One Minute Macro Update

U.S.:  Markets up this morning. Stocks plunged and oil rallied yesterday to a two year high as instability in Libya worsens. February consumer confidence rose yesterday to 70.4 according to the Conference Board, well above market expectations of 65.5. The increase marks the index’s highest level since February 2008 and is likely due to recent stock gains and lighter unemployment rates.  The gains occurred despite a stumbling housing market as the S&P/Case-Shiller home price index fell 2.4% YoY v -2.3%E in the last twelve months ending in December.

Europe: European stocks fell for a third straight day yesterday also off of news of Libyan violence. German courts have agreed to hear arguments on the constitutional validity of Germany's participation in guaranty programs. This news comes as Germany show an even more divided political scene, as the central banks and parliament are in disagreement about a financial crisis solution. The disunity will not be helpful in the upcoming EU summits in March and instead will be a greater catalyst for further economic instability in the region. In the face of rising oil prices and Middle East instability, the IMF announced that the global economy would not be permanently affected. Meanwhile, inflation will be a problem that the ECB will have to address, according to ECB council member Yves Mersch. He noted yesterday that an ECB interest rate hike is possible and that the governing council may use harsher language in regards to inflation in its meeting next week. The BOE February meeting minutes similarly revealed that an interest rate increase is on the horizon, as several committee members pushed for the change. Eurozone industrial orders rose 2.1% last December v -1.0%E, the third consecutive month of growth.  French and Italian CPI (EU  harmonized) both rose in July at 1.8% and 1.9% YoY, respectively, versus estimates of 2.0% and 2.4%. On a MoM basis,  French and Italian CPI fell 0.3% and -1.6%.

Asia: Reports yesterday revealed that Libyan leader Muammar Gaddafi ordered the sabotage of the country’s oil production infrastructure. The ongoing turmoil hurt markets worldwide yesterday. Yesterday’s massive earthquake in New Zealand is putting a strain on the already struggling economy there. The central bank is likely to hold off on the interest rate increases that were planned for the year due to the probable economic shrinkage. Hong Kong 4Q GDP increased 6.2% YoY v 5.5%E.


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