ban on oil imports from the country and banning business with major companies, EU diplomats said.
•    MF Global said the Brent/WTI oil spread is seen narrowing in the weeks ahead as Libyan rebels make progress in advances on Tripoli, indicating the end could be near for Gaddafi’s regime.
 
Geopolitical News:

•    Syrian UN envoy confirmed that Syria has stopped all military and police operations against protesters.
•    Britain, France, Germany, and Portugal said that they will seek a UN Security Council resolution ordering sanctions against Syria over its deadly crackdown on protests. In related news, the US is waging a diplomatic and humanitarian war against Syria along with some other U.N. Security Council members, Syria’s U.N. envoy said.

 

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Fri, 08/19/2011 - 08:10 | 1576471 Sudden Debt
Sudden Debt's picture

So Finland has the smartest politicians in the world... SO WHAT?!

 

Fri, 08/19/2011 - 08:19 | 1576491 Thorlyx
Thorlyx's picture

Give my your money and I will agree to lend it back to you. Geniuses...

When governments are seriously doing these weird things, it is really time to get gold..

 

Fri, 08/19/2011 - 08:18 | 1576503 disabledvet
disabledvet's picture

EXACTLY! The problem is never asking for the money but the fact that those "asshole Finns actually got it." Don't they know they're dealing with Austrians? Now hear their whine with that cheese!

Fri, 08/19/2011 - 08:13 | 1576483 westboundnup
westboundnup's picture

Welcome to another edition of THUNDERDOME!

Fri, 08/19/2011 - 08:21 | 1576515 RunningMan
RunningMan's picture

thunderdome was on the other night. two men enter, one man leaves. when two tribes go to war...

Fri, 08/19/2011 - 08:14 | 1576488 chinaguy
chinaguy's picture

Rumors of Emergency Fed meeting? impact on EUR/USD & Futures...

Fri, 08/19/2011 - 08:18 | 1576504 RunningMan
RunningMan's picture

Markets plunge, world collapsing. Markets surge, bulls are running.  Seriously, the whole oscillation between complete collapse and future is now type propaganda is worn thinner than a spider's thread.

Fri, 08/19/2011 - 08:22 | 1576517 Moneyswirth
Moneyswirth's picture

Reuters story:  "Tempted to bail on stocks?  Think again"

 

http://blogs.reuters.com/reuters-money/2011/08/18/tempted-to-bail-on-stocks-learn-this-lesson-from-2008-data/

 

The sheeple are so boned, its not even funny.  The last few weeks have been as orderly an exit as in recent memory.  Wait till the water starts rushing in.  

Fri, 08/19/2011 - 08:46 | 1576596 zorba THE GREEK
zorba THE GREEK's picture

At least I won't be bored today.

Fri, 08/19/2011 - 11:47 | 1577576 boiltherich
boiltherich's picture

And then there was this guest opinion at at CNBS from Paul Donovan, deputy head of Global Economics:

 "Let’s have a quick reality check on the United States, every single real economic data point this month, every single data release on the real economy, has come out better than expected… better than the market was looking for," Donovan said.

I really almost fell out of my chair when I saw that, I cannot recall ever seeing such a blatent outright lie in a major financial website, I mean you often see spin, you will occasionally see bending of the truth, and you will even see the rare lie that is phrased in such a way it can later be retracted as an error, but this is just sinister in it's scope and depth of lying.

He added there were reasons to be optimistic about a recovery in the US and the media had overblown the significance of the debt crisis, sparking negative market sentiment.

"The sentiment data has been negative and why is that? Because you have wall to wall coverage across all media in the last month telling you that the debt crisis is huge," he said.

"There are problems in the States, but the consumer's spending more money, they've got more income, they've got more jobs, the banks at least in the last survey were saying they're prepared to lend more money… it's not a strong recovery, but at the same time what I think we've got at the moment is excessive," he explained.

Every single thing this guy said is an outright lie, it is not a mistake, it is not a fantasy, it is a lie.  According to him there has been not a single data point that was a miss in the last month. 

Published: Friday, 19 Aug 2011 | 7:34 AM ET


By: Antonya Allen
Assistant Editor, CNBC.com

He whines about lack of political leadership in Europe, which is true enough, but then says:


"What we want is a European statesperson. Not a politician, a statesperson to come out, take the lead and say: You know what? I'm going to do what is in the interests of Europe," Donovan suggested.

 

However, he said as the situation becomes "unremittingly bad" politicians will be forced to take "extreme action" in response to extreme volatility in global markets.

And who may I remind you was Time Magazines Man of the Year in 1938?  A statesman who negotiated "peace in our time."  Why none other than that little corporal from Austria we all know and love. 

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