Fed Chairman Bernanke’s remarks


[Skip to the end]

Nothing a payroll tax holiday can’t fix in short order.

Market tumbles further on Bernanke comments

Wednesday October 15, 12:46 pm ET

NEW YORK (Reuters) – Stocks fell to session lows on Wednesday, with the benchmark S&P 500 briefly tumbling more than 5 percent, after Federal Reserve Chairman Ben Bernanke said the economy faces a significant threat from credit market turmoil.


[top]

ECB extending collateral (to almost anything)


[Skip to the end]

And this includes the ‘appropriate collateral’ for the unlimited USD loans as well.

ECB extending collateral (to almost anything)

ECB extending collateral (to almost anything) and introducing more longer dated repos with full allotment. Significant points: acceptable ratings down from A- to BBB- (except for ABS) syndicated loans included, also wider range of currency. Quid pro quo is higher haircuts but fair enough. So virtually no excuse for any bank to run out of money. Also pretty positive for corp spreads.

As you predicted. The US taxpayer, via the Fed, is basically the dumpster receiving all of this toxic crap from Europe. That’s got to be dollar bearish longer term.

Until the the ECB is driven to sell euros to pay back the USD it borrowed from the Fed.

And no doubt there will be continuous politically driven responses that could tilt the outcome in any direction.

Our leaders are in this way over their heads.

All they needed to do was declare a payroll tax holiday- none of this had to happen.


[top]

Japan Daily- Current account surplus declines in August


[Skip to the end]

Unwinding of yen borrowings/shorts is also an increase in what I call ‘savings desires’, and drives the trade gap out of surplus towards deficit.

Japan doesn’t like it but it is an improvement in real terms of trade.

The appropriate fiscal response is to move to sustain domestic demand.

Highlights:

Highlights

Current Account Surplus Down 52.5% In August


[top]

Total euro CB offerings (update1)


[Skip to the end]

The total is now up to $354 billion including $100 billion in overnight funds added by the ECB.

Haven’t seen overnight funds by the Bank of England or Swiss National Bank.

Haven’t seen any Bank of Japan numbers.

ECB Leads Push to Flood Banks With Unlimited Dollars (update1)

Oct. 15 (Bloomberg) — The European Central Bank, Bank of England and Swiss National Bank loaned financial institutions a combined $254 billion in their first tenders of unlimited dollar funds, stepping up efforts to ease strains in markets.

The Frankfurt-based ECB lent banks $170.9 billion for seven days at a fixed rate of 2.277 percent. The Bank of England allotted $76.3 billion and the Swiss central bank $7.1 billion at the same rate, also for a week.


[top]

(BN) ECB USD offerings total $270.9 billion


[Skip to the end]

The total of $279 billion is very high.

Note the seven day was higher than the one day, which could mean the longer term offerings will attract even more borrowers.

This is a lot of lending for the Fed to be doing to the ECB.

It also moves the USD debt in the Eurozone from the private sector to the public sector.

The private sector can default, declare insolvency, get ‘reorganized’, where the USD debt can be ‘converted’ to equity and functionally vanish, all to be written off by the creditors.

Public sector external debt doesn’t have that option, and thereby introduces systemic risk.

If the Eurobanks can’t/don’t repay the ECB, the Fed is left with the option of selling euros for USD for repayment.

And only if the ECB survives as a political entity.

It is not guaranteed by the national governments.

The ECB today offered banks unlimited dollar funds for seven days in the first tender of its kind, lending $170.9 billion. It also loaned an additional $100 billion for one day.


[top]

2008-10-15 USER


[Skip to the end]


MBA Mortgage Applications (Oct 10)

Survey n/a
Actual 5.1%
Prior 2.2%
Revised n/a

[top][end]

MBA Purchasing Applications (Oct 10)

Survey n/a
Actual 313.50
Prior 314.50
Revised n/a

 
Down a tad, but the lower band of the range holding.

[top][end]

MBA Refinancing Applications (Oct 10)

Survey n/a
Actual 1514.20
Prior 1345.80
Revised n/a

 
Refi machine seems to be functioning.

[top][end]

MBA TABLE 1 (Oct 10)

[top][end]

MBA TABLE 2 (Oct 10)

[top][end]

MBA TABLE 3 (Oct 10)

[top][end]

MBA TABLE 4 (Oct 10)

[top][end]

Empire State Manufacturing Survey (Oct)

Survey -10.0
Actual -24.6
Prior -7.4
Revised n/a

 
Much lower than expected as the world economy slows.

Karim says:

  • Drops from -7.4 to record low of -24.6.
  • Orders drop 25 points, shipments drop 9 points, workweek drops 4 points.
  • Employment modest improvement from -4.6 to -3.7
  • Bulk of labor force adjustment seems to be in hours.

[top][end]

Empire State Manufacturing Survey ALLX 1 (Oct)

[top][end]

Empire State Manufacturing Survey ALLX 2 (Oct)

[top][end]

Producer Price Index MoM (Sep)

Survey -0.4%
Actual -0.4%
Prior -0.9%
Revised n/a

 
As expected.

Karim says:

  • Headline -0.4% and core +0.4%
  • Intermediate stage -1.2% and core -0.3%
  • Crude stage -7.9% and core -9.4%

[top][end]

PPI Ex Food and Energy MoM (Sep)

Survey 0.2%
Actual 0.4%
Prior 0.2%
Revised n/a

 
Higher than expected.

[top][end]

Producer Price Index YoY (Sep)

Survey 8.6%
Actual 8.7%
Prior 9.6%
Revised n/a

 
Still up big year over year.

[top][end]

PPI Ex Food and Energy YoY (Sep)

Survey 3.8%
Actual 4.0%
Prior 3.6%
Revised n/a

 
This is breaking out as well.

[top][end]

Advance Retail Sales MoM (Sep)

Survey -0.7%
Actual -1.2%
Prior -0.3%
Revised -0.4%

 
Lowe than expected partly due to lower gasoline prices.

Karim says:

  • -1.2% m/m and -0.6% m/m ex-autos; modest downward revisions to back months.
  • -1.3% ex-gas.
  • All you need to know is only 2 components to rise m/m were health care and gasoline!
  • Furniture and clothing were each down 2.3%; the drop in furniture the most since Feb 2003.
  • And this before the 15% month to date decline in equities in October.

[top][end]

Advance Retail Sales YoY (Sep)

Survey n/a
Actual -1.0%
Prior 1.5%
Revised n/a

 
Looking like recession levels.

[top][end]

Retail Sales Less Autos MoM (Sep)

Survey -0.2%
Actual -0.6%
Prior -0.7%
Revised -0.9%

 
Also, lower than expected.

[top][end]

Advance Retail Sales TABLE 1 (Sep)

[top][end]

Advance Retail Sales TABLE 2 (Sep)

[top][end]

Advance Retail Sales TABLE 3 (Sep)

[top][end]

Business Inventories MoM (Aug)

Survey 0.5%
Actual 0.3%
Prior 1.1%
Revised n/a

 
A little lower than expected.

[top][end]

Business Inventories YoY (Aug)

Survey n/a
Actual 6.4%
Prior 6.5%
Revised n/a

 
Working their way higher but not out of control.


[top]