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Daily US Opening News And Market Re-Cap: September 1
From Ran Squawk
- Worse than expected manufacturing PMI figures from core Eurozone countries dented risk-appetite
- Equities came under further pressure following news that Credit Agricole is removed from EuroSTOXX 50 Index, whereas Societe Generale, Intesa Sanpaolo and Unicredit are removed from STOXX Europe 50 Index
- Risk-aversion was enhanced following a lack-lustre 5-year bond auction from Spain
- The French/German spread continued to widen throughout the session partly on the back of weaker manufacturing PMI from France
- According to an article in FT, citing European source, the IMF has estimated European banks could face a capital shortfall of EUR 200bln. However, Eurozone officials strongly disagreed with the IMF’s analysis.
Market Re-Cap
European equities and the EUR currency came under extensive pressure following worse than expected manufacturing PMI data from core Eurozone countries like Germany, France and Italy, which dented appetite for risk and promoted flight to safety. Equities came under further pressure following news that Credit Agricole is removed from EuroSTOXX 50 Index, whereas Societe Generale, Intesa Sanpaolo and Unicredit are removed from STOXX Europe 50 Index. Risk-aversion was enhanced following a lack-lustre 5-year bond auction from Spain, which also observed widening of the Spanish/German 10-year government bond yield spread. However, later in the session traders noted that the ECB is back in the market following the Spanish auction. Meanwhile, the French/German spread continued to widen throughout the session partly on the back of weaker manufacturing PMI from France, which registered its first contraction since Jul'09. In other news, EUR came under further pressure following comments from EU's Barroso that the EU is working towards a new aid package for Greece, whereas USD, CHF and JPY remained the major beneficiaries of risk-aversion.
Moving into the North American open, markets look ahead to a slew of economic data from the US in the form of jobless claims, ISM manufacturing, nonfarm productivity, and vehicle sales. In fixed income, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Mar'14-Aug'15, with a purchase target of USD 2.5-3bln is scheduled for later in the session.
Asian Headlines:
According to the Economic Observer, the PBOC may cut reserve requirement ratios for medium- and small-sized banks to spur lending to small businesses. Meanwhile, Chinese Premier Wen Jiabao signalled that controlling inflation will remain a top priority in coming months even as the world economy wobbles. (Economic Observer/Qiushi)
· Chinese Manufacturing PMI (Aug) M/M 50.9 vs. Exp. 51.0 (Prev. 50.7)
· Chinese HSBC Manufacturing PMI (Aug) M/M 49.9 vs. Prev. 49.3 (RTRS)
US Headlines:
The White House will release its mid-session review of President Obama’s fiscal 2012 budget proposal on Thursday afternoon according to an administration official. Meanwhile, Treasury Secretary Geithner will meet with a Fed advisory group for discussions on the economy and job. (RTRS/Sources)
EU and UK Headlines:
According to a European source, the IMF has estimated European banks could face a capital shortfall of EUR 200bln. The figure has prompted a fierce response from European officials who said the analysis was misleading. (FT - More)
· Eurozone Manufacturing PMI (Aug F) M/M 49.0 vs. Exp. 49.7 (Prev. 50.4), first contraction since Sep'09
· German Manufacturing PMI (Aug F) M/M 50.9 vs. Exp. 52.0 (Prev. 52.0), lowest since Sep'09
· French Manufacturing PMI (Aug F) M/M 49.1 vs. Exp. 49.3 (Prev. 50.5), first contraction since Jul'09
· Italian Manufacturing PMI (Aug) M/M 47.0 vs. Exp. 49.2 (Prev. 50.1)
· UK Nationwide House Prices SA (Aug) M/M -0.6% vs. Exp. 0.0% (Prev. 0.2%, Rev. 0.3%)
· UK Nationwide House Prices NSA Y/Y -0.4% vs. Exp. 0.4% (Prev. -0.4%) (RTRS)
· Spanish bond auction for EUR 3.62bln, 4.25% 31-Oct-2016, bid/cover 1.76 (yield 4.489%)
· French OAT auction for EUR 3.565bln, 5.00% 25-Oct-16, bid/cover 1.798 (yield 1.93%)
· French OAT auction for EUR 3.020bln, 3.25% 25-Oct-2021, bid/cover 2.31 vs. Prev. 1.93 (yield 2.90% vs. Prev. 3.490%)
· French OAT auction for EUR 1.230bln, 4.50% 25-Apr-2041, bid/cover 2.224 vs. Prev. 2.18 (yield 3.72% vs. Prev. 4.310%)
· UK Conventional Gilt auction for GBP 3bln, 3.75% Sep'21, bid/cover 1.99 vs. Prev. 2.16 (yield tail 1BPS vs. Prev. 0.2BPS) (RTRS)
EQUITIES
European equities came under extensive pressure following worse than expected manufacturing PMI data from core Eurozone countries like Germany, France and Italy, which dented appetite for risk and promoted flight to safety. Equities came under further pressure following news that Credit Agricole is removed from EuroSTOXX 50 Index, whereas Societe Generale, Intesa Sanpaolo and Unicredit are removed from STOXX Europe 50 Index. A lack-lustre 5-year bond auction from Spain, together with comments from EU’s Barroso that the EU is working towards a new aid package for Greece also weighed on sentiment. Moving into the North American open, equities continue to trade lower with basic materials and industrials as the worst performing sectors.
