Need To Know News

Ameriquest and Countrywide spent nearly $30mln on lobbying to stave off state regulations to restrict mortgage lending WSJ, A1

Record year for banks raising equity as volume of debt issuance falls 30% FT, 13

More bad news for the dollar: its share of foreign exchange reserves falls 2.7% to 63.8% FT, 1

Don’t bet on emerging markets’ infrastructure spending to offset U.S. economic weakness FT, LEX, 12

In spite of high-profile collapses, negative publicity, and more government scrutiny, hedge fund indices outperform S&P and FTSE in 2007 FT, 13

Yuan’s biggest weekly rise in 2 years fails to appease China-bashers in Congress WSJ, C1

The NIKKEI was closed overnight but the Hang Seng posted a strong gain of 442 points, ending the year up slightly more than 39%. Chinese PMI Manufacturing data is due out tonight; the November data came in at 55.4. JPY strengthened again overnight taking out 112 against the dollar but has recovered back over the figure in thin European trade. EUR/JPY sold off rather sharply as well in what looks to be a YEN carry unwind in thin conditions.

The FTSE and CAC are showing minor losses ahead of the New York open, the remainder of Europe is closed. CABLE continued its hard bounce up on the Dollar after last week’s poor showing in both Durable Goods and New Home Sales, the latter at its lowest level since 1995. Fear that the housing/banking mess will pull the U.S. economy into recession remains pervasive. EUR also continues to make gains against the Dollar, testing the triple top in the mid 1.47s overnight. There was no European or U.K. data of import overnight.

The U.S. market will be open all day but trade is expected to be thin and volatile following this morning’s Existing Home Sales for November. The data is expected to reflect sales of 4.97mln homes, unchanged from October making the Month on Month change expectation flat or 0%. December NAPM Milwaukee comes out at 10am as well and will be measured against a 60.0 reading for October. A poor showing in the Housing data is not unexpected but the equity markets are likely to sell-off on a large downside departure which should pull a strong bid to bonds as it raises the specter of an interest rate cut at the end of January. The dollar will take another leg lower on a poor showing as well. An upside surprise from the data is unlikely but would buoy equities and pull some short-covering in the dollar and a sell-off in bonds.

Oil is trading about 34 cents higher in London as news of Iranian plans to start up its first Nuclear Reactor has the market on edge. Gold is down about $5.50 at this writing as the dollar recovers a bit into the New York open.

Equities traded in the negative through most of the session due to weaker than expected New Home Sales data. Treasuries were well bid as a result of a flight to quality. The 30yr finished higher by over 1.2% and the 4wk shed 35 bps. The dollar continued its recent decline, turning in its worst weekly performance since Spring of 2006. The EUR/USD shot up after weak U.S. economic data and hawkish European inflation data this morning to close firmly above 1.47. GBP also suffered from poor housing data as Nat’wide House prices MoM fell 0.5%, much more than expected. Cable finished marginally lower and EURO/GBP rose almost 0.75%. Monday’s economic data includes the NAR’s Exisiting Homes Sales and Milwakue NAPM, both at 10:00am EST. If Exisiting Home Sales comes in worse than expected, equities and the USD may sell of as they did in response to Friday’s disappointing New Home Sales.

Equity futures are ran up from the day’s worst level on what looks like a short covering rally in thin market conditions. Existing Home Sales are out at 10am est Monday and if they miss on the order that New Home Sales missed today, by 70,000 or nearly 10%, the equity markets will head lower again. The conundrum of sharply lower prices and sharply lower sales, plus a longer time on the market does not bode well for the economy. Indeed, housing busts have typically been a forerunner of recessions.

The National Association of Realtors Nov. Existing Home Sales data is due out at 10:00 am EST on Monday. This figure is expected to be unchanged from Oct.’s reading of 4.97 mln. The Oct. Existing Homes Sales figure was the result of a 1.2% drop from Sept. data. Median home prices also fell a record 5.1% in Oct. A disappointment in Nov. Existing Homes Sales is likely to weigh heavily on equities and the USD as it did in response to Friday’s plummeting New Homes Sales.

A slew of lousy economic data in the UK and the US prompted currency traders to continue to sell off both USD and GBP today. The dollar reached new weekly lows against EUR and JPY.  Tame eurozone inflation combined with weak new home sales in the U.S. and sent EUR on a tear, spending most of the day above the 1.47 mark. JPY also benefited from USD weakness as USD/JPY sold off below 113. EUR/JPY traded within the narrow range of 165.01 and 166.48. CABLE strengthened past the 2.00 handle early this morning before selling off after the 0.5% decline in Nationwide Home Prices in the UK. It spent the day trading with a 100-pip range–1.99 and 2.0022. Heightened speculation that the BOE will cut rates twice in Q1 2008 sent the GBP lower against the EUR as well, trading above .73800 for most of the day. The DXY sold off sharply today, losing more than 350 pips in the largest weekly drop in over a year.

Energies are adding to yesterday’s gains as inventory concerns and geopolitical risk continue to affect markets. Crude has stayed above 97.00 for much of the session and nearly broke the 98 handle. Gasoline and Heating Oil are both marginally higher. Natural Gas has to continued its volatile trading, as it traded lower early but shot higher going into the EIA Natural Gas Inventory. Following the larger than expected drop in the Inventory, Natural Gas has climbed even higher to above 7.30.

Energies close at 2:30pm EST on Dec. 31st and will be closed on Jan. 1st

Gold closes at 1:30pm EST on Dec. 31st and will be closed on Jan. 1st

Silver closes at 1:25pm EST on Dec. 31st and will be closed on Jan. 1st

Platinum closes at 1:05pm EST on Dec. 31st and will be closed on Jan. 1st

Copper closes at 1:00pm EST on Dec. 31st and will be closed on Jan. 1st

Agricultures Closes at 1:00pm EST on Dec. 31 and are closed on Jan. 1

Financials Close at 1:00pm EST on Dec. 31 and are closed on Jan. 1

Equities Close at 4:15pm EST on Dec. 31 and are closed on Jan. 1

Commodity Futures, Forex and Interest Rates Close at 1:00pm EST on Dec. 31 and are Closed on Jan. 1

Equity Index Futures Close at 4:15pm EST on Dec. 31 and are Closed Jan. 1