Quick Overview

• According to Standard & Poor's/Case-Shiller index U.S. Home prices fell 0.9% in July, and down 16.3% YoY.
  

• The Conference Board said U.S. consumer confidence rose from 56.9 to 59.8 in September.
  

• The Chicago Purchasing Managers' index fell from 57.9 to 56.7 in September
  

• Canada’s GDP rose 0.7% in July and up 1.2% YoY.
  

• Japan’s unemployment rate rose from 4.0% to 4.2% in August.
  Japan’s industrial production fell 3.5% in August
  Japans household spending fell 4.0%
  

• U.K.'s GDP rose 1.5%
  

• Euro zone consumer prices rose 3.6%.
  
  

• The USDA said as of September 1st, stocks of:
  Corn totaled 1.624 billion bushels.
  Soybeans totaled 205 million bushels.
  Wheat totaled 1.857 billion bushels.
  

• Bush signed a spending bill that includes a $25 billion loan package for troubled automakers
  
  
  

Banking crash hits Europe as ECB loses traction
Data from the IMF shows that European banks hold 75pc as much exposure to toxic US housing debt as US banks themselves. Moreover they have mounting bad debts from the British, Spanish, French, Dutch, Scandinavian, and East European housing markets, where property bubbles reached even more extreme levels that in the US.

U.S. Stocks Plunge After House Votes Against Bailout Plan

'Unimaginable'

``They've got to come up with something or the damage is unimaginable,'' said Henry Herrmann, Overland Park, Kansas-based president and chief executive officer of Waddell & Reed Financial Inc., which manages $70 billion.

Quick Overview

• Sept. 29 (Bloomberg) -- The Federal Reserve increased the size of previously arranged currency swaps with foreign central banks to $620 billion from $290 billion to make more dollars available to banks worldwide.
  

• U.S. Consumer spending was unchanged in August.
  

• U.S. Personal incomes rose 0.5%.
  

• YoY Japan's retail sales rose 0.7% in August.

US Economy: Even Hank Paulson's bail-out plan cannot detox global banking
Hopes that the world can cruise happily on as the US buckles have been dashed by the violent downturn across Europe and Asia over the summer. The Baltic Dry Index measuring freight rates for ships has plummeted by two thirds since May. Japan’s economy is already contracting. China’s may be close behind: a third of all textile factories in Guangdong have closed this year. House prices are tumbling in Shenzen, Beijing, Shanghai.

While Rome burns
Sceptics on that point prefer to look at European banks’ leverage ratios, which measure the amount of capital banks hold relative to total assets. By some estimates, Deutsche Bank, Barclays and UBS have leverage ratios of 1.2%, 2.4% and 2.1% respectively, which would make broker-dealers weep with fear. Get the risk calculations wrong (it can happen) and the cushion of capital looks horribly thin.

Quick Overview

• (Reuters) - Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.
  

• Congress might be close to a deal on the $700 billion financial sector bailout.
  

• U.S. durable goods orders fell 4.5% in August -- weaker than expected. Excluding transportation, orders were down 3.0%.
  

• U.S. new home sales fell 11.5% from July's pace -- weaker than expected.
  

• U.S. jobless claims rose 32,000 last week to 493,000
  

• Japan's manufacturing sentiment improved from -15.1 to -10.0
  

• Bellwether GE cut its earnings outlook and announced steps to strengthen its capital base, including suspending share repurchases and holding its dividend flat through next year.
  

• YoY, Global Insight anticipates inbound cargo volumes at US ports will be down 6%.

EU refuses bail-out package despite crisis fears
Mr Gross said Deutsche Bank deploys fifty times leverage and has liabilites of $2,000bn, equivalent to 80pc of Germany’s GDP. Fortis Bank has liabilities of 300pc of Belgian GDP. These dwarf the burden of any US bank on the US government balance sheet. He said EU states do not have the means to bail out these banks. Any rescue would have to come from the European Central Bank, yet it is not allowed to carry out bail-outs under the Maastricht Treaty law.

The Winter of Our Discontent
The Bush administration used the 9/11 attacks as an excuse for the biggest increase in military spending and police power since WWII.

Now it is using the market correction (caused largely by its own interventions in the credit industry) to expand state power in the financial area. Half of all Americans pay their mortgages, directly or indirectly, to the federal government. Most older Americans depend, in whole or in part, on money from the government to live. Now, Americans depend on the government to keep house prices up - by subsidizing demand for mortgage backed securities - and to keep up stock and bond prices too - by buying up Wall Street's mistakes. Homeowners want protection from their own bad judgment. Investors want protection from Mr. Market. The old want free medicine. The young want free schooling. The unemployed want jobs and money. The rich want politicians in their pockets. The poor want the rich's money. Investors, homeowners, pensioners - is there anyone left in America who isn't trying to pick someone else's pocket?

