3SOF

September 27, 2010
Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.16% and Dec S&Ps up +1.00 point. The dollar is weaker and Treasuries are firmer while commodities are mixed, with silver climbing to a fresh 30-year high. Increased M&A activity is boosting European and US stock prices today with Unilever up 2.7% after agreeing to buy Alberto Culver for $3.7 billion and Wal-Mart plan's to buy South Africa's Massmart Holdings Ltd. in a transaction worth $4.6 billion. Southwest Airlines said it would acquire AirTran for $1.4 billion, or about $7.69 a share. Limiting a rally in stocks is the 7.3% drop in Actelion after Switzerland's largest biotechnology company fell after it said its clazosentan medicine didn't meet the main goal of a study in patients who had suffered from bleeding in the brain.

•   The Asian markets today closed higher with Japan up +1.39%, Hong Kong +1.00%, China +1.66%, Taiwan +0.31%, Australia +1.60%, Singapore +0.67%, South Korea +0.66%, India +0.36%. Asian stocks rallied after last Friday's bigger-than-expected increase in US capital goods orders bolstered optimism that demand for Asian exports will strengthen. Komatsu Ltd., the world's second-biggest maker of construction equipment, closed 3.2% higher, while Canon, which gets 28% of its sales in the Americas, gained 2.5%, and Honda Motor, which gets about 46% of its sales in North America, ended 2.9% higher. Japanese stocks gained despite the slowest increase in its exports this year. Aug Japan exports rose 15.8% y/y; the slowest pace since December, as a decrease in global demand and an advance in the yen threaten to undermine Japan's recovery. A Japanese government official said on condition of anonymity that Japan is considering a stimulus plan of as much as 4.6 trillion yen ($54.6 bi llion) that will be funded with tax revenue and left over funds from the 2009 budget.

September 28, 2010
Overnight Developments...

•   European stocks are slightly lower with the European DJ Stoxx 50 down -0.19%. Dec S&Ps are slightly higher by +1.20 points (+0.11%). European credit default swap prices are higher this morning as the European debt crisis continues to simmer with continued speculation about the impact of the need for a bailout of nationalized lender Anglo Irish Bank Corp, which could cost as much as 35 billion euros of additional funds. The Irish government is expected to announce this week the exact bailout figure for Anglo Irish Bank, which has already cost the Irish government 23 billion euros. The 2-year Irish bond yield today rose 46 bp to a record high of 4.70%. Irish credit default swap (CDS) prices today rose 31 bp to a record 519 bp and have now more than doubled in the past two months. CDS prices today rose 12.5 bp for Portugal, 20 bp for Greece, and 4.5 bp for Italy. The European Stoxx 600 Bank index today fell 0.6% in response to the continuing European banking problems. In European stock news, Michelin today fell 11% after announcing a rights offering to issue new shares. UK Q2 GDP was left unrevised at +1.2% q/q, which was in line with the market consensus.

•   The Asian markets today closed lower across the board on bearish overhang from Monday's lower close in US stocks and on increased concern about the Euorpean debt crisis: Japan -1.12%, Hong Kong -1.03%, China -0.83%, Taiwan -0.03%, Australia -0.12%, Singapore -0.52%, South Korea -0.33%, Bombay -0.06%.

September 29, 2010
Overnight Developments...



.European stocks are lower with the European DJ Stoxx 50 down -0.65% and Dec S&Ps down -1.40 points. The dollar index fell to an 8-month low which helped push commodities higher with copper at a 5-1/2 month high and gold at a record high. European sovereign-debt concerns continue to weigh on stock prices with the yield spread between Irish 10-year bonds and German bunds widening to a record 454 bp and the spread between Spanish 10-year bonds and bunds widening to a 2-1/2 month high of 198 bp. The euro climbed to a 5-1/2 month high against the dollar after Sep Euro-Zone economic confidence unexpectedly improved +0.9 to a 103.2, its best level in 2-1/2 years. Limiting losses in European stocks was the 4.1% jump in Rolls-Royce Group Plc after the world's second-largest maker of aircraft engines was upgraded to "overweight" from "equalweight" by Morgan Stanley, which said profitability will be boosted by a recovery in after-sales such as mainte nance and spare parts.

