Daily Market Commentary for September 15, 2011
USPS announced they are considering closing or combining more than half of its 487 mail processing facilities and slowing mail delivery service. (read more at Millennium-Traders.Com) http://www.millennium-traders.com/news/newscommentary.aspx
European Central Bank announced they will provide liquidity to banks in conjunction with other central banks, sending markets sharply higher. Top central banks announced that they will provide additional dollar loans to commercial banks in a move seen as a response to growing fears of a European credit crunch triggered by the euro-zone’s sovereign debt crisis. The European Central Bank, the Bank of England, Bank of Japan and the Swiss National Bank announced they will each conduct additional dollar tenders in an effort to provide liquidity through the end of the year. The central banks said the auctions are coordinated with each other as well as, the U.S. Federal Reserve. Through the end of the year, the ECB, Bank of England, Bank of Japan and Swiss National Bank will conduct three additional dollar tenders with a maturity of approximately three months in an effort to provide adequate dollar funding.
Philadelphia Fed Index released this morning shows manufacturing activity in the Philadelphia region contracted in September for the third time in four months. The drop however, was not as bad as the tumble last month that rattled markets. The Philadelphia Fed said its index of current activity was -17.5 in September, an improvement from the -30.7 reading in August.
According to the manufacturing survey released by the Federal Reserve Bank of New York, Empire State index for September decreased to negative 8.8 from negative 7.7 during August which marked the fourth month in negative territory. There were signs of weakness across the board with new orders, shipments and employment all declining. The prices-paid index rebounded to 32.6 after having fallen 41 points over the summer. For the first time this year, the index of the number of employees fell into negative territory in September. Inventory index fell to negative 12 during September which shows signs that inventories continue to decline. The shipments index dropped 16 points to negative 12.9.
The Labor Department reported consumer prices rose 0.4% in August, above market expectations and the core rate rose 0.2%.
Additionally Labor Department reported first-time filings for jobless claims jumped by 11,000 last week to a total of 428,000 - reaching the highest level seen in nearly two months. Initial jobless claims from two weeks ago were revised up to 417,000 from an original reading of 414,000. The average number of first-time claims filed over the past four weeks also rose, up by 4,000 to 419,500. Jobless claims have been stuck in a tight range since the end of spring, confirming the slow pace of hiring nationwide. The U.S. has only added 105,000 jobs over the past three months and most executives have scaled back plans to hire more workers amid concerns of another economic slowdown. The number of Americans who continue to receive regular state unemployment checks fell by 12,000 to 3.73 million in week ending September 3 with continuing claims reported with a one-week lag. The lack of hiring has spurred the federal government to offer extended compensation to millions of Americans whose state benefits have already expired. Nearly 7.14 million people received some type of state or federal benefit in week of August 27, down 25,033 from previous week.
Federal Reserve capacity utilization - output of the nation's factories, mines and utilities rose 0.2% during August after a strong 0.9% gain in previous month. Factory activity alone rose 0.5% in August after a 0.6% increase in July. Production of motor vehicle and parts rose 1.7% during August after a 4.5% gain in previous month. Excluding motor vehicles and parts, factory production rose 0.1% in August. Capacity utilization is a gauge of slack in the economy which rose to 77.4% during August from 77.3% during July.
The Commerce Department reported U.S. current-account deficit fell to $118 billion in Q2 or 3.1% of GDP, from Q1 levels of $119.6 billion or 3.2% of GDP. The deficit narrowed due to an increase in income from U.S.-owned foreign assets as well as a increase in the surplus in services, which offset a widening goods deficit and increased U.S. government grants. Q1 current-account deficit was revised up to $119.6 billion from $119.3 billion.
Swiss bank UBS AG reported that a rogue trader identified as Kweku Adoboli, an employee in the firm’s exchange-traded funds unit in its investment-banking division - ran up $2 billion of losses which could push UBS’s Q3 results into the red. Adoboli was a director of ETF and Delta One, a class of derivatives that are intended to move in very close step with the underlying asset. The announcement followed the early-morning arrest of the 31-year-old man in London on suspicion of 'fraud by abuse of position'. Delta One is also the division at Societe Generale SA where Jerome Kerviel was a trader in 2008, when Kerviel’s unauthorized trades cost the French bank 4.9 billion Euros ($6.7 billion). Kerviel was accused of placing €50 billion of bets on stock-market futures which was more than the entire market capitalization of SocGen at the time.
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