Need To Know News

Treasury Secretary Hank Paulson is speaking in Washington this afternoon at the Exchequer Club. He says:

* This morning’s GDP figures “clearly” show the stimulus package was timely and has supported the US economy during this “difficult period”

* The administration expects the stimulus package to continue providing support in H2, but the housing correction, credit market turmoil, and high energy prices are still dragging on the overall economy. (No mention of those elusive 500k jobs that were to be created by the legislation.)

* Housing slump will continue through the end of this year, but bulk of the correction will be over in a matter of months.

* The HOPE NOW (NOPE NOW) alliance has helped keep 1.9mln homeowners out of foreclosure. He does, however, cite a recent statistic that foreclosures have jumped to 1% of outstanding mortgages in the US.

Other than that, Paulson’s remarks are a rehash of now-familiar talking points:

* Economic fundamentals are strong

* There are no plans to access the recently created federal backstops for Fannie Mae and Freddie Mac

* The housing market must stabilize before financial markets recover

Crude is just off its lows and is down 2.2% to 123.94. Yesterday, Crude closed above its 9-day moving average (125.68) for the first time in over two weeks. In today’s session, however, Crude fell right back through that support level today. The 9-day moving average has now turned into resistance, and support lies down at yesterday’s low of 120.80.

Enbridge, Canada’s largest pipeline company, announced a 42% leap in sales to C$ 3.87bln and a fourfold gain in Q2 profits partly from the sale of assets in Spain. Net income was up to C$659.4mln from C$148.2 mln a year ago, the equivalent of C$1.82/share from 41 cents. The jump in net income included a C$556.1mln gain from the sale of the company’s 25% stake in a Spanish oil-products pipeline operator. Excluding that sale and other one time items Enbridge earned 42 cents/share beating the consensus estimate of 38 cents/share.

USD/CAD remains supported by softer oil prices, and fallout from the softer Canadian GDP data released earlier. This said, the pairing has not been able to make much headway over the 1.0250 region, as noted exporter offers remain in place. More of the same is expected up to the 1.0270-80 region, though above there, buy-stops are now said to be building, ans a test of 1.0300 could be in the cards on a move over 1.0280.

Euro$ interest rate futures have extended a bullish streak heading into tomorrow’s payrolls report; which now contains firmer than expected ADP reading, a weak Monster.com index (seasonal) and a very weak jobless claims reading (special factors) for guidance. The Dec-09 contract jumped to highs of 97.06 this morning before paring those gains back to 97.025 (up 5-ticks), still well up from lows near 96.69 last week. Early option activity included a large bullish 15k bid for “call butterflies” on Sep-08s, among other trades — the same European bank bought 15k yesterday. Technical risk is building for a pullback now to 96.85 (especially on a better than -60k payrolls print Friday), before turning higher again to challenge 97.095.

Energy stocks are selling off sharply in the wake of weaker oil prices and weaker US demand. S&P energy stocks are down better than 2.5% at this writing.