Tuesday, August 18, 2009

Evening Briefing for August 18th

* MARKET THEMES FROM TUESDAY - After Monday's pullback in risk assets, we saw a bounce overnight on favorable economic news from Japan. That led to buying in commodities, a pullback in the U.S. dollar, and a rise in 10-year Treasury rates. All are themes supportive of higher stock prices, and, indeed, buying pressure was solid through the day on Tuesday. We moved above the August 12th lows, a level I've been watching closely, but we also saw some evidence of toppiness late in the day. That will have me looking at markets carefully overnight and early Wednesday to see if the former support now serves as resistance. If so, we can expect a test of Monday's lows in the near term. If we can stay above those August 12th lows, a bounce back into the thick of the prior multi-day range would be expectable.

* OVERSEAS/OVERNIGHT NUMBERS: 11:30 PM CT - Japan, All-Industry Index; 1:00 AM CT - Germany, PPI; 6:00 AM CT - Canada, CPI.



-- Prospects for U.S. dollar decline;

-- Excellent overview of challenges facing residential real estate;

-- What lifestyle do traders desire?

-- Worthwhile reading from NewsFlashr, including prospects for more foreclosures;

-- Defaults to rise on commercial mortgage backed securities;

-- Stock market disconnected from economic realities.