Oil dominated volume on HedgeStreet last week as crude prices dropped 5.01% to close at $59.76. Investors doubt an OPEC production cut. Wholesale gas and currencies were active too. The dollar was up 0.68% against the euro, closing at $1.2595/€, and up 0.75% against the yen, closing at ¥119.01/$. The yenï¿½s weakness continues to surprise, especially given the end of the easy money policy by the Bank of Japan earlier this year. Stocks rallied to record levels. The Dow closed at 11850.21. Bonds sold off sharply on Friday with the 10-year yield up 12bp to 4.70%. Gold plummeted 4.38% to close at $572.40. All these changes are good news for the U.S. economy. Energy is getting cheaper which offsets housing weakness and boosts corporate earnings. Lower gold prices may augur tamer inflation next year. Investment is coming back into U.S. stocks, boosting the dollar. Long term rates remain low. Freddie Mac releases 30-year mortgage composite on Thursday; HedgeStreet binaries stop trading on Wednesday. CHF and CAD now trade intra-day.
This week: Virgin threatens to cancel Airbus380 orders; earnings from GE, Pepsi, Costco and McDonaldï¿½s; FCC votes on telecom mergers; and U.S. customs stops seizing cheaper Canadian drugs on the border even though imports remain illegal.
ECONOMIC RELEASES THIS WEEK
Tuesday: Wholesale inventories expected at +0.7%, with sales racing ahead this the inventory-to-sales ratio at low 1.15 months. Treasury budget expected at a $45-55bn surplus with receipts running 12% year-on-year, expenditures at 8%.
Wednesday: Crude inventories and FOMC minutes.
Thursday: Initial Claims expected at 311K. Trade balance expected at -$66.5bn, off the July record of -$68bn; a solid rebound in exports expected.
Friday: Retail sales expected at 0.2%, ex-auto at 0.0%, lower due to lower gas prices. Autos have a potential to surprise to the downside.
STARBUCKS 40,000 … PETSMARTï¿½S HOTELS … CHICAGO TO EAT MORE MEAT
Starbucks announced a goal of 40,000 coffee shops, up from 12,000 now. I am on three lattes a day; I don’t think I can handle five… PetSmart will operate in its stores 850 animal hotels catering to 110m U.S. households with pets (63%). For $36 a night, pups can enjoy TV, lambskin blankets and day care activities. Five billion people on the planet wish they had it as good as U.S. pets. That fence will sure stop immigration … The CME and Deutsche Bï¿½rse talked about a potential tie-up. The Germans were impressed with Ferris Buhlerï¿½s lederhosen and his rendition of Danke Schï¿½n, Auf Wiedersehen? The merger makes no sense, and God knows Chicago doesnï¿½t need more German food …