.The Asian markets today closed mixed with Japan up +0.67%, Hong Kong +1.22%, China -0.21%, Taiwan +0.63%, Australia -0.53%, Singapore +0.28%, South Korea +0.70%, India -0.74%. Confidence among Japan's large manufacturers rose the least since early 2009 in Sep as companies are increasingly worried that a rising yen will threaten Japan's economic recovery. The Q3 Tankan index of sentiment climbed +7 points to 8, compared with a +15 point increase in Q2. Still, the Tankan index climbed to its best level in 2-1/2 years as global demand remains strong for Japanese exports. Manufacturing in China accelerated for a second straight month in Sep after the Sep China HSBC purchasing managers' index climbed +1.0 to 52.9, its highest level in 5 months, and adds to signs the Chinese economy is stabilizing after policy makers curbed lending in an effort to avert asset bubbles. Asian mining companies and raw materials producers rallied after the release of China's manufacturing rep ort on speculation that Chinese demand for industrial metals and commodities will remain strong.

September 30, 2010
Overnight Developments...



.European stocks are weaker with the European DJ Stoxx 50 down -0.20% and Dec S&Ps down -2.80 points. The dollar index slipped to a new 8-month low, which boosted most commodities, with crude oil at a 2-week high and gold at a record high. European stocks are weaker led by weakness in financials as Allied Irish plunged 28% after the Irish government said it will take majority control of the bank in its second bailout of the lender. It also said that Anglo Irish Bank and Allied Irish Bank Plc may both need as much as 14.4 billion euros ($19.6 billion) in extra capital, taking the total cost of bailing out banks to as much as 50 billion euros ($68 billion). Irish Finance Minister Lenihan said today there is "no question" that Ireland will have to seek outside help, saying his nation is "fully funded." The other major bearish factor for European stocks today was the action by Moody's Investors Service to downgrade Spain's top credit rating on e level to Aa1, citing a "weak" economic outlook and doubts that the nation will reach deficit reduction targets. On the positive side, Sep German unemployment declined a more-than-expected -40,000, its 15th straight monthly decline, as carmakers and other manufacturers boosted hiring to meet export-led demand. Germany's jobless rate in Sep unexpectedly declined -0.1 to 7.5%, the lowest since April 1992.

.The Asian markets today closed mixed with Japan down -1.99%, Hong Kong -0.09%, China +2.11%, Taiwan -0.04%, Australia -1.34%, Singapore -0.27%, South Korea +0.28%, India +0.57%. Japanese stocks closed lower after Aug Japan industrial production unexpectedly fell -0.3% m/m, its third monthly decline, adding to concern the nation's export-led recovery is slowing. Nintendo declined 9.3% and led the makers of electronic parts for its devices lower as well after the world's largest maker of portable video games slashed their annual profit forecast by 55% and said it won't release its 3DS handheld game player in time for the year-end holiday season. Australian banks tumbled, led by a 2.2% fall in National Australia Bank, after UBS downgraded the lender to "neutral" from "buy." Chinese stocks closed higher, led by a surge in property stocks, on speculation government measures to tame real-estate prices will help to prevent asset bubbles from hurting the economy. China said it would speed up the introduction of a trial property tax in some cities and then expand the levy to the whole country to curb rising real-estate prices. The government also asked commercial banks to stop offering loans to buyers of third homes and extended a 30% down payment requirement to all first-home buyers.

October 1, 2010
Overnight Developments...



