Thursday, February 25, 2010

Economic/Bernanke Headlines 02.25.10

Economic/Bernanke Headlines

·         Initial jobless claims climbed to 496,000 in the week ending February 20 from 474,000 in the week ending February 13 and 442,000 in the week ending February 6. Claims are at their highest level since mid-November. Some technical factors are at work in the latest week, but the bottom line is that the pattern of claims in recent weeks is sending a concerning signal on labor markets. Claims fell steadily from April 2009 through the end of the year, but now they seem to be stalling at an elevated level.  A Reinhart 

·         Durable goods - The details of the January durables report were weak: ex-transportation orders were down 0.7% and core (nondefense, ex-aircraft) capital good orders fell 2.9%, the biggest tumble in this indicator of capital spending since last April. While these number are bad, as we argued in our preview of this number there is a predictable seasonality which tends to boost machinery orders in December and depress them in January. Looking at the December-January numbers together, or looking at aggregates that strip out machinery orders, sends a much less alarming message.  Feroli

·         Bernanke issued responses to some questions from Senators this morning - this line is getting attention - "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece. ... Credit default swaps are properly used as hedging instruments. The SEC, of course, has been interested in this issue. Obviously, using these instruments in a way that potentially destabilizes a company or a country is counterproductive. I'm sure the SEC will be looking into that. We'll certainly be evaluating what we learn from the activities of the holding companies that we supervise here in the U.S."

·         China yuan - a group of bipartisan senators sent a letter to Commerce Sec Locke on Thurs, urging the WH to act "urgently" to investigate allegations that the Chinese gov't is keeping its currency artificiallyu low - DJ



·         The FTSE posted a similar loss to the SP500 while the Euro Stoxx lagged both indices. In the FTSE, telecom was the only sector to finish positive, helped by Inmarsat gaining ~2.4%.  The financials were down ~1% in London in aggregate, but RBS traded up 6% after earnings (Lloyds closed up 2% in sympathy – Lloyds reports earnings Fri morning).  In the Euro Stoxx, Oil & Gas was the worst performing sector, driven down by Total SA (who lost ~3%). 

·         The OMX was the best performing European index; telecom was the strongest sector with Teliasonera leading the group

·         The CAC was the second weakest index, behind only the FTSEMIB. While telecom finished up ~1.35%, Oil & gas fell ~ 3% as Technip SA and Total SA underperformed

·         The SMI outperformed the sp500, caused primarily by strength in financials

·         The DAX finished in line with the FTSE as basic materials was the only sector to finish positive as Basf climbed ~2%.Industrials lost ~2.75% cause by weakness in Deutsche Post

·         Greece – the latest headlines - EU inspectors visiting Athens are skeptical of the gov't's ability to meet its budget cut targets; The EU inspectors expected Greece would only be able to cut its deficit-to-GDP ratio by 1.5-2.0 percentage points versus a 4 percentage points target this year, he said.  That would mean Greece would need to find another  4.8 billion euros ($6.47 billion) worth of savings to meet its target.  A team of officials from the EU commission, the European Central Bank and the International Monetary Fund are wrapping up a visit to Athens Thursday - their report could be out sometime Fri.  Moody's and S&P are both on the tape making cautious comments on the outlook for Greek's debt rating.  To watch next week in Greece - the country plans to issue a 10yr bond this week coming up according to sources cited by DJ; the bond sale will come after the govt announces a new austerity package worth EU2-2.5B.  The country had planned on issuing a bond issue this week but that was put on hold following Wed’s strike.  The government hopes to raise EUR3 billion - EUR5 billion from the bond issuance.  European Commissioner for Economic and Monetary Affairs Olli Rehn will travel to Greece next week to discuss the country's debt crisis.  DJ


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