2010 08 12

A light day in terms of economic data but nothing to cheer about.

1. Manufacturing is slowing everywhere from US to Europe to China. It is still in an expansionary stage but cannot be counted upon to fuel a huge growth.
2. Japan officials commented on the strength of Yen which might have led to a bit of selloff. But the simple fact is that there is nothing BoJ or anyone can do about the currency. Yen will go where the market pushes it. As long as economic data disappoints Yen will remain strong.
3. I think there is way too much oil investory in US. I am thinking we should short oil even at this level. Contango would work in our favor.
4. Natgas inventory is sky high as well. With slowing industrial activities I expect nat gas to perform even more poorly going forward especially with no decline in production.


Tomorrow has some big data coming out on US consumers – July retail sales and U of Michgan consumer sentiment. I expect both to be weak on steadily poor job market picture.



Japan consumer sentiment weakens in July
• Japanese consumer sentiment dropped unexpectedly in July as consumers were less optimistic about future economic situation, a closely watched survey revealed on Thursday. Consumer confidence eased for the first time in seven months.

US jobless claims remains stubbornly high
• U.S. unemployment claims hit their highest level in nearly six months last week, evidence that the job market is not recovering as fast as economists had hoped.
• Thursday's report from the Labor Department showed the number of people signing up for unemployment assistance rose 2,000 to hit a total of 484,000 across the country.
• Economists say the slow and uneven recovery of the job market hurts the consumer spending that drives most U.S. economic activity. Weak consumer spending is slowing overall economic recovery and growth.

Manufacturing slows in India too
• Growth in India's industrial production slipped to a 13-month low in June as the effects of government stimulus waned and expansion returned to more normal levels.
• The slowdown to year-on-year growth of 7.1 percent in June comes after eight months of double-digit expansion -- a pace that was unsustainable.
• The moderation is in large part attributable to the high levels of industrial production at the same last year when growth was rebounding from the global recession, economists say.

Eurozone industrial output falls in June from May
• Industrial production in the 16-nation eurozone unexpectedly fell 0.1 percent in June from the previous month, raising fears that regional economic growth may not be as high as anticipated. The results sharply contrast with the 1.1 percent gain recorded in May and disappointed market expectations for a 0.6 percent rise.
• THE REASON: Production dropped 0.5 percent in Germany, the EU's economic powerhouse, and 1.6 percent decline in France, the eurozone's second-largest economy.
• WHY IT MATTERS: With consumption levels remaining subdued amid high unemployment and muted wage growth, overall growth in the eurozone is increasingly reliant on the industrial sector.

US winter natgas inventories seen near record highs
• U.S. natural gas inventories will begin the winter at their second-highest level ever, as weekly stock builds pick up later this year after the intense heat of summer fades, according to a Reuters survey of industry traders and analysts.
• Total gas storage started the April-through-October injection season at a very comfortable 1.65 trillion cubic feet, according to data from the U.S. Energy
• Information Administration, prompting estimates that stocks could start winter above last year's record high of 3.837 tcf,

US corn export sales surge amid Russian drought
• Global grain buyers have accelerated purchases of U.S. corn to fill a feed grain void left by suppliers in the drought-scorched Black Sea region.
• The drought has also prompted a series of wheat tenders by several importing nations that would typically rely on supplies from the Black Sea region, opening a window of opportunity for the United States, the EU and other major wheat exporters.