Daily Digest

Daily Digest 12/14 - Germant May Boost ECB Capital, US Retail Sales RIse, Euro May Gain Versus Dollar

Tuesday, December 14, 2010, 11:00 AM
  • Just Another Manic Monday – Stagflation Official in China
  • China to Appeal Trade Ruling on Tire Dispute
  • Official: Germany Willing To Boost ECB Capital
  • U.S. Retail Sales Rise Above Forecast as Consumers Recover
  • Wall Street Set For Higher Open As Retail Sales Rise
  • Belgian Bonds Fall on S&P Outlook Cut as Debt Crisis Spreads
  • Euro May Gain Versus Dollar on Two-Year Notes Yield Spread, Citigroup Says

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Economy

Just Another Manic Monday – Stagflation Official in China (ilene)



We are crushing our levels as the market flies ever higher.  Our 11,500 target on the Dow looks sure to be tested and we’re already flipping bullish with our "Breakout Defense" trades, in which our goal is to make 5,000% in 5 trades or less.  We are not ashamed to jump on the bullish bandwagon – if they are giving away money, we’ll stand in line with everyone else, only we’ll take a larger share – thank you very much.  We certainly know how to use leverage just like a Bankster – we have a spread and we’re not afraid to use it!  

China to Appeal Trade Ruling on Tire Dispute



China had gone to the WTO to challenge President Barack Obama's decision in September 2009 to levy tariffs of up to 35% on Chinese tires in response to what the U.S. said was a surge in tire imports from China that was hurting U.S. competitors. The case was an emotional one, since the U.S. move made use of a so-called safeguard mechanism, spelled out in China's WTO accession agreement, that is unique to China and allows trading partners to restrict imports from it without meeting the same burden of proof required for other countries' goods.

Official: Germany Willing To Boost Ecb Capital



The bank's balance sheet has been strained over the past year as it has bought up bonds from governments with shaky finances such as Greece, Ireland and Portugal. The bond purchases, which drive down yields and stabilize bond markets, have been a key step in the easing of market turmoil in recent weeks. The bank has been under pressure to step up its purchases to help keep surging funding costs from pushing Portugal, or more dangerously much larger Spain or Italy, into seeking an international bailout.

U.S. Retail Sales Rise Above Forecast as Consumers Recover



Purchases increased 0.8 percent, following a 1.7 percent gain in October that was larger than previously estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 0.6 percent rise. Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales climbed 0.9 percent, the most since August.

Wall Street Set For Higher Open As Retail Sales Rise



Sales at U.S. retailers rose more than expected last month, more evidence the economic recovery gathered steam in the fourth quarter. "Up to about a week ago there was some vast outperformance out of the retail stocks that things would be better looking at the holiday season, and you're seeing this come to the headline news now," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut. Futures dipped briefly after Best Buy reported a decline in quarterly results and same-store sales and cut its full-year outlook, citing weak demand in its key U.S. market. The stock fell 13 percent to $36.34 in premarket trade.

Belgian Bonds Fall on S&P Outlook Cut as Debt Crisis Spreads



The extra yield, or spread, investors demand to hold 10- year Belgian bonds instead of benchmark German securities widened after S&P lowered the outlook to negative from stable. Belgium’s “prolonged domestic political uncertainty poses risks to its government’s credit standing, especially given the difficult market conditions many euro-zone governments are facing,” analysts including Marko Mrsnik, a Madrid-based analyst at the rating company, said in a note today. The yield on Belgian 10-year bonds rose four basis points to 4.03 percent at 11:48 a.m. in London. That sent the yield spread with German bunds five basis points wider to 105 basis points, the most in a week.

Euro May Gain Versus Dollar on Two-Year Notes Yield Spread, Citigroup Says



“With the European Central Bank still perceived as more hawkish than the Fed, euro-dollar should continue to receive cyclical underpinning by the two-year rate differential,” Valentin Marinov, a currency strategist at Citigroup in London, wrote in a report today. “There may be indications by the Fed that it could accelerate its bond purchases going forward if the upside pressures on the Treasury yields persevere.” The euro gained 0.1 percent to $1.3401 as of 2:21 p.m. in London, leaving it up 1.3 percent over the past two days.

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6 Comments

cmartenson's picture
cmartenson
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Re: Daily Digest 12/14 - Comments now enabled.

Now with comments enabled!

saxplayer00o1's picture
saxplayer00o1
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Posts: 4238
Re: Daily Digest 12/14 - Germant May Boost ECB Capital, US ...

"Dec. 14 (Bloomberg) -- Spain sold 2.5 billion euros ($3.4 billion) of Treasury bills, below the maximum target for the auction, as contagion from Ireland’s bailout prompted a surge in the country’s borrowing costs.

The Treasury sold 1.99 billion euros of 12-month bills and 523 million euros of 18-month bills, the Bank of Spain in Madrid said today. The average yield on the 12-year bills was 3.449 percent, compared with 2.363 percent when similar-maturity securities were sold on Nov. 16, and the 18-month paper yielded 3.721 percent, up from 2.664 percent in November. The Treasury set a maximum target of 3 billion euros for the auction."

