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 Good morning! Here's what you need to know. - Asian markets saw mixed gains. Japan's Nikkei climbed 0.07%. Korea's Kospi fell -0.11%. Australia's S&P/ASX 200 dropped -0.19%, but Hong Kong's Hang Seng closed 0.70% higher. In Europe, everyone is down except London's FTSE, which is up 0.28%.
- It's a pretty quiet day for U.S. economic data. June wholesale trade figures will be published at 10 am, with a consensus for 0.4% gain against a -0.5% decline in May. And that's it. There are no major earnings announcements today.
- Meanwhile, China dropped a bunch of new data overnight, and nearly all of it was positive: fixed-asset investment increased 20.1% YOY against 20.0% expected, industrial production climbed 9.7% YOY against 8.9% expected, and the number of visitors from Hong Kong to China increased 25.3% in June YOY. Retail sales slowed slightly. "By considering the rebounding official PMI and trade data as well as the subdued inflation readings in July, we expect today’s data will have quite a positive impact on commodities, commodity-related currencies and some Chinese stocks (especially cyclical names exposed to [fixed-asset investment])," BAML's Ting Lu said. "We believe many Street economists will likely revise up their 3Q GDP growth forecasts soon."
- We've officially just lived through the most severe one-week flight out of bonds ever. For the week ended August 7, investors withdrew $4.0 billion from Treasury bond funds. That's 1.3% of all assets under management. Michael Hartnett of Bank of America Merrill Lynch simply says "The Great Rotation" (out of bonds and into stocks) is continuing.
- One of the biggest rotaters is Norway's behemoth oil fund, which the FT's Richard Milne reports has now raised its equities holdings to a record 63.4% of its portfolio, against a record low in bonds of 35.7%. "I have said before it is less a reflection of enthusiasm for the equity markets and more a lack of enthusiasm for the bond markets," fund CEO Yngve Slyngstad said.
- The IEA lowered its global oil demand forecast for 2013 and 2014, citing recent GDP forecasts from the IMF. Consumption estimates for 2013 were cut 30,000 barrels per day to 895,000 barrels per day, and growth into 2014 was slashed 1 bp to 1.1 million barrels per day. But US 2013 demand growth was revised upward to 0.3% from 0.0% on a strengthening recovery. Longer term, demand will come down on fundamentals, the agency said.
- Brent crude oil futures contracts are up this morning on a report from Reuters' Julia Payne that unrest in Libya, where output is already at its lowest level since 2011, has ramped up again. "In the latest development, field workers at its Arabian Gulf Oil Company (AGOCO), with complaints over management, said late on Wednesday they would cut output by 10,000 barrels per day (bpd) every day their demands are not met. They join a wave of strikes by oil workers and protests by people demanding work, that began in late July, shutting down the two largest terminals of Es Sider and Ras Lanuf."
- French industrial production unexpectedly fell -1.4% for June; consensus was for +0.03%. May's print showed a -0.03% drop. There was sunnier news in the UK, where the June trade deficit shrank to £8.1bn, against £8.5bn expected and a £8.7bn print in May.
- Reuters' Heng Xie and Gabriel Wildau report China is taking measures that may signal it is planning to bail out lenders or other entities holding distressed assets. "China is developing a new trading platform to enable banks to sell off loans to a wider range of investors...Currently, the lack of well-established precedents for asset disposals effectively leaves banks only two options: sell non-performing loans in private deals, mostly with big state-backed asset management firms, or keep rolling them over indefinitely to avoid booking a loss."
- Fallout from Detroit's bankruptcy filing is spreading, at least in Michigan. On Thursday, Saginaw County withdrew a $61 million bond sale to cover pension obligations. It represents the third municipality to delay or withdraw a debt float since the Motor City filed for Chapter 9 protection last month.
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