8th
“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
Some interesting commentary on the basically in-line data from this morning…
——-
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%.
This morning, Goldman put out these three currency trades
—————
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.
Just modestly at this point, but a bit of a slide after two wild up-days.
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.
What a ridiculous day.
But first, the scoreboard:
Dow: +44.73
NASDAQ: +37.06
S&P 500: +10.60
And now, the top stories:
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.
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.