Finotec News Archive - August 29 2007

U.S. stocks dropped for a second day

U.S. stocks dropped for a second day, erasing last week's advance, after consumer confidence fell the most in two years and Merrill Lynch & Co. analysts said tighter credit markets will hurt bank earnings. Financial shares have posted the biggest

Rodian Rahnayev
29 August 2007

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''Our concern when we look out is with the U.S. consumer,'' said David Chalupnik, who helps manage about $100 billion as senior managing director at First American Funds in Minneapolis. ``Are the housing issues that we're seeing going to finally depress the U.S. consumer? That's the risk that we see.''

Stocks extended their decline today after minutes from the Fed's Aug. 7 policy meeting showed central bankers put aside concerns about the rising cost of credit because they weren't convinced a slowdown in inflation would last.

The minutes from the Fed's last Open Market Committee meeting don't include the Aug. 16 emergency video conference when officials revamped their policy statement and cut the rate the Fed charges banks on direct loans. The benchmark lending rate was kept unchanged.

Markets in Europe and Asia retreated, led by financial companies on concern the subprime mortgage rout is spreading and will erode global economic growth. The Morgan Stanley Capital International World Index slipped 1.5 percent to 1,525.60.

Investors have been shunning the asset-backed commercial paper market because of concerns about the mortgage-related securities underlying the debt.

Consumer confidence fell this month by the most since just after Hurricane Katrina two years ago. The New York-based Conference Board's index declined to 105 from 111.9 in July. Economists surveyed by Bloomberg News forecast the index would slip to 104 from an originally reported July reading of 112.6.

The yen advanced the most in almost two weeks against the dollar on speculation banks will report more credit-market losses, prompting traders to pare higher-yielding investments funded by loans in Japan.

Finotec Analysis Team
29 August 2007

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Today's Economic Events

Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
23:50	Retail Sales y/y	JPY	Jul	-0.4%	-0.8%
Measures the value of sales at the retail level. A rising trend has a positive effect on the nation\'s currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.
14:30	Crude Oil Inventories	USD	Weekly	1.9M
The Energy Information Administration's (EIA) Crude Oil Inventories measures the weekly increase in barrels of commercial crude oil held in inventory by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation and other economic forces.
09:30	Leading Index m/m	CHF	Aug	2.13	2.13		2.06
Leading Index m/m Measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads. The index is published monthly by The Conference Board, a leading private US research group, but traders tend to pay little attention because the components that make up the index are reported at an earlier date.
06:00	German Consumer Confidence	EUR	Sep	8.7	8.5		8.5
German Consumer Confidence