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Morning Notes For July 15th 2010 at Trader’s Narrative

Morning Notes For July 15th 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. Please provide feedback in the comments:

Initial Jobless Claims: Survey 445k Actual 429 Previous 454 Revised 458
initial jobless claims Jul 2010 update

  • US Small Business pinched by lack of credit, confidence – Bloomberg
  • Wall St.’s largest bond dealers have been cutting their holdings of corp debt to the lowest levels since Sept – Bloomberg
  • Airlines’ fees may be taxed – House Dems on Wed criticized airlines for rolling out increasing amounts of new fees; they are threatening to roll out fresh taxes on those fees – WSJ
  • Polls signal increased discontent with Whitehouse - A majority or plurality disapproves of Obama’s management of the economy, health care, the budget deficit, the overhaul of financial market regulations and the oil spill in the Gulf of Mexico, according to a Bloomberg National Poll conducted July 9-12. In addition, almost 6 in 10 respondents say the war in Afghanistan is a lost cause. Almost two-thirds say they feel the nation is headed in the wrong direction – Bloomberg
  • Whether they’ve ever been deployed to a foreign war, active duty military personnel in the U.S. have similarly high levels of well being, well above that of U.S. workers in general. Well being scores decline somewhat for previously deployed personnel under the age of 30, however. - GallupFor some reason, this is fascinating and brings the Hurt Locker to mind.
  • FOMC minutes (out Wed @ 2pmET) – JP Morgan’s Feroli takeaways: The FOMC greeted the European crisis and the ensuing soft patch of data with repose, modestly marking down their 2010 growth forecast but maintaining the same qualitative outlook for “continued, moderate recovery.” The committee went on to judge that the minor forecast changes were “not warranting policy accommodation beyond that already in place.” Nonetheless, the increased sense of downside risk led the committee to conclude that in addition to planning for an exit strategy, some contingency planning for more stimulus would also be prudent, just in case.

    Even though the FOMC remained quite comfortable with the 2010 growth projection–much more so than the market–a case can be made that these minutes were actually somewhat dovish. Nobody seriously believes that 2010 will be the arena for policy normalization. But in 2011 and 2012, when it is more plausible that the Fed could begin to move, the committee now sees both employment and inflation being further away from the dual mandate objectives than they did in April.

  • National Incident Commander Thad Allen announces that BP will begin the “integrity test” on the new cap over the gushing Gulf of Mexico oil well. The test will close down the flow of the well in a series of steps as officials closely monitor rising pressure in the well. – Washington Post
  • We will get a slowdown in the economy. But it is a mistake to attribute all of this to reduced final demand as much of the slowdown will be due to lower contributions from inventory adjustments. A quick and dirty measure of this is a simple ratio of inventories to New Orders. After record lows in December 2008, the ratio is quite close to its 20 year average of 9.43 (blue)…indicating the benefit from inventory restocking is closer to its completion than its commencement.

ratio inventories to new orders Jul 2010

Steinbrenner presided over 15,900% Franchise Appreciation – Bloomberg
yankees value under Steinbrenner

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2 Responses to “Morning Notes For July 15th 2010”  

  1. 1 Justin

    Why repeat the same mistake over again? The first QE, was a failure, terribly misallocating everything from housing prices, to bank bankruptcies. Too Big To Fail has to be split-up!

  2. 2 Charles

    Now, if only my ‘high levels of well being’ were correlated with my stock portfolio…haha. Though truth be told, Trader’s Narrative fills that role nicely and reading Babak’s latest postings certainly provokes positive and creative thinking.

    U.S. Army Officer

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