Recap 8-16-12

Main Items:

  • US Philly Fed improved to -7.1 in Aug vs -5 exp and -12.9 prev
  • US Jobless Claims increased to 366k last week vs 365k exp and 361k prev
  • Spain may receive an emergency disbursement from the €100bn bank bailout, because of the limits the ECB imposed on lending against government-guaranteed bonds. Bankia, formed in 2010 from the merger of Spain’s troubled banks, will get the first portion of cash imminently a source told Bloomberg.


  • EU CPI was stable at 2.4% YoY in July

Upcoming Data:

  • Thurs: EU CPI, US Jobless Claims, Housing Starts
  • Fri: Canada CPI, U Michigan Confidence
  • Mon: Chicago Fed Index, RBA Minutes
  • Tues: Japan Merchandise Trade Balance
  • Wed: US Existing Home Sales, BoC Governor Carney speaks, FOMC minutes, China HSBC Flash Mfg PMI

Commentary & Links:

One more observation on the Industrials vs Staples sectors: the ratio, which has been stable for over two decades, is now at the 7th percentile reading historically, and has just bounced off of a multi-year support line stretching back to late 1992. That was, of course, following the last housing bust induced recession. Historically, the ratio has changed direction quickly, leading to ~50% rallies over 2 year periods:

Separately, the NYTimes reports that though 1/3rd of Americans are self described independents, close to half reliably vote for one party or the other. Furthermore, many ‘true’ swing voters live in states that are dominated by one party. As a result, “the actual share of voters nationally who are up for grabs is probably between just 3 percent and 5 percent in this election, polling experts say. The Obama and Romney campaigns are expected to spend on the order of $2 billion, in part to try to sway this tiny share of the electorate.” So if voter turn out is the same as 2008, that implies there will be 5.3mm swing voters, and the two campaigns will spend a combined ~$377 per person to change their opinion.


2 thoughts on “Recap 8-16-12

  1. Great call on the cyclicals vs defensives as mkt has started to reward that view big time. As always, appreciate the commentary.

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