.European stocks are higher with the European DJ Stoxx 50 up +0.03% and Dec S&Ps up +3.00 points. The dollar continues to weaken as the dollar index slipped to a fresh 8-month low which has boosted most commodities with copper soaring to a 2-year high, crude oil climbing to a 1-1/2 month high and gold posting a record high. The expansion in manufacturing in China at the fastest pace in four months in Sep is the main bullish factor for stocks. Respol jumped 6% and led a rally in energy producers after China's Sinopec pledged to invest $7.1 billion in Respol YPF SA's Brazilian unit. Celesio advanced 5.6% after BNP Paribas raised its recommendation for Europe's biggest publicly traded drug wholesaler to "outperform" from "neutral," while HSBC gained 1.3% after Goldman Sachs added Europe's biggest bank to its "conviction buy" list. Limiting gains in European stocks were the unexpected -0.2% m/m decline in Aug German retail sales, whi ch fell for a second month, while the Aug Euro-Zone unemployment rate remained unchanged at an upwardly revised 10.1%, its highest level in 12 years.

.The Asian markets today closed mostly higher with Japan up +0.37%, Taiwan +0.08%, Australia -0.08%, Singapore +1.07%, South Korea +0.22%, India +1.87%. Markets were closed in Hong Kong today, and are shut in China for a week for public holidays. The Sep China purchasing managers' index climbed a larger-than-expected +2.1 to 53.8, a 4-month high that reinforces evidence from a separate non-government purchasing manager survey two days ago that suggests China's industries are expanding again after the economy slowed in Q2. Mining companies and energy producers rallied as the manufacturing data boosted oil and copper prices. Japanese stocks gained as consumer spending increased, deflation moderated and the unemployment rate fell, indicating the recovery remains intact. Aug Japan overall household spending rose +1.7% y/y, more-than-expected and its biggest increase in 5 months, while the Aug Japan jobless rate slipped -0.1 to 5.1% and the Aug Japan national CPI fell -1. 0% y/y, less than July's -1.1% y/y. Today's reports show little sign that the yen's climb to a 15-year against the dollar has hurt the domestic economy so far. The BOJ meets next week to consider whether to expand a credit program or to consider other stimulus measures to protect the economy from the strengthening yen.

Monday, October 4, 2010
Overnight Developments...



*European stocks are lower with the European DJ Stoxx 50 down -0.39% to a 1-month low and Dec S&Ps down -5.30 points. The dollar and Treasuries strengthened and most commodities fell. Volkswagen AG and Daimler AG slipped at least 3% and led a retreat in auto sales as German new-car sales in Sep fell 18% to about 260,000 vehicles, according to the VDIK industry group. Yara International ASA dropped 3.9% after UBS AG downgraded the largest publicly traded nitrogen-fertilizer maker to "neutral" from "buy" and Gas Natural SDG SA lost 2.9% after the company said a ruling related to a gas dispute with Algeria's Sonatrach may reduce profit by as much as 450 million euros ($619 million). The euro weakened against the dollar on concern sovereign-debt issues will hamper Europe's economic recovery after the Irish central bank cut its growth estimate for this year to 0.2% from a July forecast of 0.8% and reduced its growth forecast for next year to 2.4 % from 2.8%. On the positive side, the Oct Euro-Zone Sentix investor confidence rose a more-than-expected +1.2 to 8.8, its highest level in 2-3/4 years.

*The Asian markets today closed mostly higher with Japan down -0.25%, Hong Kong +1.17%, China closed for holiday, Taiwan +0.02%, Australia +1.01%, Singapore +0.85%, South Korea +0.21%, India +0.15%. Bank stocks in Japan led Japanese stocks lower with Mizuho Financial Group closing down 5.9% and Mitsubishi UFJ Financial Group losing 2.6% on renewed concern that stricter capital rules will require Japanese banks to raise more capital. Bank stocks weakened after a Swiss government-appointed panel today said UBS AG and Credit Suisse Group AG, Switzerland's two biggest banks, need to hold almost double the capital required under Basel III rules. Supporting Asian stocks was the increase in the Sep China non-manufacturing purchasing managers' index by +1.6 to 61.7 along with comments from Chinese Premier Wen Jiabao who said in an interview with CNN that his nation would stimulate domestic demand to stabilize and further expand its economy. South Korean automakers led the Kos pi index higher with Hyundai closing up 1.3% after its US sales rose to a record 46,556 units in Sep while Kia Motors, an affiliate of Hyundai Motor, climbed 3% after it sold 30,071 autos in the US last month, up 39% from a year earlier.

