The Aussie Jumps on Good Retail and Trade Data

“Australia’s dollar rose after reports today showed improvement in retail sales and trade, boosting prospects the Reserve Bank will leave borrowing costs unchanged at a meeting next week.

Gains in the so-called Aussie and its New Zealand counterpart were tempered on speculation any measures from European Central Bank policy makers meeting today won’t be enough to resolve the region’s debt crisis. The Federal Reserve yesterday refrained from new action to stimulate the world’s largest economy. The so-called kiwi strengthened after whole- milk powder prices climbed for the first time in six weeks.”

Full article

Draghi and his put statement last week have markets in a position to fall hard if the ECB does not deliver. For the moment the world of equities, currencies, and treasuries look complacent and full of hope.

We await an announcement from the ECB starting at 7:30 -7:45 am EST.

Full article

World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

The bank of England leaves rates steady at 0.5%.

Full article

click here for definition of “glory hole”

After the Federal Reserve declined to spike the punchbowl Wednesday, fans of monetary stimulus are now entirely dependent on the European Central Bank for a fix.

In leaving its policies unchanged, the Fed gave investors what they expected, but not what they wanted. Now, all eyes are turning to Frankfurt, where top ECB officials will meet Thursday for their monthly policy discussion.

ECB president Mario Draghi raised the stakes last week when he said the ECB will do “whatever it takes” to preserve the euro currency. In a coda that caught the attention of many stimulus-hungry investors, Draghi added: “Believe me, it will be enough.”

But investors who think that Draghi is going to do something big and bold as soon as Thursday morning are much more likely to be let down if he fails to deliver. Beware, this could end in tears.

“We think there is plenty of scope for disappointment,” said John Higgins, senior market economist at Capital Economics. “The ECB’s bark could prove louder than its bite.”

Read here.

NEW YORK (CNNMoney) — Toyota announced the recall Wednesday of some 778,000 vehicles in the United States due to a suspension problem that could cause crashes.

The recall comprises roughly 760,000 Toyota RAV4’s from model years 2006 to 2011, as well as about 18,000 Lexus HS 250h’s from 2010.

Toyota said that if the nuts on the rear suspension arms of these vehicles aren’t tightened properly during a wheel alignment service, the arms may come loose or separate.

Read here.

(CNN) — A recent CNN.com op-ed asked “Was the Shell Oil hoax ethical?” We at Greenpeace, along with the activist group Yes Men, are behind the Shell Oil website ArcticReady.com, which we created to call attention to the company’s Arctic destruction. So we were intrigued by this question.

The writer, Paul Root Wolpe, director of the Center for Ethics at Emory University, said the spoof website did not announce itself as a parody and that omission could be called misrepresentation. And that could possibly be called unethical. But we revealed our role just hours after the site went up, and the site is so over-the-top — it has a kids’ game called “Angry Bergs” — that people realize very quickly that it is fake.

But mispresentation is Wolpe’s concern, which is why he should have addressed the ethics of Shell’s multibillion-dollar international hoax perpetrated on Earth itself. A hoax the company has failed to reveal to the public.

Royal Dutch Shell made $31 billion in profits last year, while its CEO took home $15 million in compensation during one of the worst economic crises in a century. The company’s lobbyists in Washington, London and other global capitals work to slow the development of clean technologies and renewable energy, preferring instead a status quo that benefits their shareholders and leaves the massive costs of climate change to the 99%.

Read here.

Washington (CNN) — The U.S. House on Wednesday took the opposite action on tax cuts as the Senate, rejecting a Democratic proposal championed by President Barack Obama to extend lower tax rates for middle-income Americans, and then passing a Republican plan to maintain the lower rates for everyone for a year.

In separate votes that amounted to political posturing in an election year, House Republicans joined by more than a dozen Democrats passed the GOP measure by a 256-171 margin.

Minutes earlier, a similar tally defeated the Democratic alternative that would maintain the lower rates for income up to $250,000 for families and $200,000 for individuals for a year.

Wednesday’s votes extended a congressional stalemate over the Bush tax cuts from 2001 and 2003 that has come to symbolize legislative inaction in Washington.

Read here:

The Federal Reserve has indicated it will take further steps as necessary to promote a stronger economic recovery. Sadly, the Fed’s bullets are spent, and the U.S. economy is skidding as a result of Administration missteps.

The economy is growing at less than 2%. Unemployment holds steady at 8.2% only because so many folks have quit looking for work and are no longer counted in the official tally of joblessness.

Consumer spending has slowed substantially, because Americans are pessimistic that President Obama’s economic policies will fix the economy and are hunkering down for a long siege. They are simply not convinced Governor Romney offers sufficiently effective alternatives and the personal qualities to be President.

