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News & Views: Wednesday, September 10

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What you need to know for today's trading day.

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Dollar General Launches Tender Offer for Family Dollar Shares (WSJ)

OPEC Cuts Demand Outlook by Most in Three Years on Shale (Bloomberg)

Venezuela's annual inflation rises to 63.4% (BBC)

Ferrari chairman Luca Di Montezemolo to quit after 23 years (BBC)

EU Sanctions to Start in Days If Putin Doesn't Comply, Finns Say (Bloomberg)

Views
The EUR jumped near the close of yesterday's session and see if that trend can continue today. Dollar strength is once again present this morning, but mostly due to weakness in the JPY. Positioning there is crowded, but there is still plenty of room for it to get more crowded. Bank of England Governor Mark Carney will give a speech at 9:45am ET this morning to the Treasury Select Committee in Parliament. Keep an eye on headlines from there as it could be a source of volatility in FX (GBPUSD) and rates (sterling and US rates).

If you ever wondered what hyperinflation looked like, check out Venezuela. It has persisted at above 55% for the past 12 months due to the devaluation of the Bolivar - the black market rate not the official.

Japan's August producer price index growth was well below expected, which has prompted the weakness in the JPY overnight. The tone from the market has been that the Bank of Japan (BoJ) will move to ease should growth persistently falter. Separately, the BoJ bought Japanese T-bills at a negative discount rate last night, most likely a first for a central bank.

Dollar General (DG) went hostile with its bid for Family Dollar (FDO) tendering an offer for $9.1bln in cash or $80/share for the company. Dollar Tree (DLTR) had an offer for $74.50/share using cash and stock. Family Dollar rejected the revised proposal from DG last week due to antitrust reasons. DG has said that it is willing to divest up to 1,500 stores if it was required by the FTC and already has written financing committments from two investment banks.

On the geopolitical front, Ukraine PM Poroshenko said this morning that Russia has withdrawn more than two thirds of its troops within the country. Russia cannot validate that because officially those troops aren't even there! EU finance ministers are meeting today to discuss further sanctions against Russia although Bloomberg TV just said that the meeting has been delayed. Any new sanctions would be removed if the peace plan laid out by Russian President Putin holds, according to EU members.

Overnight Data:
- Japan PPI YoY (Aug) up 3.9% vs 4.1% expected, prior 4.3%
-- MoM down -0.2% vs 0.0% xp, prior 0.4%
- Australia Westpac consumer confidence index (Sep) down to 94.0, prior 98.5

US Economics (Time Zone: EDT)

07:00 MBA Mortgage Purchase Index
10:00 Wholesale Inventories MoM (Jul) - expected 0.5%, prior 0.3%
11:00 Fed to buy $350m-$450m TIPS in 5 to 30-year range
1:00 Treasury to sell $21b 10-year notes (reopening)

Earnings

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Five Below (FIVE)
Men's Wearhouse (MW)
Radioshack (RSH)

Twitter: @MichaelSedacca

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No positions in stocks mentioned.

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