Tuesday, October 5, 2010
Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.14% and Dec S&Ps up +2.90 points. The dollar index slumped to an 8-1/4 month low, which has boosted most commodities, with silver rallying to a 30-year high and gold posting another record high. The yen weakened against the dollar after the BOJ lowered interest rates and pledged asset purchases, while the euro gained after the Sep Euro-Zone PMI composite index was unexpectedly revised up to 54.1 from the previously reported 53.8. Greek stocks led a rally in European equities after Moody's Investors Service said it's "impressed" by steps to overhaul the nation's public finances. TUI Travel jumped 4.8% after Europe's largest tour operator said bookings for winter 2010/2011 have strengthened in all markets and that full-year results will meet forecasts, while Bayerische Motoren Werke AG (BMW) rallied 1.5% after the world's largest luxury automaker was rated "buy" in new coverage a t Banco Santander SA, which cited "a strong product cycle," a volume recovery in the premium car market segment, and "exposure to China." Undercutting stock prices was the unexpected -0.4% m/m decline in Aug Euro-Zone retail sales which adds to signs that Europe's recovery is losing momentum as governments step up budget cuts, while the quarterly report released by the European Commission warns that European companies' reluctance to borrow in the wake of the financial crisis may restrain investment and demand and lead to a "protracted" period of weak economic growth.

•   The Asian markets today closed mixed with Japan up +1.47%, Hong Kong +0.09%, China closed for holiday, Taiwan -0.55%, Australia -0.40%, Singapore +0.16%, South Korea +0.09%, India -0.33%. Japanese stocks rallied and provided support for other Asian markets after the BOJ cut the overnight call rate to a range of 0.0% to 0.1%, the lowest level in 4 years, and pledged to keep the rate at "virtually zero" until deflation has ended. The BOJ also expanded its balance sheep by setting up a 5 trillion yen ($60 billion) fund to buy government bonds and other assets and BOJ Governor Shirakawa said the bank would consider expanding the fund "if necessary." The yen sank after the announcement but has since recouped its losses and is little changed. Australian stocks closed lower despite the action by the RBA to unexpectedly keep Australia's overnight cash rate target at 4.5% for the fifth straight month, although RBA Governor Stevens said that higher borrowin g costs will likely be needed "at some point."

Wednesday, October 6, 2010
Overnight Developments...



*European stocks are higher with the European DJ Stoxx 50 up +0.66% and Dec S&Ps up +2.10 points. The dollar index rebounded from an 8-1/2 month low while Treasuries and commodities are higher with gold at a record high, copper at a 26-month high and crude oil at a 2-month high. Lifting stock prices was speculation that central banks round the world will follow the BOJ in announcing measures to boost their economies along with the action by the Organization for Economic Cooperation and Development (OECD) to raise its estimate of the combined growth rate among its 33 member countries to 0.9% in Q2, up from a 0.7% estimate in Aug, on signs that investment began picking up for the first time since 2008. Also boosting European stocks was the larger-than-expected +3.4% m/m increase in Aug German factory orders led by demand for investment goods such as machinery. The rally in metals has benefited mining companies with BHP Billiton up 2.4%, Rio Tinto up 2.3% and Ant ofagasta Plc up 5.2%, while Saipem gained 2% after Europe's largest oilfield-services provider was raised to "buy" from "sell" at Citigroup. On the negative side, Ericsson AB fell 1.6% after Royal Bank of Canada cut its estimate for the world's biggest maker of mobile-phone networks Q3 sales to 46 billion kroner ($6.9 billion) from 50 billion kroner, saying "currency impact, lingering component shortages and the lack of improvement in emerging markets may point to underwhelming results for Ericsson in the near term." The euro weakened and European stock gains were limited after the action by Fitch Ratings to cut Ireland's long-term foreign and local currency issue default ratings to A+ from AA- with a negative outlook.

