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Saturday, August 4, 2012

FinNews for the week ending August 3, 2012

FinNews for the week ending August 3, 2012

Top Stories

Knight Capital Group, a brokerage responsible for roughly 11 percent of all U.S. stock trades, faced massive losses due to a software glitch. The glitch prompted millions of unintended orders, which resulted in losses of $440 million in under an hour. (1)

In a meeting this week, the European Central Bank developed a side deal involving the purchase of Italy's and Spain's bonds, under the condition that the euro government's bailout fund does so directly from their treasuries. While this measure will not going into effect for weeks or even months, it may lay the framework for further bond market support plans. (2)


Economic Releases & Statistics

At the FOMC meeting, which concluded Thursday, the Federal Reserve opted to leave rates unchanged and reiterated that it would continue to leave rates low through 2014 at the earliest. It did not announce a third round of quantitative easing, but did proclaim that if the need arises they "are ready to step in and take aggressive steps to bolster the U.S. economy." (3)

Consumer spending fell 0.1 percent, countering estimates for a 0.1 percent increase. Household income grew by 0.5 percent, just slightly higher than forecasts for a 0.4 percent rise. Household saving grew 4.4 percent. (4) Construction spending grew 0.4 percent last month to a seasonally adjusted $842 billion, matching expectations. Residential construction grew 1.3 percent while nonresidential remained unchanged. (5) The Institute of Supply Management manufacturing PMI grew 0.1 to 49.8, falling short of forecasts for a growth to 50.2. July inventories grew 5.0 to 49.0, and new orders grew 0.2 to 48.0. (6) ISM non-manufacturing grew 0.5 to 52.6, surpassing estimates for no change.

Employment rose 163,000 last month as the unemployment rate increased 0.1 to 8.3 percent, versus expectations for it to remain unchanged. (4) (7)


Stocks & Earnings

Kraft Foods announced a spin off for its grocery and snack products, which will launch on October 1 as Kraft Foods Group, which will trade on Nasdaq as KRFT. Kraft will change its name to Mondelez International Inc., MDLZ. (8)


Global Currencies

In order to increase confidence in its finances, the Spanish government aims to boost its savings plan by roughly 57 percent by 2014. Meanwhile, the Spanish Prime Minister admitted he would "consider asking for financial aid for his country only once the European Central bank has fleshed out its crisis-fighting plans for buying government bonds." (9)

Over the last several years, banks have been switching from the London Interbank Offered Rate (Libor) to overnight-index-swap rates due to considerable discrepancies in funding costs across institutions. (10)


Oil & Energies

Natural gas storage grew 28 billion cubic feet to 3.217 trillion cubic feet, greater than forecasts for a 20-24 bcf growth. (11) Crude storage fell 6.5 million barrels to 373.6 million barrels, greater than estimates for an 800,000 barrel drop. Gasoline inventories fell 2.2 million barrels to 207.9 million, countering forecasts for a 500,000 barrel rise. Distillates declined 974,000 barrels to 124.3 million, versus estimates for an 800,000 barrel growth. (12)

Argentine YPF aims to invest $7 billion a year from 2013 to 2017 to help counter Argentina's energy deficit. In order to, the company is considering issuing local bonds which would offer interest payments in fuel instead of cash. (13)

Grains & Field Crops

The weekly Crop Progress report revealed corn in good/excellent condition fell 2 percent to 24 percent of the crop. 94 percent of corn was silking and 37 percent doughing. U.S. soybeans in good/excellent dropped 2 percent to 29 percent. 88 percent of the soybean crop has bloomed. Spring wheat in good/excellent condition grew 3 percent to 63 percent, with 28 percent of the crop harvested. 85 percent of the winter wheat crop has been harvested. (14) On Thursday, Mexico purchased 1.516 million tons of U.S. corn, the largest single-day purchase in over two decades, marking "the first clear sign of global anxiety over the decimated U.S. crop." (15)

