Storm Front Coming

October 29, 2012

A monster storm will slam into the Northeast of the United States today.  There will be no equity trading in New York City today, and bond markets close at noon.  Wall Street may be under water from the storm surge.  Damages from wind and flooding figure to run into the billions of dollars.  Power outages will likely last up to a week, if not more, affecting up to 50 million people.

Polls still show a very close vote for the U.S. presidency.  The outcome will hinge on electoral college arithmetic.  Romney has a deeper war chest for this final week of campaigning than Obama.  Low voter turnout in the wake of the storm moreover helps Romney, under whom there will be more fiscal spending austerity in the short term.  Romney intends to scrap major parts of Obamacare, declare China a “currency manipulator,” adopt a more aggressive foreign policy, spend more on the military, slice individual as well as corporate income tax rates and limit tax deductions and exemptions.

Share prices have dropped in Europe so far by 1.5% in Italy, 0.8% in France, 0.7% in Germany, and 0.5% in Spain and Britain.

Equities declined 0.9% in Singapore, 0.8% in New Zealand, 0.6% in Taiwan, 0.5% in China, and 0.2% in Thailand, Indonesia, and Hong Kong.  Japan’s Nikkei and South Korea’s Kospi indices closed unchanged. 

The dollar is 0.2% firmer against the loonie, euro, Swiss franc and sterling.  It is up 0.1% against the Australian and New Zealand currencies but unchanged versus the yen.

Ten-year British gilt and German bund yields declined by five basis points.  The 10-year Japanese JGB is up a basis point.

Japanese retail sales plunged 3.6% on month in September, most since the 2011 earthquake 18 months ago.  Compared to September 2011, total sales rose just 0.4%, a quarter as much as in the year to August, while large-store sales declined by 1.0%.  The latter posted a 2.2% decline between 3Q11 and 3Q12.

South Korea’s manufacturing business sentiment index recovered two points to a reading of 72 in November, but the October-November average score was the same as in August-September and down from a 2Q mean of 84.  Producer price inflation in Singapore decelerated sharply in September.  Domestic PPI was just 0.4% higher.  Taiwan’s index of leading economic indicators rose 0.2% in September.  The index of coincident economic indicators increased 0.3%.

Moody’s upgraded the Filipino credit rating by a notch to Ba1 and characterized the outlook as “stable.”

The stock of British M4 money was 3.5% lower in September than a year earlier.  U.K. mortgage approvals of 50.0K in September surpassed August’s total of 47.9K.  A considerably smaller increase had been anticipated.  Consumer credit rose GBP 1.2 billion in the month versus a predicted uptick of just GBP 0.1 billion.

The U.K. Hometrack property price index posted a 0.1% dip between the second and third quarters, but the 0.4% decline from 3Q11 was the smallest on-year decrease in two years.

In Germany, the states of Hesse, Saxony, and Brandenburg reported the same on-year CPI inflation for October as they had experienced in September.  Such stood at 2.0% in the first two instances and at 1.9% in the third one.

Finnish consumer confidence fell 5.0 points to a negative reading of 1.6 in October.  Such was even below the August score of +0.5.

Swedish retail sales volume rose 1.7% on month in September, more than reversing a 0.4% drop in August, and that resulted in a 4.6% increase from a year before.  But Spanish retail sales plunged 10.9% in the year to September, some 75% more than forecast.

In South Africa, M3 money and private credit recorded on-year increases of 7.5% and 9.1% in September after advancing by 7.8% and 7.9% in the year to August.

Scheduled U.S. data to be released today are personal income and spending and the Dallas Fed manufacturing index.  Attention will be fixed mostly on the weather in the east.  The Bank of Israel will announce its latest interest rate decision.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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