FX
Worse than expected manufacturing PMI data from core Eurozone countries, together with comments from EU’s Barroso that the EU is working towards a new aid package for Greece also weighed on the EUR currency. Elsewhere, USD, CHF and JPY remained the major beneficiaries of risk-aversion, which also weighed on commodity-linked currencies. In other news, GBP came under pressure partly after the British Chamber of Commerce cut its growth forecast for the UK. The British Chambers of Commerce cut its forecast for GDP growth this year to 1.1% from the 1.3% in its June quarterly forecasts, while for 2012 it lowered its forecast to 2.1% from 2.2%.
COMMODITIES
WTI crude and Brent crude futures trade lower today on USD strength caused by renewed concerns over the European debt crisis and continuing WTI weakness from yesterday’s larger-than-expected build in US crude inventories.
Oil & Gas News:
· Libya’s significant oil reserves are expected to loom large over today’s international conference in Paris to discuss the country’s political future, according to reports.
Geopolitical News:
· Saadi Gaddafi has said he is officially empowered to negotiate with the anti-Gaddafi forces, telling Al Arabiya TV that he contacted the Libyan rebel commander to end the bloodshed. Saadi Gaddafi also vowed to continue the resistance against the Libyan rebel forces. Meanwhile, leaders of the Libyan uprising will sit down with world powers today to map out the country’s rebuilding.
· Libya’s Gaddafi is believed to be in Bani Walis, southeast of Tripoli according to the Libyan interim council military commander.
Full report:
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Could this be true the "Kwisatz Haderach" of money printing across the globe are actually running out of....money?
Just like the Eurozone officials, I also disagree with the IMF.
I DON'T BELIEVE THERE IS A 200 BILLION SHORTFALL FOR THE BANKS!!!!
2 Trillion is more like it....
The shortfall in immediately needed capital in Eurozone banks is a minimum of 1 trillion, and is probably easily closer to +50% that amount (I'll try to find the link which breaks it down and supplement this post when I do find it).
Remember, that's just what they'll need to raise over the short term, in order to fend off a breaking of the buck....errr EUR style event.
This is what happens when you have depositors in Italy, Spain, Greece and Portugal (soon to be Ireland, Britain and France) pulling money out of banks and stuffing it into their basement walls/ceilings and under their mattresses, as they genuinely fear a banking implosion (and who could blame them?).
from the eia: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.3 million barrels from the previous week. At 357.1 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.8 million barrels last week and are in the upper limit of the average range...
Interesting since the official data only shows net withdrawals of 30m bbls.
http://www.spr.doe.gov/dir/dir.html
Jim grant is on CNBS right now advocating the gold standard and is getting prison raped by a panel of about seven fiat cronies...
They didn't let him finish any statement..pissed me off
and so it goes. To the uninformed observer, it seems to be a rout. The assumption being that the % of those for and against reflects reality. Which then, over time, becomes reality in a world where consensus is created a "news" segment at a time. Pick a topic, any topic, rinse and repeat.
This is what the set of CNBC will look like if there's no further QE, one day soon (replace 'words on teleprompter' with 'QE'):
Squawk Box: CNBullShit
S&P500 big picture remains bearish and this will ALWAYS exert the most influence. The only thing GUARANTEED is that the bearish medium/long term cycle will have the upper hand.
FX medium to long term outlook continues: Euro bearish and USD bullish.
As mentioned many times - bring on the OVERDUE USD rally.
IMPORTANT CHART HERE.
http://stockmarket618.wordpress.com
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