Jan 5, 2011

January 5, 2011

Equity markets are opening slightly lower this morning in spite of the ADP Employment report, which showed an increase of 297K jobs versus expectations of an increase of 100K. The ISM Services index also came in ahead of estimates at 57.1 vs. an expected 55.7. Commodities are weak for the second straight day, led down by oil and metals. The bond market is also soft. The dollar is up strong this morning.

The CMBS market, which has been effectively frozen since June 2008, is showing signs of life. DB and UBS are working on a $2.5 billion deal, while JPM is working on a $1.5 billion deal. Moving some of this paper could help bank lending.

Auto sales were reported yesterday for December, and came in slightly ahead of consensus at 12.5 mil units. Domestic sales were also ahead of estimates. The big surprise was vehicles manufactured by both Chevrolet and Ford outsold those made by Toyota (US sales).

The new Republican Congress was sworn in yesterday, and they have stated their first two items are cutting $100 billion from the budget and rolling back Obamacare.

The World Bank issued its first Yuan-denominated bond, raising $76 million.

The Varadero field in the North Sea is expected to yield 50 billion barrels of crude oil. This new discovery is next to the Catcher field, which was found last year and is roughly the same size.

The Fed released their minutes of last month’s meeting, and stated that the economic recovery is gaining strength. They decided to maintain the $600 billion QE-2 in spite of the economic strength because “inflation remains below” their 2% target. Guess they haven’t been to the grocery store or gas station lately?

Qualcomm announced they would be acquiring WiFi specialist Atheros for $3.2 billion in an effort to improve their competitive positioning vis a vis Broadcom.

Bloomberg is reporting that world food prices rose to a record in December, higher than the levels of 2008 that sparked a global riot. The overall cost of food increased by 25% according to the FAO. A positive data point is that rice prices remain below 2008 levels. I guess food producers haven’t read the Fed’s minutes citing a lack of inflation.

European markets are weak today while APAC markets closed down last night on concerns about declining oil, gold and other resource prices.

I thought this was an interesting MP3-based Social Experiment

Have a great morning


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