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Morning Notes For September 27th 2010 at Trader’s Narrative

Morning Notes For September 27th 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:

  • Silver Hits 30-Year High – Silver hit US$21.48 per ounce in September, its highest level since October 1980, building on a 26% rise thus far in 2010. The increase was attributed to the weak US dollar, which fell to its lowest level since February against a basket of major currencies on speculation that the Fed will instigate a further round of quantitative easing. – Roubini Global Economics

Silver Spot price 1978 to present:
silver long term chart Sep 2010

  • Former Fed Governor Alan Greenspan said it’s more important for the US to cut its budget deficit than to extend tax cuts set to expire at the end of this year. – Bloomberg
  • New York University Professor Nouriel Roubini said there is a high probability of another recession in the U.S. and second-quarter gross domestic product figures are likely to be revised lower. – Bloomberg
  • This week, the ISM manufacturing report on Friday is the week’s highlight. The employment report will be released on the second Friday of the month, the 8th. – FTN Financial
  • Huge week for IPOs coming up – there will be 9 companies attempting to come public in the coming week in what will amount to the busiest 5-day period of share sales in 3 years. The companies are seeking to raise +$3B. The recent strength in stock prices, combined w/the successful pricing of some recent offerings, has made the calendar firm up quickly. – FT
  • CSCO has a great idea for stimulus and it won’t cost Washington anything – Congress should again adopt a tax holiday on overseas earnings, permitting companies to repatriate cash without being hit by a 35% corporate tax rate. CSCO CEO John Chambers notes the country did this in 2004 and companies brought some $800 billion back into the US, more than the entire stimulus package was worth. Chambers thinks more could come back this time around. CNBC – sounds like it could be a good idea. But it would actually cost Washington something.
  • “Universal currency debasement” currently underway; nations accounting for two thirds of the global economy are currently holding down their exchange rates by direct intervention or other means (QE, etc). Gold is the “final refuge” in this world. - London Telegraph
  • The U.S. Census Bureau reported that sales of new homes in August were 28.9% below the level of August 2009 and 30.4% below the 414,000 SAAR reached in April 2010, just prior to the expiration of the first-time homebuyer tax credit. At the rate of sales in August, inventories of new homes equaled an 8.6-month supply, still well above the long-term average of around 6.2 months. The median new home sale price fell 0.6% m/m in August, while the average sale price rose 1.8% after plummeting in July. – Roubini Global Economics

Months Supply of New Homes (green line is the Average)
supply of new homes Sep 2010

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