Frontrunning: August 30

• IASB criticises Greek debt writedowns (FT)
• ECB to reassess inflation risks (FT)
• Pimco's Gross rues US debt 'mistake' (FT)
• Trichet and Rehn defend Europe’s banks (FT)
• Japan Parliament Confirms Noda as Prime Minister (WSJ)
• Sino-Forest is Second Time Chan Loses Company (Bloomberg)
• US authorities assess hurricane’s aftermath (FT)
• Solar Purge Drives Weakest Into Buyouts (Bloomberg)
• Republicans to Unveil Bill to Force Major Changes at the UN (Bloomberg)
• Japan Jobless Rate Rises, Retail Sales Drop (Bloomberg)
• UAW Wants Higher Wages for New Auto Workers (Bloomberg)
• Brazil Puts Aside Cash in Bid to Curb Prices (WSJ)
• RBI Proposes Tougher Capital, Sale Rules for New Banks (Bloobmerg)

European economic update:

• Eurozone Business Climate Indicator for August 0.07 - lower than expected. Consensus 0.10. Previous 0.45. Revised 0.44.
• Eurozone Consumer Confidence for August -16.5 - higher than expected. Consensus -16.6. Previous -16.6.
• Eurozone Economic Confidence for August 98.3 - lower than expected.Consensus 100.2. Previous 103.2. Revised 103.0.
• Spain CPI for August 2.9% y/y - higher than expected. Consensus 2.8% y/y. Previous 3.1% y/y.
• Italy Retail Sales for June -0.2% m/m -1.2% y/y - lower than expected.Consensus 0.1% m/m -0.8% y/y. Previous -0.1% m/m -0.6% y/y. Revised -0.2% m/m -0.4% y/y.
• US Consumer Confidence for August. Consensus 52.0. Previous 59.5.

Global headlines courtesy of Egan-Jones

• Asia stocks gain, Bond risk drops on growth outlook.
• Euro-zone Aug. economic sentiment indicator falls to 98.3 in Aug from 103.0 in July.
• IASB encourages larger Greek bank writedowns.
• Italy scraps tax on high earners and scales back cuts to local authority funding.
• Japan's retail sales rose 0.7% in July, slowing from a revised 1.2% gain in June.
• US Consumer spending grew by 0.8% in July, the largest increase in five months.
• ANZ in 'embryonic' talks to buy Aozora Bank.
• BofA said it plans to sell 13.1B shares of China Construction Bank, to raise $8.3B from the sale.
• CACI reaches deal with Bank of America to buy back 4M shares.
• Casella Waste beats by $0.03, posts Q1 loss of $0.12/sh. Revs rose 4.3% to $127.2M.
• Donaldson Co.'s Q4 net jumped 29% to $65.8M; revs up 21% to $625.5M. Reiterates 2012 f'cast.
• Green Mountain Coffee to sell its office coffee-service unit for $145M in cash.
• Imation Corp. acquired assets of data storage technology company ProStor Sys.
• Lowe's is shrinking its executive mgmt team as part of a decision to revamp its ailing US ops.
• Magna Intl invests $439M in electric vehicle research and development.
• Peabody, Arcelor sweeten offer to acquire Macarthur Coal for $5.2B.
• Sony, Toshiba and Hitachi Ltd. have reached a basic agreement to set up a small LCD panel JV.
• Universal Display Corp. said it entered into a license agreement with Panasonic Idemitsu.
• US Army hires General Dynamics for $3.7B in technology work.
• Venoco Inc. received a takeover offer valuing it at $770M from its CEO and majority shareholder.
• Vodafone, Largo explore possible merger of Vodafone Greece and Wind Hellas.
• Winn-Dixie Stores' Q4 net slid 48% amid weaker gross margins and lower sales.

Economic Calendar: Case-Shiller Index, Consumer Confidence, FOMC Minutes to be released today.

Earnings Calendar: BKS, CHINA, DG, LTRX, SCMR, UNIS.

Comments

[mantrid]

More frontrunning

It's not exactly the Bernank trick with a chopper but after announcing expected 2% inflation in eurozone Trichet seems to have started liquidity injections nowhere else than in Maastricht - where the (in)famous convergence criteria were once set only to be bluntly ignored by everyone.

[Sudden Debt]

There is something very funny happening in Europe.

Every European country has a hughe inflation index this year and suddenly food prices have dropped bigtime causing the inflation to drop.

Nothing spectacular...

BUT

The weather was a bitch in Europe this summer. Fruits and vegetables had one of the worst crops ever!

AND YET THE PRICES HAVE DROPPED WHOLESALE 80%!

And here comes the fun part:

You would think that the farmes would be bleeding financially BUT the EU subsidizes them and cover all their losses!

SO: The index may be down, but the cost still goes to the taxpayer.

And in the store, you'll only see a 5% drop in prices.

I guess they'll try everthing now to make inflation go lower before the end of the year before wages are adjusted to inflation.

[anynonmous]

The real effects of debt

Change in Household debt as a percentage of GDP by Country

Abstract

At moderate levels, debt improves welfare and can enhance growth. But high levels can be damaging. When does the level of debt go from good to bad? We address this question using a new dataset that includes the level of government, non-financial corporate and household debt in 18 OECD countries from 1980 to 2010. Our results support the view that, beyond a certain level, debt is bad for growth. For government debt, the threshold is in the range of 80 to 100% of GDP. The immediate implication is that countries with high debt must act quickly and decisively to address their fiscal problems. The longer-term lesson is that, to build the fiscal buffer required to address extraordinary events, governments should keep debt well below the estimated thresholds. Up to a point, corporate and household debt can be good for growth. But when corporate debt goes beyond 90% of GDP, our results suggest that it becomes a drag on growth. And for household debt, we report a threshold around 85% of GDP, although the impact is very imprecisely estimated.

http://www.bis.org/publ/othp16.pdf

[sudzee]

OT: Holding Liberty dollars? This from Coin World.

Federal officials now say that Liberty Dollars may be subject to seizure as "contraband."

The U.S. Attorney's Office that prosecuted NORFED founder Bernard von NotHaus states that individuals owning Liberty Dollars could have them confiscated, even if they are just holding them in their collection or displaying them for educational purposes, a reversal of earlier comments from the same office. In addition, a U.S. Secret Service official stated that while he could not offer a formal ruling, he suggested that Secret Service agents would be duty-bound to confiscate the medallions once marketed as an alternative currency before the arrest and conviction of von NotHaus on federal charges, including counterfeiting.

Concerns about the possible confiscation of the medallions led ANA officials to reject a collector's request to exhibit his collection of Liberty Dollars during the recently concluded ANA World's Fair of Money.

[spanish inquisition]

I guess the secret service is about to sweep the country then...

http://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States

[disabledvet]

Market has been front running Fed for two years. U missed the soaring value of treasuries? Sorry to hear that. More to come? You all are the ones saying QE is guaranteed.

[shacai]

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