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Morning Notes For August 9th 2010 at Trader’s Narrative

Morning Notes For August 9th 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:

  • RGE Analysis by Prajakta Bhide: The U.S. Bureau of Labor Statistics employment report for July further dampened hopes of significant revival in the labor market. Any cheer derived from the unemployment rate holding steady in July should be tempered by the decline in the labor force that drove down the participation rate for the third consecutive month. – RGE Monitor
  • More quantitative easing (QE) is needed to avoid a Japan-like period of economic stagnation – the Fed will probably wind up ramping back up its policy of QE according to Barron’s by the coming fall to fight off sluggish growth and deflation; the next meeting after the coming one in Sept will have three new Fed governors, all inflation doves, who could push for more accommodative action - Barron’s
  • US investors now own majority of Treasuries – for the first time since the start of the financial crisis in Aug ’07, US investors own more Treasuries than foreign holders – Bloomberg

treasury holdings Aug 2010

  • Former Treasury Secretaries Rubin and O’Neill both argue that the economy is improving (albeit at a very gradual pace) and that a second stimulus plan wouldn’t be effective – Bloomberg
  • US jobs market – the WSJ discusses how some firms are struggling to fill job positions despite very high unemployment rates. WSJ
  • US housing market - More than 20% of the nation’s mortgage borrowers owe more than their homes are worth. At 21.5% for the third quarter, it is a small improvement over the previous quarter, when 23.3% of loans were underwater – CNN/Fortune
  • Cash at S&P 500 companies has risen six straight quarters to $836.8 billion as executives fired workers and reduced capital spending, according to S&P. Earnings at the same companies will increase 35 percent in 2010, the biggest annual gain since 1988 – Bloomberg
  • BP/GOM – BP on Sunday said a test of the Deepwater well revealed that its cementing process was successful – DJ
  • FHA mortgage refinance program – the FHA on Fri (during trading) provided some details on its short refinancing program that is due to kick off Sept 7 (this had been talked about in the past but the details came out Fri); the FHA program encourages lenders to forgive 10 percent or more of the balance of a mortgage so the loans can be refinanced at a lower interest rate. That would remove the troubled loans from the lender’s books and allow borrowers to lower their payments. Bloomberg – this could be huge in preventing or alleviating a debt induced deflationary spiral.
  • US to sell F-15s to Saudis – The WSJ says Washington plans to sell F-15 fighter jets to Saudi Arabia in a $30B 10-year arms package. WSJ
  • Wall Street to start paying large payments in whistle blower cases – b/c of the new fee structure included in the Dodd/Frank legislation, allegations against Wall St firms are expected to surge – FT
  • Since 1946, presidents with job approval ratings below 50% at the time of midterm elections have seen their parties lose an average of 36 U.S. House seats, compared with an average loss of 14 seats for presidents with approval ratings above 50%. – Gallup

presidential approval Gallup Aug 2010

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One Response to “Morning Notes For August 9th 2010”  

  1. 1 ben

    The quantitative easing that the Fed will engage in according to Barrons should be bullish for gold. The chart in gold looks pretty good right now after an orderly correction to the 150 day moving average. This may be a good buy point. Any thoughts?

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