Asian and European markets were tame overnight, closing slightly
lower. The Reserve Bank of India noted that liquidity conditions
had tightened and said that it stood ready to inject more liquidity
if the necessary. Earlier this month, the RBI began intervening in
the Indian FX market by selling dollars to domestic oil companies
and offering credit lines. The rupee reached an all-time high of
68.82 vs. the dollar at the end of August, but has recently dropped
August durable and capital goods orders were released early this
morning, missing estimates. Durable goods orders rose by 0.1% in
August vs. -0.2% estimates. In July, orders had fallen by 8.1% due
to a slowdown in large aircraft orders from
). Durable goods orders ex-transports, which is the more closely
watched figure, saw a 0.1% decline vs. +1.0% estimates. This number
is very troubling because the August auto sales figure released
earlier this month showed very strong gains. The most statistically
significant figure, capital goods orders, rose 1.5% in the month,
up from a decline of 3.3% in July.
US equities traded in negative territory for most of the day,
closing down for the fifth consecutive day. Financial sector stocks
were the top performers after lagging the prior two days.
Health-care and interest-rate sensitive utilities were the worst
performers despite a rally in US Treasuries. Some of the negative
performance was attributed to the announcement that the US
government would be unable to pay its bills after Oct 17. In
response to this, US government bond markets began to gear up for
the potential of a US technical default.
from Bloomberg states that sales forecasts at
) for the back-to-school and holiday season are well below
expectations. A spokesperson for the company noted that Wal-Mart is
reducing inventory for the third and fourth quarters. Note that
yesterday ICSC lowered its growth rate for September same-store
sales to 3% from 4% on weak back-to-school and apparel sales.
Tomorrow's Financial Outlook
The third and final estimate of Q2 GDP will be released tomorrow
morning. Economists estimate that the quarterly annualized rate
will increase to 2.6% from the second estimate of 2.5%. The gain
will be due to a rise in personal consumption. Jobless claims will
also be released in the morning. Over the last two weeks, software
upgrades by the Labor Department have caused jobless claims to be
abnormally low, and it is very possible tomorrow's claims report
could be abnormally high.
The last piece of economic news on the calendar is pending home
sales. Sales are estimated to have fallen 1% in August after
falling 1.3% in July. The rate from a year ago is estimated to have
fallen to 6.3% from 8.6% in July.
The UK will release the final estimate of its Q2 GDP before the US
) is scheduled to report earnings after the market close. Nike
typically is a good leading indicator of global sales demand,
particularly retail apparel.