Friday, September 16, 2011


No one in the media is discussing the potential political fallout from U.S. financial support of European banking institutions.

The announced move by the Fed, Bank of England, Bank of Japan and Swiss National Bank (coordinated with ECB) is an attempt to stabilize U.S. dollar funding for European banks.

I suspect there has been something of a run on several large European banks' funding (particularly U.S.-dollar-based funding).

This move provides temporary liquidity (more cowbell) to the affected institutions and buys them some breathing room over the balance of the year.

Emphasis on temporary, as the structural issues remain very much in place!

Today's economic releases underscore the screwflation of the middle class.

Initial jobless claims were nearly 20,000 more than consensus, while the prior week was revised upward by 3,000. Continuing claims dropped but were still above expectations.

In terms of the rising costs of the necessities of life, the August CPI increased by 3.8%, the biggest increase in three years. The headline CPI was up by 0.4%, and the core was up by 0.2% (year over year). Food prices, rent prices and clothing were the source of the increase in the CPI.

Meanwhile, the NY Manufacturing Survey came in at -8.8, weaker than estimates of -4.0 and the worst number in a year.

NFLX, after raising prices, negatively preannounced a third-quarter subscriber miss (guides down on streaming and DVD subs).