Due to considerable rainfall, Argentinean farmers may potentially harvest 31 million tons of corn during the 2012-13 season, breaking the 22 million metric ton record. The country's soybean crop may also grow 45 percent to 56 million tons. Brazil is also set to harvest its largest soybean crop at 78 million tons. Due to cheaper prices and transportation cost, many Brazilian farmers plan to replace corn with soybeans, allotting a total of 66.7 million acres. Much of this growth is contingent on the arrival of an El Niño, which would bring an abundance of wet weather. (16)


Precious Metals

As new mines come on line in Ivory Coast, the country expects its annual gold output to grow to 25 tonnes a year by 2015. Current production is 15 tonnes, up from last year's 12. (17) Platinum demand continues to remain low due to the eurozone debt crisis, and its prices could fall by as much as 30 percent "if the eurozone crisis continues unabated." (18) South Africa is now the "number one spot in terms of gold grades," with six gold deposits with grades over 10g/t and fourteen deposits with over 5 g/t. (19)


Other Commodities

Due to July rainfall in the area which delayed the crop's start and weakened its quality, Brazil's arabica coffee harvest will end a month later than planned. (20) Due to rains in Brazil, Vietnam, and Indonesia and poor harvests, coffee prices are estimated to rise by as much as 30 percent over time. (21) Vietnam aims to more than double its arabica output to 96,000 tons by 2020 through expansion of its arabica area to 99,000 acres over the next eight years. (22)

A drought over Ivory Coast that has persisted for roughly a month and a half has cocoa farmers worried as they begin to prepare for their main-crop harvest. (23) Meanwhile, the country has plans to open a grinding facility around the port of San Pedro, which will increase bean processing by roughly 56 percent to over 300,000 metric tons a year by 2015. The plant will be set up by Olam International Ltd. while current plants improve output, and will satisfy one of the IMF's requirements for Ivory Coast to receive $4.4 billion in debt relief. (24) As Ivory Coast works to reform its cocoa sector and boost farm incomes, the country has paid 29 billion CFA francs into a stabilization fund to guarantee floor prices. Ivory Coast plans to grow this number to 40 billion by the year's end, then 70 billion over time. (25)



Next Week:

