Stocks in Asian trade were generally weak in reaction to news of a military exchange between North and South Korea. The Nikkei managed a gain of almost one percent, but the Hang Seng lost 2.7%, Shanghai was lower by about two percent and Australia fell more than one percent. European indexes are also lower on the session. The Footsie is currently down about two thirds of a percent and the Dax is off a fraction, but Ireland is down about two percent and other Euro/peripherals are down one percent or more, as the debt spreads for these countries are again widening out from the German baseline. US stock futures are down about three quarters of a percent or so.
*North and South Korea exchanged artillery fire earlier today; at least two South Korean marines are said to be dead and several others have been injured on an island that is just off the west coast of the peninsula within disputed territorial waters. As is often the case when dealing with conflicts involving North Korea it is not clear what sparked the conflict, or for that matter if the problem will escalate.
*The final reading of Germany’s Q3 GDP was unrevised +0.7% on a quarter on quarter basis and +3.9% year on year; growth was driven by strong exports and personal consumption.
*The November reading of Germany’s manufacturing sector Purchasing Managers Index was up more than two points on the month to 58.9, well above the estimate for a fractional gain. The November reading of their service sector PMI also beat the forecast with a monthly gain of 2.6 points, it rose to 58.6..
*In October there were 30,766 loans for house purchase in the UK, according to the British Bankers Association, slightly under the estimate.
*The weekly report on chain store sales from ICSC will be released at 6:45am CST. The Johnson Redbook report on the same thing is due out at 7:55am CST.
*The first revision of the Q3 GDP is due out at 7:30am CST. Headline GDP is forecast to be revised up to 2.4% from the initial report of 2.0%. However the key Q3 Personal Consumption component is expected to be revised down one tenth to 2.5% and the GDP Price Deflator is expected to be unrevised at 2.3%. The Core PCE price measure is also expected to be unchanged at 0.8% on a quarter on quarter annualized basis. The October reading of Existing Home Sales is due out at 9:00am CST; Sales are forecast to fall 1.1% from the pace set the month before to an annualized rate of 4.48 million units.
*The November reading of the Richmond Fed Manufacturing Index is due out at 9:00am CST, it is expected to improve one point on the month to 6.
*The FDIC will release their Q3 report on bank earnings at 9:00am CST.
*The Fed is scheduled to buy TIPS today that are due to mature between 7/15/12 and 2/15/40; the results of the operation will be announced just after 10:00am CST.
*The Treasury plans to sell $35 billion 5 Year Notes today; the results of the auction will be announced just after noon CST.
*The minutes from the November 2/3 FOMC meeting are due to be released at 1:00pm CST. In addition to the minutes the Fed will also release their Summary of Economic Projections, which will extend out to 2013 for the first time.
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