A Quiet Monday

November 14, 2011

This is a big week for economic releases, beginning tomorrow with the PPI, retail sales, and business inventories. Later in the week we’ll get CPI, industrial production, capacity utilization, housing data, and jobless claims. Economic data has been coming in slightly better than expectations for the past two months.

Attention here in the US is now focused on the Supercommittee charged with finding $1.2 trillion in savings over the next 10 years. The Republicans have proposed a combination of $500 billion in tax increases with $750 billion in spending cuts, the Democrats have countered with $1 trillion in tax increases and $1 trillion in spending cuts. The deadline for a deal is November 23^rd.

Moody’s has expressed additional concerns about Greece after officials considered a referendum to cut the country’s debt by 50%. Eventually they cancelled the vote, but the market concerns are still abundant. Again, if they had their own currency, they could devalue it and achieve a similar result.

Borrowing costs for French banks have begun rising in relation to German banks as the sovereign debt crisis begins to weigh on the French banks, which have historically been large purchasers of sovereign debt.

Wheat production in Russian, Ukraine, and Kasakhstan has surged, pushing the price of wheat down dramatically. Milling wheat futures have fallen 19% this year on the CBOT and 27% on the NYSE Euronext.

The Supreme Court agreed to review the constitutionality of Obama Care today. Their decision will determine whether the individual mandate (which requires people to purchase health insurance) is legal or not. If the court rules against the mandate, the plan is effectively dead. If they uphold it, then the plan will probably be enforceable, subject to other appeals. A group of 26 states brought the suit, saying “the act is without precedent both in it coercive impositions on the states and in its effort to force individuals to engage in commerce so that the federal government may regulate them.”

Stanford and Boise-ouch!

Have a great Monday

Ned