Recap 10-18-11

Main Items:

  • US Core PPI was unchanged at 2.5% YoY in Sept vs 2.4% exp
  • NAHB index jumped to 18 vs 14 exp and prev. The improvement was broad based, and was likely helped by low mortgage rates.
  • Citi on its conf call: "our early bucket delinquencies are beginning to increase reflecting re-defaults of previously modified mortgages…we could begin to see increasing delinquencies and net credit losses in the first mortgage portfolio…the pace of improvement in our home equity delinquencies has slowed”.


  • German Zew Survey of Economic Sentiment declined to -48.3 in Oct vs -45 exp and -43.3 prev
  • UK CPI jumped to 5.2% YoY in Sept vs 4.9% exp and 4.5% prev. Core CPI increased to 3.3% YoY in Sept vs 3.2% exp and 3.1% prev
  • Chinese Data:
  1. GDP rose 9.1% YoY in 3Q vs 9.3% exp and 9.5% prev
  2. Fixed Asset Investment growth slowed to 24.9% vs 24.8% exp and 25% prev
  3. IP rose 13.8% YoY in Sept vs 13.4% exp and 13.5% prev
  4. Retail Sales rose 17.7% YoY in Sept vs 17% exp and prev


For people who still have balance sheet, senior unsecured money market paper in the big financials may look attractive. BAC 6.05 8/12 bond is trading at a yield of ~5% with 10 months to maturity. People who think that Buffet is right and BAC won’t default but are afraid banks are value traps may find this appealing.