Bringing Down Wall Street as Ratings Let Loose Subprime Scourge
``I view the ratings agencies as one of the key culprits,'' says Joseph Stiglitz, 65, the Nobel laureate economist at Columbia University in New York. ``They were the party that performed that alchemy that converted the securities from F- rated to A-rated. The banks could not have done what they did without the complicity of the ratings agencies.''

Quick Overview

• U.S. existing home sales fell 2.2% on the month -- weaker than expected.
  

• Business confidence in Germany dropped from 94.8 to 92.9 in September, the lowest in three years.
  

• Pressure to regulate the $62,000bn credit derivatives market mounted as the main US market regulator called on Congress to pass laws to supervise the industry
  

• The U.S. Department of Energy said:
  Supplies of crude oil fell 1.5 million barrels
  Supplies of gasoline fell 5.9 million barrels
  Supplies of heating oil rose 300,000 barrels.
  Refinery use fell from 77.4% to 66.7% of capacity
  Gasoline demand fell 3.5% YoY
  Distillate demand fell 5.5% YoY
  

• (Bloomberg) -- CME Group Inc., the world's largest futures exchange, will offer a steel contract beginning Oct. 19 after the rival London Metal Exchange introduced a similar product earlier this year.

• (Bloomberg) -- Barrick Gold Corp. Chairman Peter Munk said bullion prices will go higher, driven by large-scale buying by ``major, major'' holders of dollars who fear the effects of the U.S. government's bailout plan on the currency.
  
  

Quick Overview

• The Richmond Fed’s regional index of manufacturing fell from -16 to -18 in September.
  
  

• YoY Canada’s consumer prices rose 3.5% in August.

• Industrial orders for the Euro area rose 1.0% in July.
  

• Goldman is getting $5 billion from Buffett.
  

• (FT) Investors in gold-backed exchange-traded funds (ETFs) have amassed a record 1,039.68 tonnes of bullion, becoming the largest holders of gold after the reserves of the US, Germany, the International Monetary Fund, Italy, France and Switzerland.

Mr. Market Will Have His Say
At some point - and here we are just guessing, of course - investors are going to put two and two together. They're going to realize that every increase in the U.S. government's debts and financial obligations DECREASES the value of its paper - notably, the U.S. dollar…and U.S. Treasury bills, notes and bonds.

Financial Crisis: America rises to the occasion as storm heads for Europe
The US government debt (owed to the public, using the IMF measure) is just 48pc of GDP, one of the lowest of the G7 industrial powers. This compares with 57pc for Germany, 94pc for Japan, and 100pc for Italy. After the Second World War, the US debt touched 120pc of GDP. As the Habsburgs liked to say, today's drama is desperate but not serious.

Life Imitates Farce
"How fabulous," writes Brian Reade in the British tabloid The Mirror. "Thanks to the way it props up the USA's two biggest mortgage firms, more than half of American homes are now effectively owned by the state… Who'd have imagined that when the most right-wing of neo-cons leaves office 50% of the Land of the Free will effectively be [public housing]"?

Yes, almost every imbecilic act we could imagine has become fact. No exaggeration is too extreme. Life imitates farce.

Quick Overview

• The Federal Reserve agreed to convert Morgan Stanley and Goldman Sachs into traditional bank holding companies. The move effectively put an end to the investment banking industry, 75 years after its creation.
  

• (Reuters) - The dollar weakened broadly on Monday as the U.S. government's $700 billion bailout plan aimed at easing a global credit crisis raised renewed concerns about the country's massive budget deficit.
  

• Cargo volume at major US retail container ports is expected to fall 6% in 2008 compared with 2007 on the back of the global economic slowdown, according to the monthly Port Tracker report.
  

• Clarkson, the London shipbroker, says world containership orders fell 49% so far this year as charter rates slump, freight rates come under pressure and growth volumes shrink on major trade lanes.
  
  
  

Democrats Pledge Quick Action on Rescue Legislation (Update1)
Sept. 21 (Bloomberg) -- U.S. Democratic lawmakers said they would act quickly on a $700 billion rescue plan for financial companies, while demanding that the legislation limit compensation for executives of companies that will benefit.

