Minyanville's Before The Bell: Abe Rocks Headlines, Futures Down
Abe rocks the world and resigns. Stocks are mixed around the world and U.S. futures are down...
In Japan, the Nikkei 225 lost half a percentage point after Prime Minister Shinzo Abe rocked headlines by announcing his resignation. Abe, whose approval rating had fallen to a low of 30%, cited a difficult environment to push ahead with effective policies. His decision comes six weeks after his Liberal Democratic Party suffered an embarrassing defeat in an upper house election. (From WSJ)
In China, the Shanghai Composite added 1.15% a day after news of surging inflation caused a 4.5% sell of in stock prices. In a report by the World Bank, China's GDP is expected to grow by 11.3% due to strong external trade and investment-driven recovery in domestic demand. The main macroeconomic task is containing the country's rising trade surplus, the WB Said. (From Xinhua)
Yesterday's 4.5% sell-off was due to news of inflation increasing at the fastest rate in over a decade. This morning the National Development and Reform Commission (NDRC) added more color to the inflation figures stating the retail price of pork, China's staple meat, rose 77.6% in August on a year-over-year basis. (From Xinhua). Professor Rohrlich wrote about this in his article China's Year of the Pricey Pig. In addition, click here for our China package for more background on this soaring economy.
In other parts of Asia, the Hang Seng added +1.49%, Taiwan's's TAIEX added +0.17%, and India's Sensex lost -0.24% as the country's industrial production grew at its slowest pace in nine months. (From Bloomberg)
In Europe, markets are trading mixed. The CAC is up +0.13%, DAX is down -0.23%, and the FTSE is down -0.58%.
Making headlines is news of Bank of England's Governor Mervyn King refusing to relax the BOE's system for money-market lending, rejecting calls to provide commercial banks with more longer-term cash to reduce borrowing costs. (From Bloomberg) As reasons for not doing so, King cited such a move would "encourage excessive risk-taking, and sow the seeds of a future financial crisis." (From Bloomberg) King's move is in-line with the views at Minyanville. Read Mr. Practical's What Future Does The Credit Crunch Bring for more insight into the current turmoil.
In a bit of economic data for the European Union, 2Q labor costs came in at 2.5% vs. 2.3% cons. July industrial production rose 0.6% vs. 0.2% cons on a month-over-month basis. UK Jobless claims fell 4.2 k vs. 8 k cons. (From BTIG)
In the U.S. Secretary Treasurer Hank Paulson stated the confidence crisis of the credit markets is likely to last longer than the turmoil caused by the Latin American debt crisis of the 1980's or the Asian crisis and Russian default of the 1990's. (From FT) Toddo first noted the tone had considerably shifted from the "contained" statements earlier this summer. Read Toddo's thoughts from August in The Credit Card.
The major credit ratings agencies in the U.S. have been summoned to Washington for more clarity into their ratings processes. The ratings agencies have been under increased scrutiny. Toddo predicted the blame game in his article A Walk On The Beach.
The dollar fell to record lows against the euro as investors bet the U.S. interest-rate advantage over Europe will narrow as the housing slump continues. Please read Professor Bloudek's Duration Carry Trader for more on the importance of foreign currencies.
In some company-specific news, Old Lane, the hedge-fund firm acquired by Citigroup (C)this year, fell 5.9% due to losses on debt and emerging-market securities. The poor performance of the $4.4 bln fund leaves Old Lane with a 1.9% gain for 2007. (From Bloomberg)
For more stock-specific news, please click on our Stocks To Watch.
The weekly crude inventories report is due at 10:30 AM EST. Please click here for the full radar.
Hope you Minyans are having a great morning. If not, Hoofy and Boo will cheer you up. Make sure you check out their new video! Have a great day. Good luck and good trading!
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