The US Trade Balance is worse than expectations. Should lower 3rd quarter GDP.

The Trade Balance came in at -36.472B which was worse than expectations.  The Exports rose by 2.9%. The Imports rose by 5.8%. The Real Trade Balance was also more negative than last month. This is the value that gets plugged into the GDP for the 3rd quarter and the higher value will have an effect of lowering the 3rd quarter GDP.  The Real Trade Balance fell to -41.714B from -37.861 B.

The initial reaction is a slightly lower dollar.  The EURUSD has moved up to 1.4884 from 1.4875.  USDJPY fell from 89.75 to 89.47.  A lower dollar should lead to more exports and less imports. The problem is the US is reliant on imports from other countries (i.e. oil and other goods from China). As a result, the dollar moves may not necessarily have a huge effect on the margin. As a result, the effect may be shortlived this morning and focus may revert back toward the stock market opening shortly.  Dow Futures are up 19 points. S & P are up 3 points

US Trade Balance comes in at higher than expectations

The expectation was for a -30B. The actual number came in at -26.0B. Lowest since 1999.  Imports since July 2004.

Exports rose by 1.6% while imports fell by -0.6%.

The Real or inflation adjusted Trade Balance also improved to -36.182B from -40.063 B in April.  The real Trade Balance is what is used to calculate GDP.  A smaller deficit is a net gain for GDP. 

Meanwhile Canada Trade Balance had a worse than expected Trade deficit of -1.4B. This is the largest deficit on record.  Imports fell by 3.5%.  Exports fell by -6.9%.

UK Data Released

UK’s Manufacturing Production came out stronger than expected at 0.2% from the previous -0.1%.  No change from -0.1% was forecast. 

UK’s Trade Balance missed forecasts at -7.0B from the previous -6.6B.  A rise to -6.4% was forecast.

UK’s Industrial Production came out better than expected at 0.3% from the previous -0.6%.  A rise to -0.1% was forecast.

Swiss Trade Balance Released

CHF’s Trade Balance came out above expectations at 2.56B from the previous 0.15B.  A drop to 0.11B was forecast.

UK Data Released

The UK Manufacturing Production Number came out at -0.1% from the previous -0.9%.  A slight rise to -0.8% was forecast.

The UK Trade Balance came out at -6.6B from the previous -7.3B.  A slight rise to -7.2B was forecast.

The UK DCLG HPI came out at -13.6% from the previous -12.3%.  A drop to -12.7% was forecast.

The UK Industrial Production number came out at -0.6% from the previous -1.0%.  A rise to -0.7% was forecast.

It’s the economy today…

The stock market rallying has the commodites moving higher and the commodity currencies in demand today.   Energy, copper, and other industrial metals are up today which has things looking good.  The Wells Fargo earning have people wondering as well.  Remember Wells is in California and maybe it does not say it is “happy days” again - they have a lot of million dollar homes with jumbo sized mortgages which are underwater - but the yield curve is certainly benefiting cash flow earnings and can dramatic especially if bank mortgages have all been written off.  If homeowners make payments the spread between mortage rates and free money, rings the cash register day to day.  It is when payments don’t come in and houses are written off at foreclosure prices.  In addition, do not underestimate the Trade Balance today as well.  It will add to GDP. 

In a related market, the Financial Select  Sector SPDR (symbol XLF), has been rebounding and is testing resistance after selling off sharply last month.  Banks are not out of the woods as people are still losing jobs and that leads to mortgage defaults, but perhaps stabilization may be upon the US, and the yield curve helps.

Ironically, both Canada and Australia had weaker employment reports today, yet both their currencies are moving higher.  The commodity/economy story is trumping the employment picture (much like it is in the banking stocks).  The USDCAD is now moving through the low from Monday at the 1.2222 level.   The next level is 1.2189  to 1.2200 which represents a series of low going back to March 19th

Initial and Continuing Claims more or less as expected. US Trade Deficit improves sharply. Helps 1Q GDP

Initial Claims 654K vs 660 K

Contininng Claims 5840K vs 5800

The Employment picture remains bleak.

US Trade Plunges on headline to -26B versus.  Exports up 1.6%.  Imports -5.1%.   The Real Deficit also fell sharply to -35.604 Billion.  Down sharply from -44B.  This is a boost to GDP for the 1st quarter.  This should be good for the stock market overall.  USDJPY should get a boost.

Bobbys Corner-Open Market-4.9.2009

Good Morning:

As expected the BOE left interest rates unchanged-and reiterated that they will continue to buy UK Gov’t bonds to fight the ongoing recession.    The USD and JPY weakened overnight-as equities gained and market participants looked for riskier assets.

The Good Friday/Easter holiday will see most of the world  (except the US) closed both Friday and next Monday. 

Equities and commodities rose as speculation that the  rescue plans for financial firms are getting traction and starting to work.  US Futures are also higher this morning.

Oil:$50.81                          Gold:$884.50

Today’s Data:
Trade Balance:            exp: -$36.6B                  prior: -$36. B
Import price Ind:      exp: 1.00%                      prior: -.2%
Jobless Claims:           exp: 665K                        prior: 669K

HAVE A GREAT DAY & GOOD LUCK

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