Succinct summation of week’s events:
Positives:
1) For asset prices ONLY, more QE from the Fed
2) Preliminary Sept UoM confidence jumps 5 pts led by the Outlook
3) MBA said refi’s rose 11.9% and purchases up 8.1%
4) NFIB small biz optimism index up 1.7 pts off lowest since Oct
5) July Business Inventories rise twice expectations and matched by rise in sales
6) German Court blesses ESM
7) UK jobless claims unexpectedly falls
8) China’s Aug loan growth rise 100b yuan above forecast and CPI, PPI, retail sales and IP about in line with estimates
9) Japanese machinery orders in July rise more than expected.
Negatives:
1) More Fed QE: mortgage rate spread decline to treasuries offset by jump in 10 yr yield (highest since May) so mortgage rates unch, CRB index up 20% from late June low, CPI index in Aug rises to record high squeezing those whose wages are stagnant, 10 yr implied inflation expectations spike 20 bps to highest since May ’11, Fed further clogs balance sheet with longer term securities, US$ gets pounded, I guarantee a nasty recession when Fed has to unwind its balance sheet whenever that might be in our lifetime but the bond market will likely force it
2) Aug core Retail Sales unexpectedly falls for 3rd month in the past 5
3) Initial Jobless Claims total 382k, 12k more than expected but mostly due to hurricane
4) Aug IP weak across the board
5) PPI up large 1.7% and CPI up .6% m/o/m but core rates benign
6) China imports in Aug unexpectedly drops and exports rise less than est
7) India IP in July up just .1% and Aug inflation jumps
8) Spanish 2 yr yield jumps 40 bps as Spain backs away from asking for help.
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