*The Asian markets today closed higher with Japan up +1.81%, Hong Kong +1.07%, China closed for holiday, Taiwan +1.02%, Australia +1.73%, Singapore +0.88%, South Korea +1.42%, India +0.66%. Carry-over support from the BOJ's surprise action on Tuesday to expand its quantitative easing measures to spur economic growth is boosting Asian stocks. Raw material companies advanced as commodity prices climbed on optimism that expanding global economies will lead to increased demand for commodities. Japanese stocks also benefited from a proposal from Japan's ruling Democratic Party for an economic stimulus plan in excess of 4.8 trillion yen ($58 billion) that would help local governments and small businesses create jobs. Prime Minister Kan said passing the stimulus is his top priority in the parliament session to keep Japan's economic recovery intact.

Thursday, October 7, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.31% and Dec S&Ps +1.50 points. The dollar index continues its downward trajectory as it fell to an 8-1/2 month low, with the yen surging to a 15-year high and most commodities gaining with gold posting another record high. The BOE as expected left its benchmark interest rate at 0.50% and held its asset purchase plan at 200 billion pounds. European stocks rose after Aug German industrial production rose a more-than-expected +1.7% m/m, led by demand for investment goods such as machinery. Demand was decent for Spain's first bond auction since Moody's Investors Service stripped the nation of its top Aaa credit rating. The bid-to-cover ration, a gauge of demand, was 2.15 times the amount sold, compared with 1.89 times in August. Limiting gains in stocks was the -3.6% m/m plunge in Sep UK home prices, the biggest decline since records began in 1983 as higher supply and faltering consumer confidence w eakened the property market and adds to evidence that the housing market faces a renewed slump.

•   The Asian markets today closed mixed with Japan down -0.07%, Hong Kong +0.02%, China closed for holiday, Taiwan unchanged, Australia +0.10%, Singapore -0.73%, South Korea -0.19%, India -1.11%. Samsung Electronics, Asia's largest maker of semiconductors, dragged chipmakers lower after reporting profit that missed analyst estimates, while most Japanese exporters weakened after the yen surged to a 15-year high against the dollar. The Australian dollar rose to a record against the US dollar after Australian employers in Sep added 49,500 jobs from Aug, the seventh straight monthly gain and the biggest increase in 8 months, which bolsters the case for the RBA to resume raising interest rates. Asian raw-materials producers closed higher on speculation that demand for commodities will remain strong, while shipping companies gained after the Baltic Dry Index, a measure of commodity-shipping costs, rose 2.7% yesterday.

Friday, October 8, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.73% and Dec S&Ps down -5.10 points as participants square positions ahead of the all-important US payrolls report. The dollar is higher and Treasuries and most commodities are lower across the board. Bank stocks are leading European share prices lower with Barclays Plc down 2.2% after Nomura Holdings sold 220 million shares of the UK lender as part of a hedging transaction with Abu Dhabi. Credit Suisse Group AG fell 1.5% after Barclays downgraded the company to "underweight" from "equal weight," saying the Swiss bank has more of a capital shortfall than UBS AG and is trading "more expensively." Also pressuring European stocks was the -0.4% m/m decline in Aug German exports which fell for a second month as a strengthening euro and slowing global growth curbed demand. On the positive side, the Sep Bank of France business sentiment unexpectedly rose +1 to 102, its best level in 6 months, while Alcoa, the largest US aluminum producer, climbed 2.9% as it kicked off Q3 earnings season by reporting profit late yesterday that beat analysts' estimates.

