G7

The G7 meeting will take place today.  The stakes will be high as it seems the banks continue to play chicken with the global economy, choosing to keep LIBOR rates high. 

The UK Chancellor of the Exchequer, Alistar Darling, is proposing an international guarantee of the interbank lending between banks as a way to open things up.  As a result, the banks seem to be holding out in lowering key rates like the 3 month LIBOR rate (see above chart). 

In a curious statement, the G7 communique addressed the sharp fall of the dollar, without saying the words "US dollar".  Their specific quote:

"Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability,"

Analysts and G7 officials say the message is intended to signal to markets that the G7 is closely focused on the decline of the US dollar.  They also probably want to send a message to large speculators that making large bets on the direction of the dollar would be met with central bank intervention. 

•  G-7 Meets as Trichet, King, Paulson Warn of Greater Credit-Crisis
• World Bank, IMF Warn Accelerating Inflation Poses Increased Poverty Threat
• Darling to Call For Bigger IMF Role in Supervising World Financial Markets (Darling UK Chancellor of the Exchequer)
• IMF Says Credit Losses May Reach $945 Billion

• OFFICIAL FROM G-7 NATION SPOKE TO REPORTERS IN WASHINGTON
• G-7 REMAINS POSITIVE ON EMERGING MARKETS, OFFICIAL SAYS
• G-7 TO OMIT ANY REFERENCE TO A U.S. RECESSION, OFFICIAL SAYS
• G-7 STATEMENT MORE NEGATIVE ON U.S. ECONOMY, OFFICIAL SAYS

Analysis: This is just on the wire.  It is a bit confusing to me as more negative on the US economy, yet omit any reference to a US Recession.  So watching for more clarification.

The only other key speaker set to talk is the Fed’s Fisher who will speak at 9:00 AM NYT.  Fisher is an FOMC voting member. 

The Wall Street Journal reported today the major initiative from the G7 Meeting this weekend.  The chief goal would be to put in place measures to prevent another financial crisis.

Japanese Finance Minister Nukaga: 

"The important thing is to stabalize the markets and create a relationship of trust by facilitating information disclosure such as losses at financial institutions. It is important to japan as the host country to send this message to the global markets."

German Deputy Finance Minister Mirow:

"In Germany the economiy is in a robust situation"  adding "there were no plans for a US style economic stimulus package"

British Finance Minister Darling:

"Growth depends on free fair trade"

The G7 Meeting addressed the Yuan and little else. No mention of dollar weakness nor EUR strength. Ironically, the dollar rallied and EUR got weaker after first doing the opposite. Go figure.

Oct 24 10:00 Existing Home Sales, Previous 5500, Estimate 5200
Oct 25 08:30 Durable Goods Previous -4.9, Estimate 1.5
Oct 25 08:30 Dur Goods ex Trans Previous -1.8, Estimate 0.9