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Morning Notes For August 17th 2010 at Trader’s Narrative

Morning Notes For August 17th 2010

The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. I welcome your feedback in the comments:

  • Republicans continue to lead Democrats in midterm voting preferences for the U.S. House, and the GOP’s current 50% to 43% advantage among registered voters is the largest Gallup has measured to date in its weekly tracking of the 2010 vote. – Gallup
  • congress mid-term elections Aug 2010

  • The Fed has issued new rules designed to protect mortgage borrowers. Under the new rules, securitizers will no longer be permitted to pay a premium for loans more expensive to the borrower. Lenders must inform borrowers how options like balloon payments and adjustable rates make loans more expensive and lenders must inform borrowers when their loans are sold or transferred. To some extent, the new rules are moot because there is practically no securitization outside of the GSEs anyway. Congress will hold hearings today with members of the industry to try and brainstorm ways to fix the securitization process. – FTN Financial
  • The Fed’s Senior Loan Officer’s Survey showed a loosening of lending terms at big banks for the first time since before the financial crisis began. The findings support the industry contention that there is plenty of credit available, but little demand for loans. (Although its clear the easing of loan standards has a long way to go after years of tightening.) – FTN Financial
  • Bloomberg says a New Orleans judge is reviewing the Obama bans on deepwater drilling. Meanwhile, yesterday, shrimp boats returned to the Gulf and reported an abundant catch and no sign of oil. A report by the two University of Georgia scientists published yesterday contends 80% of the spilled oil is still there, mostly below the surface.
  • Mark Mobius, chairman of Templeton As¬set Management, said the global economic recovery is “well in place” and may accelerate as growth in developing nations counters a slowing pickup in Japan and the US – Bloomberg
  • Housing – NY Post says that Fannie & Freddie could be converted into giant co-ops co-owned by WFC, C and BAC among others, under 1 plan to be discussed today.
  • China – June leading economic index rose. Leading Economic Index rose 0.8% in June. The increase in the index “signals continued moderate expansion in the 2H10,” W. Adams (economist for The Conference Board) said today. “China’s export growth remains relatively soft, meaning domestic markets will offer the most dynamic business opportunities.” - Bloomberg
  • The August German ZEW survey provides additional evidence of the potential for a slowdown in euro-area growth in the first half of 2011 relative to the robust gross-domestic-product growth seen in the second quarter of 2010.
  • ZEW sentiment Germany Aug 2010

  • Europe: The successful bond auctions by both Spain and Ireland helping sentiment and causing CDS spreads to tighten this morning.
  • Corn climbs as US crop condition deteriorates, wheat rallies – Corn rose Tuesday morning as excessive heat in the US weighed on crop conditions. Wheat also recouped some of yesterday’s sharp slide which sent the commodity to its lowest level in nearly two weeks. - Bloomberg

corn futures Aug 2010

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