Found At The October 21st

This will be our last Daily Reckoning until April 17th. So, what well-chosen words can we leave you with? How about “if,” “but” and “maybe?” Yes, dear reader, if everything continues to clunk along as it is today…maybe the world financial system will hold together until we get back. We certainly hope so. We’ve been waiting years to watch the final crack up of the phony-money system. We don’t want to miss it! But you never know. For all we know, the system is cracking up now…right before our eyes. We just don’t recognize it. Take this item from yesterday’s news. It proves that Lent is bad for you: WASHINGTON (AP) — Europe has endured the pain of layoffs, wage cuts and tax increases designed to bring government debt under control. So where’s the gain? Far from falling, debt burdens ...

Fundamental Analysis EUR "Spain is considered a far more attractive credit than Italy" - Michael Leister, rate strategist at WestLB Spain sold €6.03 billion of debt on Thursday, more than initially expected and at a lower rate compared to Italy, easing concerns the country may lose access to financial markets next year. USD "We’re seeing improvement in labor-market conditions" - Julia Coronado, chief economist at BNP Paribas The number of Americans claiming for unemployment benefits tumbled to 366 thousand last week from 385 thousand the week before, said the Department of Labor on Thursday. Economists expected the reading to increase to 389 thousand. GBP "All in all, the picture for U.K. household consumption is not very encouraging" - Annalisa Piazza, an economist at Newedge Group ...

During yesterday's press conference European Central Bank President Mario Draghi laid out 3-pillars for the “Fiscal Compact”. He also stressed the ECB will not use QE nor will it purchase unlimited amounts of European bonds. The EUR fell below the 1.33 level following the disappointing comments. Economic News USD - US Data Releases Go Unnoticed All eyes are on Europe today with the European economic summit in Brussels. Yesterday US weekly unemployment claims were overshadowed by the ECB press conference. The data showed 381k new jobless claims were filed on expectations of 397k. Inventories for the month of November rose 1.6% on consensus forecasts of a 0.4%. This hints at reduced business spending in Q4 and potentially lower year end US GDP. The data was largely ignored in favor of ...

ECB President Mario Draghi has hinted at his willingness to support European nations with additional bond purchases if European governments will move to restore investor confidence in the euro zone. But this announcement will likely only come following Friday's EU economic summit and a concrete commitment by European nations to reign in their debt and budget deficits. Economic News USD - USD Driven by European Headlines The USD is mixed as stress in Europe comes to a head over the next 2-days. There has been a lack of US economic data and therefore much of the movement in the G10 currencies have been coming on headlines from Europe. This scenario has played out over before with risky assets rising leading up to a European summit and the euphoria wearing off after the weekend. For ...

The most recent CFCT IMM data shows EUR non-commercial traders have their largest short position built in the futures market since June of last year. The one sided positioning could create a short squeeze if European leaders begin to instill a bit of investor confidence towards the end of the week. Economic News EUR - Positioning for the ECB Press Conference/Economic Summit The EUR is shrugging off the recent negative headlines as investors begin to position themselves prior to the ECB policy meeting on Thursday and the 2-day EU economic summit. Market expectations are for at least a 25 bp interest rate cut and some are calling for a 50 bp reduction in ECB interest rate. The rate decision will come 45 minutes before the main event which is the ECB press conference. Investors will be ...

Today at 8:15 GMT the market will digest Swiss CPI data for the month of November. The report is expected to show inflation rose by only 0.1%, up from a decline of -0.1% in October. The risk is the report will show another contraction in Swiss prices and may force the SNB to act again to prevent deflationary forces from creeping into the Swiss economy. Economic News USD - Non-Farm Payrolls Nothing to Brag Home About Friday's NFP data was nothing to brag home about. While the headline number was in-line above consensus forecasts of +140k on expectations of +120k the data in the report was less inspiring. Currently the 12-month average for new private job growth is just under +160k which is less than the latest jobs report. The drop in unemployment rate initially looks promising but the ...

Citing a failure of the Congressional super committee to address the US deficit Fitch moved to change its outlook on US government debt to negative from stable. Economic News USD - Fitch Warns on US Credit Rating Yesterday Fitch warned on the US credit rating. Citing a failure of the Congressional super committee to address the US deficit Fitch moved to change its outlook on US government debt to negative from stable. Technically this means there is a chance of a ratings downgrade within the next two years. This puts Fitch on the same level with Moody's and one level above S&P who downgraded the US credit rating in August, igniting a storm in the financial markets. The move by S&P to lower the AAA rating of the US fueled sharp declines in equity markets and a rush to safe haven ...

Fundamental News: Today’s highlights: • Nationwide HPI (MoM) (GB, 05:00 GMT) • CB Consumer Confidence (US, 15:00 GMT) • Private New Capital Expenditure (QoQ) (Aus, 24:30 GMT) • Current Account (CAD, 13:30) New home sales in the U.S. showed a slight increase in the month of October, as Builders sold fewer new houses in the U.S. than forecast in October. According to data released by the Commerce Department on Monday, sales of new single-family homes came in at a seasonally adjusted annual rate of 307,000 in October. The growth was largely the result of data revisions showing that the September sales rate came in weaker than initially estimated. U.S. Rating Outlook was cut to negative by Fitch Ratings following the congressional supercommittee’s inability to reach an agreement on deficit ...

The USD came off its highs yesterday versus the majors after reports in the Italian press that the International Monetary Fund (IMF) will be providing aid to Italy. These reports subsequently proved to be false. Recent price movements in the FX markets have become more and more driven by the headlines and this should continue as reports come from today's 2-day Eurogroup meeting. Economic News USD - USD Down Despite False IMF Aid Story The USD gave up a portion of last week's gains after reports of an IMF deal for Italy. The story proved false but that did not stop riskier assets from making a comeback at the expense of the USD. Both equities and higher yielding currencies such as the AUD came off of last week's lows. The main news releases this week will come from the US with today's ...