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Morning Update


Yesterday Greek Prime Minister Antonis Samaras spoke to Germany’s Bild newspaper saying: "Let me be very explicit: we demand no additional money. We stand by our commitments and by fulfilling all our requirements. We have to crank up growth because that decreases the financial gaps. All we want is a bit of 'air to breathe' to get the economy running and to increase state income. More time does not automatically mean more money" (Reuters). Currently Greece is aiming to have its budget deficit below 3% by the end of 2014, and Samaras is likely to lobby for a 2-year extension to the end of 2016. At the end of 2011 the budget deficit was 9.3%.

S&P 500 futures traded modestly lower overnight on news that Japanese exports and imports were much lower than expected. Japanese exports to Europe were down 25.1% Y/Y, demonstrating how a slowing European economy is affecting global trade. The news caused the Yen to strengthen as traders shed positions in riskier currencies. The AUD/JPY (Australian Dollar / Japanese Yen), a good barometer of risk appetite, was down significantly overnight. This, along with a bullish breakout in Gold yesterday, strong gains in US treasury bonds, and intraday reversals in market leaders Google and Apple suggest traders may be paring back the amount of risk assets in their portfolios.

The main source of headlines in the US trading session today is likely to be the release of FOMC meeting minutes. These could offer further hints to what Bernanke might say in Jackson Hole on August 31st and the debate ongoing within the FOMC.

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