Updates resume September 21

Quick Overview

• U.S. producer prices fell 0.9% in August, but rose 9.6% YoY. Excluding food and energy, prices rose 0.2% in August.
  

• U.S. retail sales fell 0.3% in August. Excluding autos, retail sales fell 0.7% in August.
  

• The University of Michigan's consumer sentiment index rose 63.0 to 73.1.
  

• Japan's GDP fell 0.7% in the second quarter.
  

• Industrial production in the Euro area fell 0.3% in July.

• YoY China's retail sales rose 23% in August.
  

• Asia - Europe volumes continue to rise according to Far Eastern Freight Conference statistics, which record a 3.2% YoY westbound container throughput increase in July, and a 7.5% jump to 5.75 million TEU in the first seven months.
  
  

• The USDA's U.S. 2008-2009 ending stocks estimate for:
  Corn was reduced from 1.133 to 1.018 billion bushels.
  Soybeans unchanged at 135 million bushels.
  Wheat unchanged at 574 million bushels.
  Sugar was reduced from 767,000 to 505,000 tons.
  Cotton was increased from 4.6 to 4.9 million bales.
  

• The USDA's world 2008-2009 ending stocks estimate for:
  Corn was reduced from 112 to 110 million tons.
  Soybeans were increased from 49 to 51 million tons.
  Wheat was increased from 136 to 140 million tons.
  Cotton was increased from 51 to 52 million bales.
  
  

• The USDA's estimate of 2008 beef production unchanged at 26.69 billion pounds
  

• The USDA's estimate of 2008 pork production was reduced from 23.6 to 23.5 billion pounds
  

• INTERFAX-CHINA - Lower iron ore demand from China is a major factor behind the sliding Baltic Dry Index (BDI), a measure of the freight rates of raw materials, which plunged from above 10,000 points five months ago to around 5,000 points on Sept. 9, industry analysts told Interfax on Sept. 10.
  

Quick Overview

• The U.S. trade deficit grew 5.7% to $62.2 billion, the largest in 16 months. U.S. exports increased $5.4 billion to $162.8 billion in July while imports increased $8.7 billion to $221.6 billion.
  

• (Reuters) - Lehman Brothers shares lost about 40 percent on Thursday as Wall Street questioned whether the investment bank will survive because of its failure to sell assets to cover losses from toxic real estate investments.
  

• U.S. jobless claims fell 6,000 last week to 445,000.
  

• Canada’s exports rose 2.2% in July while imports rose 4.6%, resulting in net exports of C$4.9 billion, down from C$5.6 billion in June.
  

• Japan's machinery orders fell 3.9% in July.
  

• Analysts forecast world container trade will grow by 8.7% this year, down from an earlier estimate of 9.7%. They estimate ship capacity will grow by 13.2%.

Quick Overview

• The Mortgage Bankers Association's index of mortgage applications rose 9.5% last week, but fell 24% YoY.
  

• YoY Japan’s wholesale prices rose 7.2% in August
  

• The U.S. DOE said:
  Supplies of crude oil fell 5.9 million barrels to 289.0 million barrels.
  Supplies of gasoline fell 6.5 million barrels
  Supplies of heating oil rose 700,000 barrels.
  Refinery use fell from 88.7% to 78.3%
  Gasoline demand fell 2.1% YoY
  Distillate demand fell 0.4%.
  

• ED&F Man predicts that world sugar production will fall short of consumption by 700,000 tons in 2008-2009.
  

Quick Overview

• The National Association of Realtors said pending home sales fell 3.2% in July and down 6.8% YoY.
  

• Lehman shares fell 45% after a Korean official said talks about an investment by Korea Development Bank have ended. This also ended the jubilation that greeted the US government's bail-out of Fannie and Freddie as worries about the financial sector and the health of the broader global economy returned.
  

• Canada’s housing starts rose 15% from July's pace.
  

• U.K.'s manufacturing production fell 0.2% in July.
  

• Business confidence in Australia rose from -9 to -7 in August.
  

Quick Overview

• The U.S. government is taking over Fannie Mae and Freddie Mac in an effort to save the mortgage industry and keep the whole show from going over the cliff.
  

• U.K.'s producer prices fell 0.6% in August
  

• Hurricane Ike is currently headed toward Texas or Louisiana.
  

• (Reuters) - Global meat consumption is expected to rise about 20 percent higher by 2015 due to Chinese demand.
  

• (Bloomberg) - With rising fuel prices China's extensive rail network looks set to triple intermodal transport by moving 10 million TEU in three years compared to 3.5 million in 2007.