Date Currency Event GMT Forecast Previous
5-Aug Sun GBP GBP Lloyds Employment Confidence 23:01   -53.00
AUD AUD TD Securities Inflation (MoM) 00:30 -0.20%
AUD AUD TD Securities Inflation (YoY) 00:30 1.60%
AUD AUD ANZ Job Advertisements (MoM) 01:30 -1.20%
6-Aug Mon JPY JPY Leading Index 05:00 92.90 95.20
JPY JPY Coincident Index 05:00 93.90 95.80
EUR EUR Euro-Zone Sentix Investor Confidence 08:30 -31.00 -29.60
USD USD Fed's Bernanke Speaks on Economic Measurement 13:00
NZD NZD Average Hourly Earnings (QoQ) 22:45 0.50% 1.30%
NZD NZD Private Wages ex Overtime (QoQ) 22:45 0.60% 0.50%
NZD NZD Labor Cost Private Sector (QoQ) 22:45 0.60% 0.50%
GBP GBP BRC Sales Like-For-Like (YoY) 23:01 -0.20% 1.40%
JPY JPY Official Reserve Assets 23:50 $1270.6B
GBP GBP Halifax Plc House Prices s.a. (MoM) -0.50% 1.00%
GBP GBP New Car Registrations (YoY) 3.50%
GBP GBP Halifax House Price (3MoY) -0.60% -0.50%
7-Aug Tue AUD AUD Reserve Bank of Australia Rate Decision 04:30 3.50% 3.50%
CHF CHF Unemployment Rate s.a. 05:45 2.90% 2.90%
CHF CHF Unemployment Rate 05:45 2.70% 2.70%
CHF CHF Foreign Currency Reserves 07:00 364.9B
CHF CHF Consumer Price Index (MoM) 07:15 -0.60% -0.30%
CHF CHF Consumer Price Index (YoY) 07:15 -0.80% -1.10%
CHF CHF CPI - EU Harmonised (YoY) 07:15 -1.20%
CHF CHF CPI - EU Harmonised (MoM) 07:15 -0.20%
GBP GBP Industrial Production (MoM) 08:30 -3.50% 1.00%
GBP GBP Industrial Production (YoY) 08:30 -5.30% -1.60%
GBP GBP Manufacturing Production (MoM) 08:30 -4.30% 1.20%
GBP GBP Manufacturing Production (YoY) 08:30 -5.70% -1.70%
EUR EUR Italian Gross Domestic Product s.a. and w.d.a. (QoQ) 09:00 -0.80% -0.80%
EUR EUR Italian Gross Domestic Product s.a. and w.d.a. (YoY) 09:00 -2.50% -1.40%
EUR EUR German Factory Orders n.s.a. (YoY) 10:00 -7.00% -5.40%
EUR EUR German Factory Orders s.a. (MoM) 10:00 -0.80% 0.60%
CAD CAD Building Permits (MoM) 12:30 -3.90% 7.40%
CAD CAD Ivey Purchasing Managers Index s.a. 14:00 52.00 49.00
USD USD JOLTs Job Openings 14:00 3642.00
GBP GBP NIESR Gross Domestic Product Estimate 14:00 -0.20%
USD USD Fed's Bernanke Speaks on Financial Education in Washington 18:30
USD USD Consumer Credit 19:00 $10.500B $17.117B
NZD NZD Building Permits (MoM) 22:45 3.00% 5.70%
AUD AUD AiG Performance of Construction Index 23:30 34.80
JPY JPY Current Account Total (Yen) 23:50 ¥415.2B ¥215.1B
JPY JPY Adjusted Current Account Total (Yen) 23:50 ¥742.9B ¥282.2B
JPY JPY Trade Balance - BOP Basis (Yen) 23:50 ¥120.0B -¥848.2B
JPY JPY Bank Lending Banks ex-Trust 23:50 0.80%
JPY JPY Bank Lending incl Trusts (YoY) 23:50 0.70%
JPY JPY Current Account Balance (YoY) 23:50 -24.90% -62.60%
NZD NZD QV House Prices (YoY) 00:40 4.20%
AUD AUD Home Loans 01:30 2.00% -1.20%
AUD AUD Investment Lending 01:30 -4.60%
AUD AUD Value of Loans (MoM) 01:30 0.20%
8-Aug Wed JPY JPY Bankruptcies (YoY) 04:30   -16.30%
JPY JPY Eco Watchers Survey: Current 05:00 43.80
JPY JPY Eco Watchers Survey: Outlook 05:00 45.70
CHF CHF SECO Consumer Confidence 05:45 -4.00 -8.00
EUR EUR German Imports s.a. (MoM) 06:00 -2.00% 6.20%
EUR EUR German Trade Balance (euros) 06:00 14.6B 15.3B
EUR EUR German Exports s.a. (MoM) 06:00 -1.30% 4.20%
EUR EUR German Current Account (euros) 06:00 11.9B 9.0B
AUD AUD Foreign Reserves (Australian dollar) 06:30 A$47.2B
GBP GBP Bank of England Inflation Report 09:30
EUR EUR German Industrial Production s.a. (MoM) 10:00 -0.80% 1.60%
EUR EUR German Industrial Production n.s.a. and w.d.a. (YoY) 10:00 0.30% 0.00%
USD USD MBA Mortgage Applications 11:00 0.20%
USD USD Unit Labor Costs 12:30 0.40% 1.30%
USD USD Non-Farm Productivity 12:30 1.40% -0.90%
NZD NZD Unemployment Rate 22:45 6.50% 6.70%
NZD NZD Employment Change (QoQ) 22:45 0.40% 0.40%
NZD NZD Employment Change (YoY) 22:45 1.20% 0.90%
