I see most of the regulars are out of stocks now, and short the index(s), so I feel in good company. Having been too blinkered to accept GFC1 was coming, I made a determined effort to be prepared not miss any further falls.
The data confirmation that it's more doom and gloom coming out of the States, which of course flows on to us is: (Excerpt from Kathy Lien report freely available by subscribing to emails on www.fx360.com)
This of course is talking about their 'tonight' for us...
Previewing Friday?s U.S. Economic Reports
Retail sales, consumer prices and confidence are the 3 big pieces of U.S. data scheduled for release tomorrow. When the Federal Reserve decided to reinvest principal payments from agency and mortgage backed securities, they cited concern about the sluggish pace of household spending and subdued inflationary pressures. Therefore Friday?s economic reports will be critical in confirming or contradicting the central bank?s concerns. If the surprises are large enough, it could also be a deciding factor in where the dollar trades next. In yesterday?s daily report, we talked about how macro factors drove the flows in the foreign exchange market. Even though risk appetite will continue to have a major impact on currencies, the significance of tomorrow?s report should turn the market?s focus back to economic data. This means that on Friday, fundamentals could have a larger impact on the dollar than risk appetite.
In terms of the data, there are a number of reasons to believe that consumer spending will be weak and inflation will remain muted. Retailers such as Costco, Macy?s and Limited Brands reported strong sales but J.C. Penny and teen clothing stores such as The Wet Seal and The Buckle reported weaker results. However consumers are very picky about where they spend their discretionary income, forcing retailers such as American Eagle Outfitters and Abercrombie & Fitch to lure in shoppers with deep discounts and promotions. In general, the back to school shopping season has been sluggish, yielding dissatisfactory results for most retailers. The International Council of Shopping Centers reported a 2.8 percent increase in sales compared to a forecast of 3 to 4 percent. The Johnson Redbook survey of retail sales showed a 0.6 percent decline compared to the previous month. Retail sales and consumer prices will also not get much support from the price of gas which hovered around $2.73 a gallon for most of July. We also believe that the University of Michigan survey will indicate deterioration in consumer sentiment because a similar report by Investor?s Business Confidence showed that confidence fell to a 22 month low. According to the editor of the IBD, "The failure of government programs to bring about a promised turnaround in the job market seems to have soured many Americans on current stimulus and bailout efforts.?
This morning?s U.S. economic reports provided no relief for risk. Jobless claims rose to a 5 month high from an upwardly revised 482k to 484k. As long as claims are moving closer and not further away from 500k, the labor market is light years away from recovery. Continuing claims pulled back slightly but that was partially due to regular benefits expiring as the number of people receiving emergency benefits surged by 1.34 million. Import prices also grew at a slower than expected pace in July which indicates that inflationary pressures remain muted.
(20min delay)