5 Things To Know Before Trading

Stocks in Asia were generally lower on the session. The Nikkei was the weakest with a decline of 1.75%, while the Hang Seng, Shanghai and Australia all lost about a half percent. European indexes are also generally lower, with the Dax down a quarter percent and the Footsie off by about 0.4%. US stock futures are lower by a third to a half percent.

*The October reading of China’s Business Conditions Survey was down four points on the month to 65.03, according to Market News.

*The September reading of Japan’s Jobless Rate was down one tenth to 5.0%, a steady reading was forecast. Additionally Overall Household Spending was unchanged on a year over year basis, below the expected gain of 0.8%.

*The September reading of Japan’s Consumer Price Index ex-fresh food is -1.1% on a year over year basis, one tenth more deflationary than the estimate. However, the October reading of that same inflation measure for Tokyo is -0.5%, a few tenths less deflation than expected and half the rate of deflation seen the month before.

*The preliminary look at the September reading of Japan’s Industrial Production showed a decline of 1.9% on a month on month basis, much weaker than the -0.6% that was expected.

*There is a lot of unsubstantiated market chatter about national European central banks buying short dated Greek debt and other peripherals sovereign debt. The buying could be in response to the widening out of the yields on Portugal and Ireland debt versus German debt this morning, possibly because the plan that Germany’s Merkel is presenting to the EC today has a provision that, according to an article in the UK Telegraph, “calls for the ‘orderly insolvency’ by eurozone countries in trouble. Details are sketchy but the ‘Chapter 11’ for soverign states would include an extension of debt maturities, a ‘holiday’ on interest payments for as long as needed to let debtors recover, and a suspension of bondholder rights. The blueprint is akin to debt-restructuring schemes used by the International Monetary Fund.” I was told by a German contact that it appears the Germans are unwilling to keep footing the bill for others in the EU, that they are in essence heading down an “Austrian” path in their economics. The EC meeting is ongoing so be aware of headline risk.

*The September reading of German Retail Sales was down 2.3% on a month on month basis, well short of the expected gain of 0.5%.

*There were 47.5k mortgage approvals in the UK during September, according to the Bank of England, steady from the month before and above the expectation.

*The initial look at Q3 GDP is due out at 7:30am CDT. The expectation for GDP is +2.0%, Personal Consumption is forecast to be +2.5% and the estimate for the GDP Deflator is +1.8%. The Core PCE measured on a quarter on quarter annualized basis is+1.0%. Also due out at 7:30am is the Q3 reading of the Employment Cost Index; it is expected to be +0.5%. The October reading of the Chicago Purchasing Managers Index is due out at 8:45am CDT, but three minutes earlier for subscribers. The Chicago PMI is forecast to be 58.0, down from the September result of 60.4. The final October reading of consumer sentiment from the University of Michigan is due out at 8:55am CDT, the forecast calls for 68.0, or one tenth higher than this month’s preliminary result; it was 68.2 in September.