Central Bankers Gather in Jackson Hole; US PMI and Housing Data Outperform

Economic Data

- (IL) Israel Jun Manufacturing: -0.6% v +1.3% prior
- (RU) Russia Gold and Forex Reserve w/e Aug 15th: $468.6B v $468.6B prior
- (PT) Portugal Jun Current Account Balance: -€0.2B v €0.4B prior
- (US) Initial Jobless Claims: 298K v 303Ke; Continuing Claims: 2.500M v 2.52Me
- (BE) Belgium Aug Consumer Confidence Index: -11 v -10 prior
- (MX) Mexico Jun IGAE Economic Activity Index Y/Y: 2.7% v 2.5%e
- (MX) Mexico Q2 GDP Q/Q: 1.0% v 0.8%e; Y/Y: 1.6% v 1.5%e
- (US) Aug Preliminary Markit Manufacturing PMI: 58.0 v 55.7e
- (US) Aug Philadelphia Fed Business Outlook: 28 v 19.7e
- (US) July Existing Home Sales: 5.15M v 5.02Me
- (US) July Leading Index: 0.9% v 0.6%e
- (EU) Euro Zone Aug Advance Consumer Confidence: -10 v -9.1e
- (US) Weekly EIA Natural Gas Inventories: +88 bcf v +82-86 bcf expected

- US and European indices are making steady progress today thanks to very good US economic data reports. As of writing, the DJIA is up 0.45%, the S&P500 is up 0.27% and the Nasdaq is flat.

- The flash print of the August Markit manufacturing PMI data has easily made up for July's weak showing. The 58 reading is the highest since April 2010, beating expectations and up from the 55.8 July final print. Production levels surged, employment rose at the fastest pace since March 2013, and new orders picked up again. The existing home sales data expanded at its strongest pace in 2014 so far, while distressed sales hit their lowest rate since the NAR started tracking the data in Oct 2008.

- The FOMC minutes out yesterday afternoon showed that some on the committee feel a "relatively prompt move" toward reducing policy accommodation is needed, as the Fed is "overshooting" its goals. The minutes showed members agree that improvements in labor markets have been "greater than anticipated" and inflation has firmed. Despite the firmer tone, Bill Gross rightly points out that the weighting of the 2015 Fed voters is distinct from the 2014 voters: hawks Fisher and Plosser will be out, tilting the balance toward the doves.

- EUR/USD hit resistance around 1.3245 overnight and has moved up toward 1.3290 through the US session. Gold fell to two-month lows below $1,280 this morning, most likely thanks to expectations the Fed could hike interest rates sooner than expected. Note that the yield on the 10-year UST has not eased up much, with buying though the US session driving it momentarily below 2.42%.

- Bank of America reached a $16.7 billion agreement with DoJ to settle charges it misled investors into buying troubled MBS, confirming numerous reports from earlier in August. BoA will pay a $9.65 billion in cash and provide $7 billion of consumer relief to struggling homeowners and communities. The deal resolves nearly all of the legacy issues left over from the purchase of Countrywide and Merrill Lynch. The accord is expected to reduce Q3 earnings by about $5.3 billion, or about $0.43/shr.

- Shares of Hewlett-Packard have gained steadily after the open of US cash trading, with HPQ up 4.5%. The reaction to the firm's in-line third-quarter earnings report was muted in the futures market. CEO Whitman's reiteration that HP was looking to enter the enterprise 3D printing area organically, not via acquisitions, helped the shares.

- Tech blog The Information reported this morning that eBay's board has been telling recruits for the position of CEO of Paypal that the unit may be spun off in 2015. Back in June, former PayPal CEO David Marcus said he was leaving for Facebook. Recall that back in Spring, Carl Icahn pressed management via a proxy contest to begin spinning off PayPal. EBay reached a deal with Icahn to end the proxy battle and withdraw his PayPal spinoff proposal.

- Cult burger chain Shake Shack has reportedly selected JPMorgan and Morgan Stanley to lead a proposed IPO as soon as this fall. The firm is pretty small, however the buzz surrounding the brand ensures it will be a high-profile offering.

Looking Ahead

- 11:30 (US) Fed's Williams from Jackson Hole, WY on CNBC
- 13:00 (US) Treasury to sell $16B in 5-Year TIPS Reopening
- 15:00 (US) API Monthly Statistical Report
- 20:00 Fed symposium begin in Jackson Hole, WY
- (AR) Argentina Aug Consumer Confidence Index: No est v 42.8 prior