•   The Asian markets today closed mostly lower with Japan down -0.99%, Hong Kong +0.26%, China +3.70%, Taiwan -0.48%, Australia -0.21%, Singapore -0.42%, South Korea -0.29%, India -0.32%. The Shanghai Composite Index closed sharply higher and at a 5-month high as trading resumed in China after a 5-day national holiday. Boosting Chinese stocks was the fall in the cost of protecting against a default by China to a 2-year low after Moody's Investors Service said it was poised to upgrade the country's debt. A fall in technology shares undercut Asian stocks when Samsung slipped 2.1% after it reported Q3 operating income of 4.8 trillion won ($4.3 billion), short of the 5.03 trillion won analysts were expecting. Weakness in retail stocks led Japanese shares lower after Seven & I holdings, Japan's largest retailer, sank 4.1% after it cut its sales forecast by 1.2% for the year ending Feb, saying a stronger yen may reduce revenue from the US.

Monday, October 11, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.11% and Dec S&Ps +2.30 points. The dollar weakened and boosted most commodities after global finance chiefs failed to narrow differences at their weekend meeting in Washington. G-7 finance ministers and central bankers pledged to improve cooperation, yet did little to show how they would alter their ways beyond agreeing to let the IMF study the matter. A reduction in sovereign-debt concerns ins boosting European stocks, with the yield on 10-year Greek bonds tumbling 21 bp to 9.63%, after IMF Managing Director Dominique Strauss-Kahn said his institution is prepared to give Greece more time to repay its loan should European nations decide to do so first because Greek officials are doing "exactly what they need to do" to rein in spending and meet the benchmarks set out as a condition of aid. Also boosting European stocks was a rally in fertilizer makers after corn prices surged to a 2-year high in overnight trade. Limiting gains in European stocks was the unexpected stalling in French industrial output after Aug French industrial production was unchanged m/m, weaker than expectations of +0.3% m/m, which signals the recovery in the Euro-Zone's second-largest economy is losing momentum.

•   The Asian markets today closed mixed with Japan closed for holiday, Hong Kong +1.15%, China +2.91%, Taiwan -0.82%, Australia +0.34%, Singapore +0.32%, South Korea -0.43%, India +0.44%. Mining companies and raw materials producers led gains in Asian stocks after most commodities rallied, with copper soaring to a 27-month high, on speculation of increased demand. Despite the weaker-than-expected Sep US payrolls report on Friday, Asian stocks were boosted on expectations that additional Fed stimulus will inflate asset prices and provide a solid platform for equities to rally in the short term. A Reuters report that the PBOC will unexpectedly raise reserve requirements for six large commercial banks may be a negative on Chinese bank stocks tomorrow. The report, which was released after the Asian markets closed, says the reserve requirement ratio for China's 6 big commercial banks will increase 50 bp to 17.5% for 2 months as the PBOC attempts to rein in liquidity as the economy stabilizes and money flows in from abroad.

Tuesday, October 12, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.53% and Dec S&Ps down -6.70 points. Weaker stocks have boosted the dollar and Treasuries and prompted a retreat in most commodities. European steelmakers lost ground and led stock prices lower after Posco, the world's third-largest steelmaker, cut its full-year profit forecast by 7% and reported its first decline in earnings in four quarters as rising commodity costs erode earnings. ArcelorMittal, the world's biggest steelmaker, dropped 3.1% and ThyssenKrupp AG, Germany's biggest steelmaker, lost 2.1%. Stock prices in France led declines in Europe as workers there demonstrated in nationwide marches against the government's overhaul of the pension system, which disrupted rail and air traffic. Fed Vice Chairman Yellen warned late yesterday "it is conceivable that accommodative policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system." The m arket is eagerly awaiting the minutes of the Fed's Sep 21 FOMC meeting today in the hope that some clarity to further asset purchases will be provided.

