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News & Views: Friday, September 12

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

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Scottish Independence Push Loses Ground as No Leads Poll (Bloomberg)

Special Report: Moscow stifles dissent as soldiers return in coffins (Reuters)

France and Germany oppose guarantees for ECB debt-buy plan: document (Reuters)

Poroshenko Says EU Agreement to Be Ratified Next Week (WSJ)

Chinese Bank Loans Bounce Back, but More Support May Still Be Needed (NYTimes)

Views
Another poll overnight showed a roughly 5 point gap between the "Yes" votes and "No" votes for Scottish independence, with the secessionists trailing. This is the third poll this week showing the same amount of dispersion since the weekend poll showed a scant lead to the secessionists. There are certainly many assets that would be buyable if the No vote comes through - RBS, UK small caps - and it would also turn into a headwind for the USD.

Ben Bernanke gave a speech yesterday to a group of Morgan Stanley advisors. Supposedly he told the group that he was surprised the 10yr Treasury yield was still below 3%. This is confusing because earlier this year he gave paid speeches to groups of financial professionals with anecdotes like "the Fed will never hike in my lifetime," "due to fiscal headwinds and structural stagnation the terminal rate will be neutral at 2% and tight at 3%," and "the Fed staff is changing its models to reflect a lower long-run growth rate." The comments were a key reason for the bull flattening this year in the Treasury curve, although I have to chuckle it had to be in that venue to make it happen, when he said the same comments for free last year serving as Chairman of the Fed. Board Member Stein also did a speaking circuit amongst traders and made similar comments, so I hear. In any case, the 10yr comment is the causa proxima cited for the weakness in Treasuries this morning.

The speech by Bank of Japan (BoJ) Governor Kuroda overnight did not include any useful market-related information. He discussed an optimal tax system and the how important it is to use history as a guide for making useful policy decisions.

ECB President Draghi spoke in Milan very early this morning and talked up the lending to small businesses as a way to increase demand for credit and growth in the economy. He said that governments should consider bank guarantees on loans made to small or medium enterprises. He also stated that monetary stimulus - most likely in the form of outright government bond purchases, or just in general - won't work without structural fiscal changes. Lastly, he said that it would be useful for governments to hold a discussion on raising public investment if there is the fiscal space to do so - ie less austerity.

Overnight Data:
- Eurozone industrial production MoM (Jul) up 1.0% vs 0.7% expected, prior -0.3%

US Economics (Time Zone: EDT)

08:30 Advance Retail Sales (Aug) - +0.6%, expected 0.6%, prior was revised up to 0.3% from 0.0%
08:30 Retail Sales Ex Auto - +0.3%, exp 0.3%, prior was revised up to 0.3% from 0.1%
08:30 Retail Sales Ex Auto & Gas - +0.5%, exp 0.5%, prior was revised up to 0.3% from 0.1%
08:30 Import Price Index MoM (Aug) - exp -1.0%, prior -0.2%
09:55 University of Michigan Consumer Confidence (Sep prelim) - exp 83.3, prior 82.5
10:00 Business Inventories (Jul) - exp 0.4%, prior 0.4%
 
Earnings

Darden Restaurants (DRI)

Twitter: @MichaelSedacca

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