Joseph Weisenthal

Goldman Basically Buries NGDP Targeting

“Of the devices that may be used to buttress the commitment to a new target, several—fiscal policy most obviously, but in the Fed’s case any expansion of the kinds of assets being purchased—would need legislative approval even if the target itself did not.” — Dominic Wilson, Jan Hatzius and Sven Jari Stehn

Nomura On The Import Prices Data

Some interesting commentary on the basically in-line data from this morning…

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Import prices declined by 0.4% in August (+13.0% y-o-y), in line with Nomura expectations, but less than consensus (-0.8%). Two volatile headline price categories, petroleum (-2.1%) and food (-0.8%), were responsible for the decline in August. Barring the effect of a lower petrol price, non-petroleum prices increased by 0.3%, bringing them to their fastest year-over-year pace (5.5%) since September 2008. Elsewhere, industrial supplies (affected by lower petrol prices) declined by 0.9%. Import prices for consumer goods excluding autos increased by 0.3% in August and were up 2.0% y-o-y. In a recent article, New York Federal Reserve Bank economists found that “U.S. import prices for consumer goods shipped from China have been rising rapidly in recent quarters—by 7 percent between 2010:Q2 and 2011:Q1”. Export prices increased by 0.5% in August with a large contribution from sharply higher food prices (+3.4%) and a rebound in industrial supplies (+0.4%). We expect producer prices, which are the next measure in the inflation pipeline, to increase by 0.5% in August with core PPI increasing by 0.4%.

3 Short-Term Recommended Currency Trades From Goldman Sachs

This morning, Goldman put out these three currency trades

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The following trading ideas from the Global Markets Group reflect shorter-term views, which may differ from the longer-term ‘structural’ positions included in our ‘Top Trades’ list further below.

In FX:

1) Close long EUR/TRY, opened at 2.1620 on 9 February 2011, after closing below the trailing stop for a potential return of 9%.

2) Stay long EUR/$, opened at 1.4085 on 18 March 2011, with a target of 1.50 and a stop on a close below 1.35, now at 1.3611.

3) Stay short USD against a basket of NZD, RUB, SEK, KRW, MYR and CLP, opened at 100 on 10 August 2011, with a target of 105 and a stop on a close below 98, now at 98.3.

BREAKING: DOJ In Criminal Of eBay Employees

Reuters bombshell.

FUTURES DRIFTING LOWER AFTER HOURS

Just modestly at this point, but a bit of a slide after two wild up-days.

Why The Rumored Brazil Bailout Of The Eurozone Is Outrageous

Amid a rumor-filled day, one that stood was the chatter about the BRICS nations possibly working together to bail out Europe.

The rumors seemed to be emanating out of the Brazil camp, but there were also rumors relating to China and Russia, so maybe that’s not that important.

Regardless, the whole thing is scandalous and absurd because, despite the European sovereign debt mess, Europe is actually very rich, and Brazil and China and Russia and South Africa are very poor.

Brazil, for example, is 71st on GDP per capita. China is 94

The only reason they’re in a position to bail out Europe is because Europe has a screwed up economic system, where countries don’t control their own currencies, and because we’re a slave to accounting and the idea of central bank credibility, preventing the ECB from going whole-hog on the monetization front.

So because of totally contrived institutions — these dumb pseudo countries that don’t have their own currencies — and a silly belief in numbers, we’re getting this situation where the poor most pony up to bail out the rich.

Outrage.

STOCKS MAKE GIGANTIC COMEBACK ON RIDICULOUS DAY OF NEWS: Here’s What You Need To Know

What a ridiculous day.

But first, the scoreboard:

Dow: +44.73
NASDAQ: +37.06
S&P 500: +10.60

And now, the top stories:

• Yesterday was wild, as markets saw gigantic Europe-selling in the morning, followed by a huge comeback. Today was similar, except there were tons more headlines, and the entire seesaw took place before the market even opened.

• Things were briefly positive when the opening bell rang in Europe, as markets raced to catch up with yesterday’s big rally. But things collapsed really quickly, as markets keyed off of a controversial column in the Wall Street Journal, citing an anonymous BNP Paribas executive saying that the bank had run out of dollar-funding options. French bank stocks, which have already been getting slammed on Greece fears/downgrade rumors got crushed for the second day in a row. BNP Paribas fell over 10% at one point. Not long after the article came out, the company came out and said it was still able to access dollar funding, and that put a floor on the market, which rebounded.

• Then in the early going, a rumor came via Reuters that Nicolas Sarkozy and Angela Merkel were going to give a press conference on some matter related to Greece. One report even indicated that they were going to announce some sort of action. Stocks surged on that, moving from violently negative to significantly higher. And then not long after that, the rumor was denied! There would be no Merkel/Sarkozy press conference, just the possibility that Sarkozy might make some comments to the press later in the day — certainly falling short fo any real action.

• But that wasn’t it for European headlines. Later in the day it was reported (and confirmed!) that on Wednesday Merkel, Sarkozy, and Papandreou would hold an emergency call. It’s not clear whether that’s really good or bad, but at least it’s definitely happening. In the early afternoon, there was a report about how Geithner would urge the Germans to expand the EFSF, but then later in the day that was denied. And finally, there was a rumor about how the Dutch Finance Minister had called a Greek default inevitable, but then that was denied, with the Dutch claiming that all they were doing was exploring the various options.

• Oh, and also, there are rumors about a bailout of Europe from the BRICs (possibly in coordination with each other!), but who knows. And remember that rumor from yesterday about China buying Italian bonds. Well it turns out that the only talks have been about China buying Italian industrial assets, not bonds.

• In terms of domestic news, it was mercifully pretty quiet. Shares of Best Buy got slammed to the tune of 6.3% after reporting bad earnings. There continued to be more jousting on the matter of the President’s jobs bill, with Republicans getting a bit more aggressive in their opposition. Also: Late in the day, Harry Reid talked about introducing a new anti-China currency bill in the Senate, and that briefly seemed to rattle equities, though ultimately not for very long.

• In the end: We got a big rally, and are set up for more furious days ahead, with gigantic uncertainty.

• Meanwhile, for the best reading of the day, Check out Citi’s WIllem Buiter on what happens if Greece leaves the Euro >

Drinks tonight

I’m having a big Chinese feast next Thursday (details here), but tonight (9/2/11) is my actual birthday.

So I’m gonna do the cliche thing and get drinks at Tom & Jerry’s at 8 tonight.

Y’all should come. I promise to engage in non-stop talk about the economy, the debt, the fallacy of the 90% debt-to-GDP ration, and the deleveraging cycle. Will be very fun.

YOU’RE INVITED! Joe’s 31st Birthday Chinese Food Feast

Dear everyone,

I’m turning 31*, and I would be thrilled if you would join me to eat a monster Chinese feast at my favorite restaurant in the city: The Grand Sichuan on Canal Street at 7:00 PM on September 8th (a Thursday).

The idea is this: We’ll pack the place to the gills, and then order a gigantic variety of dishes on the menu so we can try everything.

Because I want to try so many different dishes, you should come even if I barely know you, or you don’t live in NYC, or you don’t like me and don’t want to talk to me (very plausible, and totally fine).

Afterwords, we’ll go Karaokeing for the rest of the night until around 4:00 AM at which point I’ll just head to my office and start covering the early going in the European markets.

Anyway, we did this last year, and it was awesome, and I want this year to be 10 times better.

Bring anyone you want, or anyone I’ve forgotten or whatever.

Joe

*You may not think 31 is a big milestone, but I like prime numbers, and I won’t be a prime again until 37.