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The Day Ahead: Producer Prices, Housing Starts, Building Permits
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U.S. equity futures are relatively stable this morning as stocks in Japan rebounded 5.7% after crashing 10.6% Monday. Uncertainty remains key and is pushing safe haven assets modestly higher. “The nuclear situation remains in flux, with workers evacuating the plant at one point overnight due to high radiation levels, before later returning,” said BMO Capital Markets. Nomura Securities adds: “Another fire broke out early this morning at the Fukushima #4 reactor, but after 30 minutes it was no longer visible. There have been rolling blackouts in the Kanto area.” S&P 500 futures are 2.3 points lower at 1,273 and Dow futures are down 9 points at 11,780. In the first two days this week, the Dow lost 189 points, or 1.57%. Light crude oil rose 1.45% to $98.58 per barrel, while gold prices increased…(read more)
The Day Ahead: Flight to Safety Pours into Bond Market
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Another explosion at a nuclear power station in Japan triggered a 10.55% sell-off in Japanese stocks last night and initiated a massive global flight to safety away from equities into safe haven bonds and currencies. “The situation at Japan’s Fukushima Dai-Ichi nuclear plant worsened overnight with at least one other explosion and fire at the facility,” said economists at BMO. “There was some release of radiation and those living within 30km were advised to stay indoors, while those within a 20km range were being evacuated.” Prime Minister Naoto Kan said the risks of further radiation leaks are increasing. Japanese economic minister Kaoru Yosano told reporters the nation’s economy is healthy and that stocks are falling because of uncertainty. S&P 500 futures are a staggering 32.50 points…(read more)
The Week Ahead: Japan, FOMC Meeting, Inflation, Construction Data
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The progressively more tragic consequences of the Japanese earthquake remind us that reality can change in an instant. What we initially received as news of an earthquake several thousand miles away has amounted to a living hell for the people of Japan. The death count is unknown but is much worse than initially thought. Power outages are widespread. Roads are closed along the coastline. Water, food and fuel shortages are being reported. And now there are growing fears of a major radiation leak at the Fukushima nuclear complex, which is 140 miles north of Tokyo. “The devastation caused by the Tohoku Pacific Offshore Earthquake and subsequent tsunamis is even greater than initially estimated,” said economists at Nomura Global Economics, a Japanese bank, who said 11 nuclear reactors and three…(read more)