Succinct summation of week’s events:
Positives:
1) More US fiscal stimulus coming
2) Maybe we’re finally at end game with Greece that would dramatically cut their debt. It may be a contagious mess but a process that needs to happen. Germany prepares banks, other Gov’ts likely to follow
3) Italian Senate passes updated budget program, we await lower House vote
4) Indonesia, South Korea, Philippines and Malaysia back off from further rate hikes
5) Aug ISM services index unexpectedly rises
6) July Trade Deficit shrinks by $7b, exports rise to record high, Aug though likely different
7) China economic data eases pressure on PBOC to tighten further
Negatives:
1) Short term fiscal stimulus only lasts short term, we need permanent policy changes
2) Greece on verge of outright default as having difficulty meeting Bailout conditions. If were to occur, can it be contained? Likely not at first
3) European bank stress intensifies, euro basis swap widest since Dec ’08, 3 month euribor/OIS spread back at Mar ’09 levels
4) Canada and Australia both report unexpected job losses in Aug
5) Initial Jobless Claims 9k higher than expected at 414k
6) Even with a mortgage rate of just 4.23%, refi apps fall 6.3%, lower for a 3rd straight week and purchases rise just .2%
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