Halister News

Economic Release Details: {LEI CHNG Index ECOD} --BRENDAN MURRAY

(Bloomberg) -- Existing home sales seen rising 1.1% m/m in Aug. to 5.45m annual rate (forecast range 5.28m to 5.65m); based on closings of single-family homes, town homes, condominiums, co-ops.

• Rising home prices could be limiting “more robust acceleration” in sales: Bloomberg Intelligence
• Index of leading economic indicators seen unchanged in Aug. after rising 0.4% in July (forecast range -0.3% to +0.4%); LEI measures economic outlook for next 3 to 6 mos.

Economic Release Details: {SARPRT Index ECOD} --ALASTAIR REED

(Bloomberg) -- European politics is seen as a potential risk to markets more than U.S. politics and the flurry of events coming up in the region is increasingly becoming a topic of conversation among clients, Simon Smiles, CIO at UBS WM Ultra High Net Worth, says in interview.

• The focus isn’t on any one event as none is individually likely to be detrimental to markets, but the sheer number in the relatively near future means the chance one will go wrong is something investors are starting to get more concerned about
• The prospect of an accident that may severely hamper the ECB is starting to get people worried
• If the outcome of any of the events including the referendum in Italy or elections across the region is such that it sets a country on the path to possibly leaving the EU, that would be very difficult for the ECB to manage over the medium term
  • While not likely, Merkel no longer being part of the German government would be a step change in terms of the ECB’s ability to react
  • There’s a widespread view that Merkel and Draghi have been the sources of leadership in the region as they have done an incredible job working together; if you take those two key players away, it’s a source of uncertainty
• Clients aren’t worried about the next month but about what will happen in the next 1 to 3 years
• In a survey of UBS’s Industry Leaders network of 100 private entrepreneur clients, their biggest concern on a 3 to 5 year horizon was another financial crisis and the second was a breakup of Europe
  • After a series of “war games” in London, the group concluded the region was the most likely proximate cause of the next financial crisis because, among other factors, its history has been a series of tactical fixes rather than a strategy
• Investors aren’t particularly bearish but are more positive on the outlook for the U.S.
• Because these risks haven’t manifested themselves in a major way, clients aren’t looking to move into cash and favor a hedge
• One way clients have been doing that is by systematically buying the three cheapest puts among 18 equity markets UBS tracks, which acts as a negatively correlated asset which lowers portfolio volatility and has a relatively flat carry

(Bloomberg) -- Initial jobless claims seen at 261k in wk ended Sept. 17 vs 260k prior wk (forecast range 255k to 270k); represents inflow of workers receiving benefits.

• Initial claims have been below 300k for 80 weeks in row, longest stretch since 1970