"OLYMPIA, Wash. (AP) — Washington Gov. Chris Gregoire is asking the Legislature to make changes to the state's health care and pension systems to help address costs as the state grapples with a projected $5 billion deficit for the next two-year budget.

Gregoire told reporters Monday she is proposing ending automatic yearly pay increases for some state pension plans, a move she says would save the state $368 million for the 2011-2013 budget and would cut the state's unfunded pension liability of $7 billion by nearly 60 percent."

"New York state’s deficit may be 22 percent wider than estimated by the Budget Division because tax revenue, including from Wall Street bonuses, may be less than expected.

The division has forecast a 13 percent increase in taxable cash bonus payments to $39.7 billion, according to Erik Kriss, a spokesman. By contrast, Options Group, an industry consultant, estimates the annual payments will drop from a year earlier. Capital gains revenue also may fall short of estimates. "

"Boston — Massachusetts taxpayers have delivered more revenue to the state Treasury nearly every month since October 2009, but the Patrick administration still faces a significant budget gap largely because of soaring costs in the state Medicaid program, which has attracted almost a quarter million new enrollees since June 2006 while playing a major role in helping Massachusetts achieve the lowest rate of uninsured individuals in the nation."

"The combined unfunded liability of the Virginia Retirement System and other state-supported pension plans amounts to $17.6 billion, a report by the legislature's watchdog agency concluded Monday.

That means that contributions by the state and local governments likely will have to increase in the next biennium, said Tracey Smith, an analyst with the Joint Legislative Audit and Review Commission."

"SEATTLE, Dec. 13, 2010 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today released the latest update to the Milliman 100 Pension Funding Index, which consists of 100 of the nation's largest defined benefit pension plans. In November, these plans experienced asset decreases of $8 billion and liability increases of $14 billion, resulting in a $22 billion decrease in pension funded status for the month. November's decline in funded status follows two months of improvement and leaves the pension funding deficit at $335 billion."

 

  • Other news, headlines and opinion:

S&P Says Could Downgrade Belgium Within 6 Months

France's Sarkozy says time to consider SDR role

China to raise inflation target in dovish signal

Household debt nears 900 trillion won (Korea)

US Senate Advances $858 Billion Extension for Bush-Era Income Tax Cuts

Cash Crunch Means RBI Seen Buying 300 Billion Rupees of Debt: India Credit (India)

Yahoo preparing to lay off 600 to 700 workers

Flint moving ahead with police layoffs, after city breaks murder rate record

Moody's: November CMBS Delinquencies Up; Office Space Hurt

Minnesota faces 'unsustainable burden' for long-term care

Europe should rescue banks before states (George Soros.....Financial Times)

Trichet Calls for `Maximum' Flexibility of Region's Rescue Fund

State wants Illinoisans to pay web taxes

pinecarr's picture
pinecarr
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Posts: 2259
Eurozone debt crisis spreads to Belgium

Per Ambrose Evans-Pritchard's latest, "Eurozone debt crisis spreads to Belgium on rising political risk", at http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8202422/Eurozone-debt-crisis-spreads-to-Belgium-on-rising-political-risk.html 

Europe's debt woes have moved closer to the core of monetary union after Standard & Poor's threatened to downgrade Belgium over the failure of Flemings and Walloons to form a government.

Also at the Telegraph, "US will lose AAA credit rating, says M&G's Jim Leavis", at http://www.telegraph.co.uk/finance/economics/8202225/US-will-lose-AAA-credit-rating-says-MandGs-Jim-Leaviss.html

A leading fund manager has warned that the world's largest economy will be downgraded within two years because of its high levels of debt.

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Re: Daily Digest 12/14 - Germant May Boost ECB Capital, US ...

Yuan demand heats up currency markets

http://www.theaustralian.com.au/business/markets/yuan-demand-heats-up-currency-markets/story-e6frg91o-1225970920767

"This is the beginning of a new era," said Norman Chan, head of Hong Kong's central bank. "This is a step moving to full convertibility of the yuan, and is a major change of the international financial landscape."

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2259
Re: Daily Digest 12/14 - Germant May Boost ECB Capital, US ...

Good article, DTM!  I  would be curious to hear what Chris and/or others have to say on what the Yuan coming more into play globally, as described in the article, means to the overall assessment (including timing) of how things unravel...er...I mean unfold.

mobius's picture
mobius
Status: Silver Member (Offline)
Joined: May 18 2009
Posts: 160
Re: Daily Digest 12/14 - Germant May Boost ECB Capital, US ...
Damnthematrix wrote:

"This is the beginning of a new era," said Norman Chan, head of Hong Kong's central bank. "This is a step moving to full convertibility of the yuan, and is a major change of the international financial landscape."

Sorry folks, I'm a novice here. Can anyone explain how the yuan's peg to the USD $  was eased in June.  I thought that the Chinese state controlled the FOREX and not the markets.

 

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