Auto Sales

A quiet week to send off August ahead of a deluge of key data next week and as the fateful Septembr 18 FOMC announcement approaches. Still, quite a few macro events to keep track of.

• Low Wages Work Against Jobs Optimism (WSJ)
• Tourre’s Junior Staff Defense Seen Leading to Trial Loss (BBG)
• Russia gives Snowden asylum, Obama-Putin summit in doubt (Reuters)
• Fortress to Blackstone Say Now Is Time to Sell on Surge (BBG)
• Brazil backs IMF aid for Greece and recalls representative (FT), previously Brazil refused to back new IMF aid for Greece, says billions at risk (Reuters)
• Google unveils latest challenger to iPhone (FT)
• Swaps Probe Finds Banks Manipulated Rate at Expense of Retirees (BBG)
• Academics square up in fight for Fed (FT)
• Potash Turmoil Threatens England’s First Mine in Forty Years (BBG)
• Dell Deal Close but Not Final (WSJ)

While much is being made of the ISM smash this morning and China's 'official' PMI overnight, it seems cognitive dissonance is on the rise as China's 'other' PMI collapsed and US Construction Spending dropped precipitously. It was only a month ago that ISM was sub-50 and that housing (and construction spending) was set to lift us out of the growth-scare. Apparently not. But there is another pillar of this recovery that has been stalwart during the equity market rally - that of US auto sales... until now...

*FORD U.S. VEHICLE SALES UP 11%, EST. UP 17%
*GM JULY U.S. VEHICLE SALES RISE 16%, EST. UP 20%
*CHRYSLER JULY U.S. VEHICLE SALES UP 11%, EST. UP 16%

It seems that all that channel-stuffing, subprime-lending, term-extending has hit its peak as, despite smiles and being 'pleased', US auto companies are underperforming expectations (as Ferrari exceeds).

After a slow start in the week, there is a substantial pick up with announcements from the FOMC, ECB and BOE (as well as monetary policy updates from the RBI, RBA, Israel, and Czech Republic) with the possibility, if not probability, of a Fed update on tapering expectations. On Wednesday we get the much expected wholesale GDP revision which will boost "growth data" all the way back to 1929 and is expected to push current GDP as much as 3% higher, and on Friday is the "most important NFP payroll number" (at least since the last one, and before the next one), where the consensus expects a +183K print, and 7.5% unemployment. All this while earnings season comes to a close.

Dis-passionate discussion of next week's events and data, placed within a somewhat larger context.  

A brief discussion of the technical condition of the major currencies going to what is a week packed with fundamental developments.

With the Detroit bankruptcy hearing under way (constitutional crises notwithstanding), we thought it useful to cut through the rhetoric, break-down the mutally-assured-destruction barriers, and peer into the cold-hard facts as the city looks to restructure its $18 billion in debt.

Overview of the investment climate.  

"For years, the City has spent more than it takes in and has borrowed and deferred paying certain obligations to make ends meet. The City is insolvent" - Kevin Orr

Some thoughts on why US auto sales are at their strongest pace since prior to the crisis, while EU auto sales are at 20 year lows.

Last week it was JPM just somewhat contradicting Jamie Dimon's "kid gloves" CNBC infomercial, when it slashed its Q1 GDP forecast from 2% to 1% (and about to be revised to sub-stall speed). Today, following the latest retail sales unadjusted disaster, it is Goldman's turn to slash its Q2 GDP tracking estimate from 1.3% to 1.0%. Stall speed has arrived despite everyone's forecasts for the this time it's different glorious US economic renaissance (so far "deferred" each year since 2010).

• Bernanke Supports Continuing Stimulus Amid Debate Over QE (BBG)
• Portugal president wants 'salvation' deal, including opposition (Reuters)
• Egypt has less than two months imported wheat left - ex-minister (Reuters)
• A rise in long-term interest rates is creating challenges and opportunities for the largest U.S. banks. (WSJ)
• BoJ says Japanese economy is ‘recovering’ (FT)
• More Chinese cities likely to curb auto sales (Reuters)
• PC Shipments Fall for 5th Quarter (BBG)
• Property Crushes Hedge Funds in Alternative Markets (BBG)
• New aid gives Greece summer respite before showdown (Reuters)
• Rajoy Punishes Exporters Sustaining Spain’s Economy (BBG)

• Portuguese bond yields soar amid political turmoil (FT)
• Portugal Resignation Rocks European Markets (WSJ)
• Portugal, Greece risk reawakening euro zone beast (Reuters)
• Egypt’s military chiefs hold crisis meeting as Mursi snubs ultimatum (Al Arabiya)
• Egypt Crisis Deepens as Mursi Refuses to Step Down (BBG)
• Hidden microphone found in London embassy: Ecuador (AFP)
• Health Law Penalties Delayed (WSJ)
• Rise in mortgage rates cut into homebuyer demand last week (Reuters)
• Bolivia angered by search of president's plane, no sign of Snowden (Reuters)
• Olympus ex-chairman gets suspended sentence (FT)

This piece is timely as markets spit up the punch from Bernanke's bowl

• Whale of a Trade Revealed at Biggest U.S. Bank With Best Control (BBG)
• ECB backs away from use of ‘big bazooka’ to boost credit (FT)
• Turkish unions join fierce protests in which two have died (Reuters)
• Europe Floods Wreak Havoc (WSJ)
• Beheadings by Syrian Rebels Add to Atrocities, UN Says (BBG)
• RBA Sees Further Rate-Cut Scope as Aussie Remains High (BBG)
• China’s ‘great power’ call to the US could stir friction (FT)
• J.C. Penney Continuing Ron Johnson’s Vision on the Cheap (BBG)