Morning Call July 7 2010

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SSA Morning Call - July 7, 2010
  Stone Street Advisors Morning Call  – 7/7/2010ChiBondKing  – See Important Disclosures on page 4 Morning Focus Interesting overnight session, particularly in Europe: French trade balance was worse than expected at -5.5b vs. forecast of -3.9B.Previous was -4.3B. Eurozone quarterly GDP was in line with estimates, +0.2pct, while German factory orders declined by 0.5pctvs. an expected 0.5 gain  –  this metric was previously +3.2pct. Baltic Dry index continues its slide, falling over 5pct as I put thefinishing touches on this morning update. Asian markets were a mixed bag ahead of key economic data due out on Thursday fromthe region: Australia down 0.5pct to 4254, Nikkei down 0.63pct to 9279, Hang Seng -1.13pct to 19857. The notable exception wasChina (Shanghai) which was up 0.49pct to 2421. UK followed the broader Asian market lead  –  to the downside. Currently the FTSEis down 0.85pct, DAX down 0.79pct, CAC40 down 1pct and ESTX down 0.86pct. No economic data in the US today, but the IveyPMI number in Canada is due out, refer to the economic calendar for details. Notable Overnight Headlines  Asia Australian Leading Employment Indicator Rises In July (DJ)China 5-yr bond sale yield towards bottom of forecast (Reuters) PBOC Official: China 2010 GDP Growth Likely 9.5%, China GDP Growth To Slow 2H But Double Dip Unlikely (DJ) Japan Auto Association Head: Very Concerned About Yen Strength (DJ) China committed to U.S. Treasuries, tepid on gold (Reuters) Australian July Leading Employment Indicator Minus 0.599 Vs. Minus 0.832 In June: DEEWRAustralia construction sector shrinks in June (Reuters)Japan's executive-worker pay gap narrows: report (MW) Europe Eurozone Q1 GDP Rises 0.6% On Year Polish cbank chief urges govt to tackle budget gap (Reuters)Greece June HICP Up 5.2% On Year, Down 0.2% On Month ECB calls for bids in 7-day dollar lending operation, Overnight deposits at ECB fall (Reuters) UK gilts boosted by equities slide, stress test concerns (Reuters)Russia bank lending up 3-4 pct in Q2-cbank (Reuters)EU lawmakers curb bank bonuses, risk taking (Reuters)Hungary May Industrial Output Up 13.7% On Year, Consensus 8.2%Portugal May Industrial New Orders Down 3.2% On YearGerman May Factory Orders Fall 0.5% On Month, Consensus 0.3% Rise US Pre Open Economic News OECD: Rich country unemployment may have peaked (AP) 3-Month USD Libor Falls To 0.52988% Vs 0.53113% TuesdayMortgage Loan Application Volume Rises 6.7% In Week Ended July 2nd Versus Previous Week  –  MBA Moody's sees positives in U.S. states' budgets (Reuters) Equities MSFT: Microsoft plans small job cuts  –  WSJ   FDO: Family Dollar 3Q Sales $1.997B (DJ)   STT: State Street Records Second-Qtr After-Tax Chg Of $251 M, Or $0.50 Per Shr   NYX: NYSE Euronext U.S. share trading volumes decline (MW)    See Important Disclosures on page 4 Interesting Morning Reading Professor Pinch - At The Precipice: The Choices We Make vs. The Choices We ’ re Forced To Make:   Fundamental Trader  –  Bitumen & Bolts :   Telegraph  –  With the US trapped in depression, this really is starting to feel like 1932:   Mish Shedlock on IL Construction Workers -   Notable Bond Market/Economic Events Bond Auctions (1PM ET) o   4 week bill Upcoming Bond Auctions (This Week) o   None. Economic Releases For Today o   None in the US o   10AM: Canada Ivey PMI, consensus 64.1 o   7:50PM     Japan Core Machinery Orders     Japan Bank Lending, yearly      Japan Current Account, cons. Y1.12T      Japan M2 Money Supply, yearly  –  