NZD NZD Participation Rate (QoQ) 22:45 68.60% 68.80%
JPY JPY Japan Buying Foreign Bonds (Yen) 23:50 -¥8.9B
JPY JPY Japan Buying Foreign Stocks (Yen) 23:50 -¥12.6B
JPY JPY Foreign Buying Japan Bonds (Yen) 23:50 ¥57.0B
JPY JPY Japan Money Stock M2+CD (YoY) 23:50 2.20% 2.20%
JPY JPY Japan Money Stock M3 (YoY) 23:50 1.90% 2.00%
JPY JPY Machine Orders (MoM) 23:50 11.00% -14.80%
JPY JPY Machine Orders (YoY) 23:50 -5.30% 1.00%
JPY JPY Foreign Buying Japan Stocks (Yen) 23:50 -¥76.5B
JPY JPY Housing Loans (YoY) 23:50 2.40%
JPY JPY Bank of Japan Rate Decision 0.10% 0.10%
NZD NZD ANZ Consumer Confidence Index 01:00 110.50
NZD NZD ANZ Consumer Confidence (MoM) 01:00 4.40%
CNY CNY Consumer Price Index (YoY) 01:30 1.70% 2.20%
AUD AUD Unemployment Rate 01:30 5.30% 5.20%
AUD AUD Part Time Employment Change 01:30 6.6K
AUD AUD Employment Change 01:30 10.0K -27.0K
CNY CNY Producer Price Index (YoY) 01:30 -2.60% -2.10%
AUD AUD Full Time Employment Change 01:30 -33.5K
AUD AUD Participation Rate 01:30 65.30% 65.20%
JPY JPY Tokyo Avg Office Vacancies (%) 02:00 9.43
9-Aug Thu JPY JPY Consumer Confidence 05:00   40.40
CNY CNY Industrial Production YTD (YoY) 05:30 10.40% 10.50%
CNY CNY Industrial Production (YoY) 05:30 9.70% 9.50%
CNY CNY Fixed Assets Inv Excl. Rural YTD YoY 05:30 20.60% 20.40%
CNY CNY Retail Sales YTD (YoY) 05:30 14.30% 14.40%
CNY CNY Retail Sales (YoY) 05:30 13.60% 13.70%
JPY JPY Machine Tool Orders (YoY) 06:00 -15.50%
EUR EUR ECB Publishes Aug. Monthly Report 08:00
GBP GBP Trade Balance Non EU (Pounds) 08:30 -£4100 -£3865
GBP GBP Visible Trade Balance (Pounds) 08:30 -£8725 -£8363
GBP GBP Total Trade Balance (Pounds) 08:30 -£3100 -£2717
CAD CAD Housing Starts 12:15 213.5K 222.7K
CAD CAD New Housing Price Index (YoY) 12:30 2.40%
USD USD Trade Balance 12:30 -$47.6B -$48.7B
USD USD Continuing Claims 12:30 3273K 3272K
CAD CAD New Housing Price Index (MoM) 12:30 0.20% 0.30%
CAD CAD International Merchandise Trade (Canadian dollar) 12:30 -1B -0.79B
USD USD Initial Jobless Claims 12:30 370K 365K
USD USD Wholesale Inventories 14:00 0.30% 0.30%
NZD NZD NZ Card Spending - Retail (MoM) 22:45 0.40%
NZD NZD NZ Card Spending (MoM) 22:45 0.30%
JPY JPY Domestic Corporate Goods Price Index (MoM) 23:50 0.10% -0.60%
JPY JPY Domestic Corporate Goods Price Index (YoY) 23:50 -1.50% -1.30%
CNY CNY Exports (YoY) 8.20% 11.30%
CNY CNY Imports (YoY) 7.40% 6.30%
CNY CNY Trade Balance (USD) $35.05B $31.72B
AUD AUD Reserve Bank Board - Statement on Monetary Policy 01:30
10-Aug Fri JPY JPY Industrial Production (MoM) 04:30   -0.10%
JPY JPY Capacity Utilization (MoM) 04:30 -2.20%
JPY JPY Industrial Production (YoY) 04:30 -2.00%
EUR EUR German Consumer Price Index - EU Harmonised (MoM) 06:00 0.40% 0.40%
EUR EUR German Consumer Price Index - EU Harmonised (YoY) 06:00 2.00% 2.00%
EUR EUR German Consumer Price Index (MoM) 06:00 0.40% 0.40%
EUR EUR German Consumer Price Index (YoY) 06:00 1.70% 1.70%
GBP GBP Producer Price Index Input n.s.a. (YoY) 08:30 -1.50% -2.30%
GBP GBP Producer Price Index Output n.s.a. (MoM) 08:30 0.00% -0.40%
GBP GBP Producer Price Index Output Core n.s.a. (MoM) 08:30 0.10% -0.20%
GBP GBP Producer Price Index Input n.s.a. (MoM) 08:30 1.30% -2.20%
GBP GBP Producer Price Index Output n.s.a. (YoY) 08:30 2.00% 2.30%
GBP GBP Producer Price Index Output Core n.s.a. (YoY) 08:30 1.60% 2.00%
CAD CAD Part Time Employment Change 12:30 -22.00
CAD CAD Participation Rate 12:30 66.70 66.70
USD USD Import Price Index (MoM) 12:30 0.20% -2.70%
USD USD Import Price Index (YoY) 12:30 -2.70% -2.60%
CAD CAD Unemployment Rate 12:30 7.20% 7.20%
CAD CAD Net Change in Employment 12:30 9.5K 7.3K
CAD CAD Full Time Employment Change 12:30 29.30
USD USD Monthly Budget Statement 18:00 -$103.0B