At the conclusion of its August 1 meeting, the Federal Reserve Open Market Committee stated it “will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions…”

Unfortunately, the Federal Reserve has already pulled all the levers that might make a difference. Short-term interest rates — such as the overnight bank borrowing rate and one-month and one- year Treasury Bill rates — are already close to zero.

Read more:

Hat tip to Allahpundit:

Chik-Fil-A’s owner said they set a new world record for sales today.

Via Zero Hedge:

 The state’s Legislative Analyst’s Office said Wednesday that ‘hundreds of millions’ of dollars in assumed tax revenues may never materialize due to the continued slide in Facebook’s stock price.

Unexpectedly!

American manufacturing unexpectedly contracted in July for a second month, reflecting a drop in orders that threatens to undercut a mainstay of the recovery.

Read the rest here.

NEW YORK (CBSNewYork) — The New York City Fire Department said a large sinkhole opened up Wednesday afternoon in Brooklyn.

The 20-foot-deep by 20-foot-wide hole, which formed at around 6 p.m., is located between 4th and 5th avenues in Bay Ridge.

Read the article and see the picture here.

Faber reminds us that Europe is trading at levels which can only be described as “depressed” and may therefore be setting up for a great mean reversion play.

The strategy produced an excess return of 4.42% annualized for the period 1976–2011. With Europe trading at depressed valuation ratios, mean reversion suggests that the region is poised for long-run outperformance.

Read the article here.

A little commentary from Ritholtz about the Sell Side Consensus Contrary Indicator…

Read the article and see the graph here.

World badminton has apologized for a scandal that has sullied the sport’s reputation at the London Olympics and resulted in eight women being disqualified from the tournament.

The expulsion of the four women’s doubles pairs earlier on Wednesday sent shockwaves through the tournament, removing China’s top-seeded duo and other doubles pairs from the South Korean and Indonesian teams.

“I’m very, very sorry this has happened for both the players and for the sport,” Badminton World Federation secretary general Thomas Lund told a media conference.

“We made this decision for the best interests of all the players.

“The most important thing is to deal with such cases in a firm and fair manner.”

Full Scandal

We all know something went horribly wrong in various NYSE-traded stocks today between 9:30 am and 10:15 am. So wrong in fact that the NYSE had to step in and cancel numerous trades in 6 symbols. However it did not DK millions of other trades in 134 other symbols, the vast majority of which we assume traded errantly due to the market making of Knight Capital (as admitted by the company), which today saw its biggest drop ever since going public on volume about 60 times greater than its average. We also all know that one should buy low and sell high. At least that is whathuman traders are taught, and that is what they attempt. Because if one consistently does the opposite, one will simply run out of money. Well, the opposite is precisely what the berserk algo in Knight’s Market Making group may have done if Nanex, which has done a forensic analysis of one of the trades in question, is correct. In other words, instead of at least attempting to provide liquidity via limit trades, Knight’s algorithm acted as a market order… gone horribly wrong. As the third chart below shows what the algo did with furious repetition and steadfast consistency was to buy at the offer, and sell at the bid, in other words buy high and sell low. Over and over and over and over. As Nanex laconically notes, “In the case of EXC, that means losing about 15 cents on every pair of trades. Do that 40 times a second, 2400 times a minute, and you now have a system that’s very efficient at burning money.” Which also means that by not DK’ing several hundred million prints, the NYSE may have just thrown Knight under the bus, because the market maker is suddenly on the hook for tens if not hundreds of millions in inverse market making profits.

Here we will assume that readers are sufficiently familiar with market structure to know that market makers only participate in the market in order to collect liquidity rebates, i.e., to be the limit on the bid which is hit, or the offer which is lifted. What Knight did was effectively the opposite, and it also collected the opposite of a rebate: i.e., it paid someone else for no reason at all… well technically to withdraw liquidity. However liquidity that led to creation of losses not profits.

This is absolute lunacy and our dumb ass DOJ delivering zero justice.

Commandeered by one of his drivers, who was secretly working with federal agents, the truck had been hauling marijuana from the border as part of an undercover operation. And without Patty’s knowledge, the Drug Enforcement Administration was paying his driver, Lawrence Chapa, to use the truck to bust traffickers.

At least 17 hours before that early morning phone call, Chapa was shot dead in front of more than a dozen law enforcement officers – all of them taken by surprise by hijackers trying to steal the red Kenworth T600 truck and its load of pot.

In the confusion of the attack in northwest Harris County, compounded by officers in the operation not all knowing each other, a Houston policeman shot and wounded a Harris County sheriff’s deputy.

Full Article