2010 09 02

Market broadly pushes higher on a day with no real good news. I think the ISM number yesterday took a lot of bears by surprise and they’re now retreated licking their wounds. But I believe the sharp push up in last 2 days set up for a particularly vulnerable Friday when the payroll number comes out.


Swiss Q2 GDP strong but shows slowdown
• Q2 Gross domestic product rose 0.9 percent from the first quarter, when it increased 1 percent
• Gross fixed capital spending jumped 2.1 percent from the first quarter, when it dropped 2.2 percent. Exports growth slowed to 1.7 percent from 3.7 percent.
• Switzerland’s recovery may lose some momentum as a global slowdown threatens to hurt exports just as a stronger franc makes goods less competitive abroad. Leading economic indicators fell for a second month in August and central bank President Philipp Hildebrand said on Aug. 21 he expects a “weaker” economic momentum in the second half of 2010.
• With exports accounting for more than half of Swiss GDP, the Swiss National Bank was forced to add billions of euros to its balance sheet in the 15 months through June to weaken the franc.  Obviously this has done nothing to weaken the CHF and that is why every speculator is buying Yen. When central banks try to intervene there is blood in the water.

US jobless claims still way too high
• Initial jobless claims fell by 6,000 to 472,000 in the week ended Aug. 28, in line with the median forecast of economists

US july factory orders disappoint
• Orders placed with U.S. factories rose less than forecast in July, restrained by a slump in demand for capital equipment that points to slower business investment in coming months.
• A report yesterday showing manufacturing picked up in August signaled any factory slowdown will not be broad-based as companies like Caterpillar Inc. report increasing demand from overseas while Cisco Systems Inc. and Intel Corp. are among those lowering forecasts.

OPEC oil output falls to lowest since Nov 2009
• OPEC crude oil supply fell in August to the lowest since November 2009 as reduced supplies from Nigeria, the United Arab Emirates and Iraq offset increased output in Angola, a Reuters survey showed on Wednesday.
• Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, averaged 26.83 million barrels per day (bpd) last month, down from 26.95 million bpd in July, according to the survey of oil companies, OPEC officials and analysts.

Mexico 2010/11 sugar output may break record -gov't
• Mexico's 2010/11 sugar production could exceed the record 5.4 million tonnes harvested in the 2007/08 season, Agriculture Secretary Francisco Mayorga said on Wednesday.
• Mexico has suffered two successive disappointing harvests that forced the government to open up import quotas for sugar.

Petroleum inventory gets even higher
• The Department of Energy reported that in the week ending August 27th, 2010, U.S. crude oil increased by 3.4 million barrels, gasoline inventories decreased by 0.2 million barrels, distillate inventories decreased by 0.7 million barrels, and total petroleum inventories increased by 4.0 million barrels.
• Total petroleum inventories moved further into multi-decade high territory. The surplus now stands at 105.395 million, or 10.2% above the 5-year average, up from 9.2% in the prior week.