1. http://www.latimes.com/business/la-fi-0803-trading-chaos-20120803,0,1527952.story

2. http://www.bloomberg.com/news/2012-08-02/ecb-politicians-anti-crisis-bargain-emerges-after-2-1-2-years.html

3. http://moneymorning.com/2012/08/01/todays-fomc-meeting-we-could-wait-four-more-months-for-action/

4. http://www.foxbusiness.com/economy/2012/07/31/personal-income-ticks-up-in-june-spending-holds-steady/

5. http://articles.marketwatch.com/2012-08-01/economy/32972427_1_nonresidential-construction-low-levels-gain

6. http://www.businessinsider.com/ism-pmi-points-to-continued-weakness-of-us-manufacturing-in-july-2012-8

7. http://www.bloomberg.com/news/2012-08-03/ism-services-index-in-u-s-rose-to-52-6-in-july-from-52-1.html

8. http://stream.marketwatch.com/story/markets/SS-4-4/SS-4-8565/

9. http://www.boston.com/news/world/europe/2012/08/03/interest-rate-for-key-spanish-bond-soars/pELIK47Vly1d2ztMJIagMP/story.html

10. http://www.chicagotribune.com/business/sns-rt-us-banks-accountingbre87215k-20120803,0,5956855.story

11. http://www.huffingtonpost.com/huff-wires/20120802/us-natural-gas-storage/

12. http://online.wsj.com/article/BT-CO-20120801-712335.html

13. http://www.reuters.com/article/2012/08/03/argentina-ypf-debt-idUSL2E8J30BJ20120803

14. http://seekingalpha.com/article/763941-crop-progress-corn-conditions-decline-for-eighth-straight-week

15. http://www.reuters.com/article/2012/08/02/usda-sale-idUSL2E8J276E20120802

16. http://www.bloomberg.com/news/2012-07-31/south-america-readies-record-crops-amid-u-s-drought.html

17. http://www.reuters.com/article/2012/08/01/ivorycoast-mining-gold-idUSL6E8J1JY820120801

18. http://allafrica.com/stories/201208030177.html

19. http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=156415&sn=Detail&pid=102055

20. http://www.bloomberg.com/news/2012-08-01/brazil-s-arabica-coffee-harvest-seen-ending-one-month-later.html

21. http://www.profi-forex.us/news/entry4000003454.html

22. http://in.reuters.com/article/2012/07/26/vietnam-coffee-arabica-idINL4E8IQ32G20120726

23. http://www.businessweek.com/news/2012-07-31/ivory-coast-s-coastal-cocoa-farmers-say-drought-threatens-crop

24. http://www.businessweek.com/news/2012-07-30/ivory-coast-cocoa-grinding-to-exceed-300-000-tons-by-2015

25. http://www.businesslive.co.za/world/int_markets/2012/08/02/ivory-coast-cocoa-reform-reserve-fund-reaches-29-bln-cfa

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