cons. 3.1pct  o   9:30PM     Australian Employment Change, cons. +15.3k      Australian Unemployment Rate, cons. 5.2pct   See Important Disclosures on page 4 Market Summary  –  8AM Futures Currencies Fixed Income Symbol Last Chg Symbol Last Chg Symbol Last Symbol LastDOW 9666 -16 EURUSD 1.2588 -0.0038 2s5s 114.00 US2Y .61SP500 1022.25 -2 GBPUSD 1.5124 -0.0025 2s10s 232.00 US5Y 1.75NSDQ 1732.75 -1.75 EURJPY 109.77 -0.67 2s30s 328.00 US7Y 2.40ZB 128'02 +0'02 USDCAD 1.0578 0.0037 5s10s 118.00 US10Y 2.93ZN 122'245 +0'010 USDJPY 87.25 -0.26 5s30s 214.00 US30Y 3.89ZF 118'217 +0'025 NZDUSD 0.6916 -0.0024 10s30s 96.00 UK5Y 2.04ZT 109'142 +0'007 UK10Y 3.34CLN0 72.3 0.32 UK30Y 4.14 Spreads BpsSpreads BpsUK25 129.00 USUK2 14.00 UK210 259.00 USUK5 29.00 UK230 339.00 USUK7 32.00 UK510 130.00 USUK10 41.00 UK530 210.00 USUK20 70.29 UK1030 80.00 USUK30 25.00  Stone Street Advisors Morning Call  – 7/7/2010ChiBondKing  – Disclosure/Legal T HE MATERIAL CONTAINED IN THIS DOCUMENT IS INFORMATIONAL ONLY , AND IS NOT INTENDED AS AN OFFER OR A SOLICITATION TOBUY OR SELL ANY SECURITIES .   T HE AUTHOR IS NOT ACTING AS AN ADVISOR OR FIDUCIARY IN ANY RESPECT IN CONNECTION WITHPROVIDING THIS INFORMATION AND NO INFORMATION OR MATERIAL CONTAINED WITHIN THIS DOCUMENT IS TO BE RELIED UPON FORTHE PURPOSE OF MAKING OR COMMUNICATING INVESTMENT OR OTHER DECISIONS NOR CONSTRUED AS EITHER PROJECTIONS ORPREDICTIONS .   I NVESTORS MUST MAKE THEIR OWN INDEPENDENT DECISIONS REGARDING ANY SECURITIES , FINANCIAL INSTRUMENTSOR STRATEGIES MENTIONED HEREIN .   P LEASE CONTACT YOUR FINANCIAL ADVISOR TO DETERMINE THE SUITABILITY OF THE MATERIALCONTAINED HEREIN TO YOUR INVESTMENT GOALS , OBJECTIVES AND RISK CRITERIA .   T HE MATERIAL CONTAINED IN THIS DOCUMENT ISINTENDED FOR QUALIFIED INVESTORS ONLY .   T HE PERSON OR PERSONS INVOLVED IN THE PREPARATION OR ISSUANCE OF THEINFORMATION CONTAINED IN THE MATERIAL WITHIN THIS DOCUMENT MAY DEAL AS PRINCIPAL IN ANY OF THE SECURITIESMENTIONED , AND MAY HAVE A LONG OR SHORT POSITION IN ( INCLUDING POSSIBLY A POSITION THAT WAS ACCUMULATED ON THEBASIS OF THE MATERIAL PRIOR TO IT BEING DISSEMINATED AND / OR A POSITION INCONSISTENT WITH THE INFORMATION WITHIN THISDOCUMENT ),   A CCORDINGLY , INFORMATION INCLUDED IN OR EXCLUDED FROM THIS DOCUMENT IS NOT INDEPENDENT FROM THEPROPRIETARY INTERESTS OF THE AUTHOR , WHICH MAY CONFLICT WITH YOUR INTERESTS .   C ERTAIN TRANSACTIONS , INCLUDING THOSEINVOLVING FUTURES , OPTIONS , DERIVATIVES AND HIGH YIELD SECURITIES , GIVE RISE TO SUBSTANTIAL RISK AND ARE NOT SUITABLEFOR ALL INVESTORS .   F OREIGN CURRENCY DENOMINATED SECURITIES ARE SUBJECT TO FLUCTUATIONS IN EXCHANGE RATES THATCOULD HAVE AN ADVERSE EFFECT ON THE VALUE OR PRICE OF OR INCOME DERIVED FROM ANY INVESTMENTS DISCUSSED HEREIN .   U NLESS OTHERWISE SPECIFICALLY STATED , ALL STATEMENTS CONTAINED WITHIN THIS DOCUMENT ( INCLUDING ANY VIEWS , OPINIONSOR FORECASTS ) ARE SOLELY THOSE OF THE INDIVIDUAL ( S ) MAKING THE STATEMENT , AS OF THE DATE INDICATED ONLY , AND ARESUBJECT TO CHANGE WITHOUT NOTICE .   C HANGES TO ASSUMPTIONS MADE IN THE PREPARATION OF SUCH MATERIALS MAY HAVE AMATERIAL IMPACT ON RETURNS .   T HE AUTHOR OR AUTHORS DOES NOT UNDERTAKE A DUTY TO UPDATE THESE MATERIALS OR TONOTIFY YOU WHEN OR WHETHER THE ANALYSIS HAS CHANGED .   W HILE THE INFORMATION CONTAINED WITHIN THIS DOCUMENT ISBELIEVED TO BE RELIABLE , NO REPRESENTATION OR WARRANTY , WHETHER EXPRESS OR IMPLIED , IS MADE AND NO LIABILITY ORRESPONSIBILITY IS ACCEPTED BY THE AUTHOR OR AFFILIATED PARTIES AS TO THE ACCURACY OR COMPLETENESS THEREOF .
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