•   The Asian markets today closed mostly lower with Japan down -2.09%, Hong Kong -0.37%, China +1.27%, Taiwan -1.06%, Australia -1.69%, Singapore -0.44%, South Korea -1.26%, India -0.67%. Most Asian markets closed lower on concern China's efforts to rein in bank lending will slow the global economic recovery. The PBOC temporarily raised reserve requirements for six lenders, which led to a decline in material companies and raw material producers as commodity prices fell on concern demand will weaken as China tightens credit further. Exporters in Japan closed lower after the yen strengthened to near a 15-year high against the dollar and dimmed the outlook for export earnings. China's Shanghai Composite Index rallied to a 5-month high as the country's share prices caught up with regional measures after a weeklong holiday from Oct 1 to Oct 7.

Wednesday, October 13, 2010...

Overnight Developments



*European stocks are higher with the European DJ Stoxx 50 up +0.89% and Dec S&Ps up +7.20 points at a 5-1/4 month high. The dollar and Treasuries are weaker and most commodities are higher, with copper at a 27-month high. Crude oil is stronger after the IEA raised its global oil demand forecasts for this year and next amid signs of "apparently resurgent" consumption in the US, Germany and Japan in the past quarter. ASML Holding NV led semiconductor stocks higher in Europe after it gained 3.6% when it reported better-than-expected Q3 profit of 268.5 million euros ($375.6 million), beating analysts' estimates of 247 million-euros, while Intel jumped 2% after the world's largest chipmaker reported a jump in net income late yesterday. Also giving European stocks a boost was the better-than-expected Sep French CPI (unchanged m/m versus expectations of +0.2% m/m) along with the stronger-than-expected Aug Euro-Zone industrial production (+1.0% m/m versus ex pectations of +0.8% m/m). A slide in bank stocks limited gains in European stocks after Standard Chartered lost 1.5% when the lender announced a 3.3 billion-pound ($5.2 billion) share sale, which also prompted a 3.3% slide in Barclays Plc on concern that it may also have to announce a share sale to improve its capital buffer. Sep UK nationwide consumer confidence plummeted a bigger-than-expected 9 points to 53, a 1-1/2 year low, as Britons braced themselves for the biggest spending cuts since WWII.

*The Asian markets today closed higher with Japan up +0.16%, Hong Kong +1.45%, China +1.41%, Taiwan +0.20%, Australia +0.04%, Singapore +1.68%, South Korea +0.26%, India +2.40%. China's Shanghai Stock Index rallied to a 5-1/4 month high after its foreign-exchange reserves increased by a record to $2.65 trillion at the end of Sep while a 25% y/y jump in exports lifted its trade surplus to $16.9 billion for Sep, reinforcing optimism that China will continue to lead the global recovery. Chinese construction companies rallied after the Ministry of Housing and Urban-Rural Development said the country will start trials of a program to promote sales of construction materials in rural areas, while bank stocks rallied after the PBOC said Sep new local lending was 595.5 billion yuan, higher than estimates for 500 billion yuan of new loans. Asian technology companies rallied after Intel predicted Q4 sales that beat estimates and Japanese industrial companies closed higher after A ug Japan machine orders unexpectedly increased +10.1% m/m, their biggest monthly gain in 8 months.

Thursday, October 14, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 down -0.01% and Dec S&Ps are up +1.20 points. The dollar index slumped to a 10-month low on the outlook for additional quantitative easing from the Fed, which has boosted most commodities, with gold soaring to a record high, silver to a 30-year high and copper to a 27-month high. European stock prices were supported after Germany's leading economic institutes revised up their German growth forecasts for this year and next. The institutes predict German GDP will expand 3.5% in 2010 and 2.0% in 2011, higher than their April estimates of 1.5% this year and 1.4% next year. ECB Council member Mersch also sounded upbeat about Euro-Zone growth prospects when he said today that economic indicators don't give a reason for "increased pessimism" about the Euro-Zone economy. A drop in bank stocks is limiting gains in European equities as Barclays fell 3.7%, Societe Generale SA slipped 3.2% and Ro yal Bank of Scotland Plc fell 2.8%. Standard Chartered Plc's announcement yesterday that it will seek to raise 3.3 billion pounds ($5.3 billion) in a rights offer may encourage other banks to increase their capital. Credit Suisse Group AG predicts that UK lenders will have to constrain dividend payments to shareholders for up to 3 years to meet the more stringent capital requirements under the new Basel III capital rules agreed by regulators last month, which require that banks have a Core Tier 1 ratio of at least 7%.

