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Morning Notes For September 30th 2010 at Trader’s Narrative

Morning Notes For September 30th 2010

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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:

  • Paris on red alert after bomb threats empty Eiffel Tower – deploying thousands of police and soldiers to ‘sensitive’ locations after at least four bomb threats at the Eiffel Tower and railway stations in the past two weeks. – Bloomberg
  • China’s PMIs Signal a Soft Landing? – The HSBC/Markit China Manufacturing PMI rose to 52.9 in September, suggesting a continued expansion and that China’s economy may expand in Q4 from the low of Q3. Export orders began to expand again, after several months of decline, but the pace of growth of both overall and foreign orders is more subdued than that of early 2010 or the series average. Until this moderate expansion, the PMI, which is thought to reflect conditions in private sector companies, had trended down since March. – Roubini Global Economics
  • Masaaki Shirakawa, Governor of the Bank of Japan, discussed in a speech earlier this month whether or not the U.S. will “fall into ‘deflation in the Japanese style’ or the “lost decade like Japan’.” The chart below, excerpted from his speech, compare Japan’s earlier crisis with the more recent global one. The first looks at inflation, while the second looks at bank loans. – Bloomberg

bank loans after bubble Japan Euro US Sep 2010
Note how our loan growth adjusted much faster than Japan’s. A swift catharsis is painful, but perhaps healthier for the system. Let me know if you want the full speech and the rest of the charts.

  • Japan – Nikkei falls ~2% leading to the downside after a slew of economic data (IP, PMI, and a possible GDP estimate cut) weighed. – JP Morgan
  • Postal Service “close to broke”; as early as Thurs could unveil billions in new losses – WP
  • The most important barometer in the Conference Board’s Consumer Confidence Index is the difference between the Jobs-Hard-to-Get and Jobs-Plentiful Indices. The Jobs Differential Index, as this component is known, fell to minus 42.3 in September from minus 41.5 in August. – Bloomberg

conference board jobs plentiful hard to get Sep 2010
At least this has stabilized, but no sign of improvement yet.

  • Flow of funds data from the Federal Reserve suggests that households continue to deleverage, as the amount of outstanding mortgage debt and household debt both fell at a 2.3 percent pace in the second quarter of the year from the first quarter. – Bloomberg

US household deleveraging Sep 2010

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