Global Spread Trading News

The Financial Markets - 10 September 09

• Japanese machinery orders, a leading indicator of capital expenditure, fell 9.3% in July, in a sign companies’ spending appetite may drag on the world’s No.2 economy as it crawls out of its deepest slump in decades. Japanese wholesale prices fell 8.5% in the year to August, and economists expect deflation to persist due to weak demand even though downward pressure from the slide in oil prices from record levels last year is likely to ease.
  
  
• Asian stocks in general rose this morning as hopes for global economic recovery prompted investors to shift into riskier assets, while oil found support above $71 a barrel following OPEC’s decision to keep output steady. The investor shift kept the US dollar on the defensive. It hit its weakest value in almost a year yesterday and was holding just above that level today. South Korea and New Zealand kept interest rates at record lows. The Japanese Nikkei gained 1.4% even though machinery orders’ data pointed to weak capital spending. The MSCI index of Asia Pacific stocks traded outside Japan firmed by 0.8%.
  
  
• One that passed under the news wires radar yesterday was the release of the US Bureau of Labour Statistics JOLTS (job openings and labour turnover survey) to the end of July. This report measures gross hirings and separations, and provides some sense of the dynamics underpinning the payroll numbers (NFP), although both surveys are structured quite differently. That said, the broad trends in both sets of data are similar, and while JOLTS data comes out with a lag on NFP, the survey might be giving us a few leading clues (JOLTS history only extends back to 2000, so we have only had two turns in the cycle over the past nine years). In particular, I remain struck that July JOLTS shows a record low number of job openings at the end of month, totalling 2.392m, down from 2.513m at end June. This suggests continued declines in non farm payrolls?
  
  
• The Bank of England (BoE) MPC meeting was much ado about nothing this morning. They kept rates at 0.5% and their QE purchase programme at £175bn, all as expected. However there was a major disappointment over the lack of any reference to the rate that the BoE pays on reserves. There had been widespread talk that they may do a Riksbank (make the rate negative) or certainly cut the rate it pays in order to force the banks to lend rather than hoard. The Bank is looking at this, King has said as much, but the lack of a comment suggests that it is either still work in progress or that the MPC do not see the re-ordering of the monetary framework as a priority. In either case, it pushes any implementation of a new framework further into the future.
  
  
• British house prices rose for the second consecutive month in August, leaving the average near the level seen at the end of last year. The average house price rose 0.8% to £160,793, the monthly Halifax survey said. Economists had expected a stronger monthly jump of 1.1% and a 10% year-on-year decline.
  
  
• Ex-AIG adviser who practiced voodoo on victims gets 12 years for fraud.
  
  
• Least We Forget. I am still grinning from watching “The Last Days of Lehman Brothers” last night. I think it was written and directed by Professor Chris Knight of G20 protest fame. The characters were truly superb. Dick Fuld may as well have been played by LT (Lawrence Taylor of the NY Giants). John Thain was depicted as an Oscar Wilde type never devoid of a full champagne glass throughout. In true Orwellian fashion the farmer from Babe was cast as Hank Paulson. It was truly a case of Trading Places meets Wall Street, sure to be a requirement to watch for the 09 graduate intakes.