•   The Asian markets today closed mostly higher with Japan up +1.91%, Hong Kong +1.68%, China +0.20%, Taiwan +1.34%, Australia +1.71%, Singapore -0.22%, South Korea +1.34%, India -0.92%. Asian stocks rallied on increased confidence in the economic outlook as global economic and corporate earnings data strengthen. Raw materials producers and mining stocks closed higher as metals prices surged on speculation that Chinese demand for commodities will remain strong. Japanese exporters strengthened despite the soaring yen that climbed to a fresh 15-year high against the dollar today. Royal Bank of Scotland Group Plc turned bullish on stocks in China and the rest of Asia, saying they will benefit from a global "liquidity wave" as they upgraded China and Asian stocks to "overweight" from "underweight." The chief investment officer at Cabot Money Management says that China's stocks are in a "solid bull market" and predicts that the Shangh ai tock Index may rise 20% in the next 6 months.

Friday, October 15, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 up +0.10% and Dec S&Ps down -2.10 points. The dollar is weaker and Treasuries and most commodities are higher ahead of this morning's speech by Fed Chairman Bernanke at a Boston Fed conference. A rally in European chipmakers is bolstering the overall market after Advanced Micro Devices posted better-than-estimated earnings results as demand from China increased. Infineon Technologies, Europe's second-largest chipmaker rose 1.3% and STMicroelectronics NV, Europe's largest chipmaker gained nearly 1.0%. Aug Euro-Zone exports rose 1.0%, which suggests the Euro-Zone economy is weathering a global slowdown and a stronger euro, while the Sep Euro-Zone CPI accelerated to 1.8% y/y, in line with market estimates and its highest level in 22 months. A decline in European retailers limited gains in the overall market when Carrefour SA, the world's second-largest retailer, fell 3.7% after it cut its full-yea r forecast of so-called activity contribution, a measure of operating profit, to about 3 billion euros ($4.2 billion) from 3.1 billion euros because of a 100 million-euro charge related to Brazil.

•   The Asian markets today closed mixed with Japan down -0.87%, Hong Kong -0.40%, China +3.21%, Taiwan -0.12%, Australia -0.21%, Singapore +0.29%, South Korea +0.13%, India -1.82%. Weakness in bank stocks led Japanese share prices lower after Mizuho Financial Group, Japan's third-biggest bank by market value, tumbled 4.9% and Mitsubishi UFJ lost 2.8% after the Nikkei English News reported that Japan's biggest banks may sell 2 trillion yen ($24.6 billion) in shareholdings to meet capital requirements. Other Asian bank stocks also weakened after US home seizures reached a record in Sep and scrutiny of home foreclosure practices grew. Japanese exporters closed lower after the yen strengthened to near a 15-year high against the dollar, as the stronger yen cuts the value of overseas income at Japanese companies when converted into their home currency. China's Shanghai Stock Index closed at a 5-1/2 month high after foreign direct investment in China rose 6.1% y/y in Sep to $8 .4 billion, which underscores confidence in the outlook for China's economy. Total foreign direct investment in China in the first 9 months of 2010 climbed +16.6% to $74.3 billion, which has prompted the PBOC to increase its foreign-exchange reserves to $2.65 trillion, the world's largest, in order to avert gains in the yuan.