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Asian stocks were higher overnight; they were helped by an upbeat budget and economic report in India. Elsewhere, there was a rumor that Deutsche Bank CEO Ackermann was meeting with Greek officials to discuss a €15 Bln. loan to ease pressure on Greece.  DB denied the rumor.  US Q4 GDP showed a higher than expected revision.  Later this morning we get the Chicago PMI at 8:45, Consumer Sentiment at 8:55 and existing home sales at 9 AM.  Lots of news to chew on for the last trading day of the month.  There’s yet another big snowstorm out East; will it slow trading>  Read more... (475 words, estimated 1:54 mins reading time)

Chinese stocks were higher after the government said they will extend support to industry amid weak global demand.  That didn’t help the rest of Asia or Europe, as apparently more traders read yesterday’s story that S&P warned of a potential further downgrade of Greece’s credit rating.  The strength in the Yen is pressuring Japanese exports.  Greece has €20 bln. (About $27 bln.) of debt to repay by the end of May; a downgrade would make it more difficult to borrow as Greek government debt would be ineligible for ECB loans.  In the US, weekly jobless claims showed a much bigger than expected jump, more than offsetting a decent durable goods report.  Bernanke continues hi Congressional testimony at 9 AM, and the results of the 7 yr. T Note auction are out at Noon. Look for angst about a double dip for the economy to be the underlying concern.  Read more... (628 words, estimated 2:31 mins reading time)

Asian stocks were lower overnight after the reports showing lower consumer confidence in Germany and the US.  Greek unions called for a second day of strikes to protest the government’s austerity measures.  Greek credit spreads are wider this morning.  It’s being reported that there’s little US interest in a potential Greek debt offering this week.  The Washington Post is reporting that commercial banks and investment firms have shifted their political contributions toward Republicans in recent months. This is why Obama has softened his view toward banks and regulatory bills are moving slowly in Congress.  This morning we get January new home sales; they are expected to have risen a bit from Dec.  We also get Bernanke’s Congressional testimony on monetary policy at 9.  That has the potential to be a big deal, given last week’s discount rate hike, general angst about the global economy, and the prospects for financial system reform legislation.  We’ll also get the EIA crude inventory report at 9:30 and the results of the 5 year T Note auction at Noon.  Read more... (612 words, estimated 2:27 mins reading time)

Overnight the German IFO business confidence index fell; this fall put pressure on the Euro.  BoE Governor King made downbeat comments on the UK and EU economies.  An ECB member said that the EU will have to help Greece, but not less than had been reported. The January Consumer confidence report is out at 9 AM; it is expected to have fallen a bit from December.  Read more... (532 words, estimated 2:08 mins reading time)

Greek stocks and bonds were higher overnight; the Greek central bank governor Provopoulos said he’s confident Greece’s government will meet its “very ambitious” deficit-reduction goals.  There were mixed stories on the EU’s plan to help Greece.  Der Spiegel said that the EU had a plan ready, but the Finance Ministry denied this.  There’s no economic news out today.  We’ve had a good rally in ‘risk exposure’ assets; is it time for a correction?  Read more... (446 words, estimated 1:47 mins reading time)

Yesterday’s discount rate hike was out of left field.  The fact that they raised isn’t really the surprise, but the timing was.  They made the announcement in conjunction with the normal money supply release, and I would guess they picked to do it precisely because the market was closed, to limit the impact of knee jerk reactions.  The DR is really a symbolic rate, and the move was technical, not really the start of tightening.  Bernanke will have his Humphrey Hawkins testimony to Congress next week to explain himself. (Although I think they call it something different now).
This hike is the start of the winding down of the emergency liquidity, although it may also mean that tightening is coming sooner rather than later. This morning’s CPI report was much more benign than yesterday’s scary PPI.  There’s a Cattle on Feed report at 2 PM.  Read more... (558 words, estimated 2:14 mins reading time)