NOAA: EL NINO LIKELY TO DEVELOP THIS MONTH, END IN EARLY 2013... The National Oceanic and Atmospheric Administration (NOAA) says El Nino is likely to develop this month and persist through December 2012 or February 2013. NOAA says most of the dynamic models expect the event to persist the remainder of the year, likely ending during the aforementioned period. Improved moisture prospects during this period point to at least some drought relief this fall and winter across the central U.S.; this assessment lines up with that of the Australian Bureau of Meteorology, which also expects a “short” El Nino event. Click here for more.
DROUGHT MONITOR REFLECTS IMPROVEMENTS IN PATH OF ISAAC... The National Drought Monitor notes some drought improvement where rains fell last week in the path of Hurricane Isaac and its remnants. Many areas of Missouri, Illinois and Indiana recorded rainfall in the 2 to 6-inch range and saw a two-category drought improvement, while areas of Indiana and Ohio saw one-category improvements. But across the Plains, another dry and hot week led to drought expansion. Click here for more.
ECB TO LAUNCH BOND-BUYING PROGRAM TO AID EURO-ZONE... European Central Bank (ECB) President Mario Draghi announced this morning the central bank would launch an “outside monetary transaction” program in the secondary sovereign bond market aimed at lowering borrowing costs for struggling euro-zone countries. Importantly, the ECB will not set a limit on how much sovereign debt it can buy under its new initiative and will waive its senior creditor status, meaning it will be treated the same as private creditors in case of default.
While the ECB is allowed to decide when to start, continue or suspend bond purchases, it will do so under strict conditionality -- although those conditions were not announced.
This is the boldest move yet by the ECB -- or any other central bank for that matter -- in the attempt to keep the global economy from collapsing. By waiving its preferred status, the ECB is putting its neck on the block. While specific details of the the ECB plan were lacking, it gives investors more confidence to add risk in this still very uncertain economic climate, especially with expectations the Fed will soon announce -- possibly following the Sept. 12-13 Federal Open Market Committee meeting -- its own stimulus package.
OECD: EUROPEAN RECESSION SLOWS THE GLOBAL ECONOMY... The Organization for Economic Co-operation and Development (OECD) in its latest Interim Economic Assessment says the global economy is slowing because key European countries are entering a recession that is now having worldwide impacts. The G7 economies are expected to grow at an annualized rate of just 0.3% in the third quarter of 2012 and at a rate of 1.1% in the fourth quarter. The organization warns that “the continuing euro area crisis is dampening global confidence, weakening trade and employment and slowing economic growth for OECD and non-OECD countries alike.” It projects the U.S. economy will grow at an annualized rate of 2% in the third quarter and a 2.4% pace in the fourth quarter of 2012. Click for more details.
IF OBAMA WINS REELECTION... He should thank former President Bill Clinton, because he was able to articulate what the current president has not yet done himself. Clinton on Wednesday evening delivered a scalpel-like dissection of President Barack Obama’s term to date, the factors behind it and bottom-line assessments of the Republican approach without once mentioning Bain Capital. He showed other Democratic Party members -- and perhaps Republicans -- how to target someone without getting too personal. Click here to read a breakdown of the speech.
Washington Consultant Jim Wiesemeyer says the speech showed that Bill Clinton is the real communicator in the Democratic Party. But Jim also noted, “An unintended impact of Clinton’s address may make mainstream Democratic voters think that someone like Clinton should be president. Clinton makes people long for the day when a person can and did reach across the political aisle (welfare reform) -- something Obama hasn’t done. Clinton is a people person who understands that part of being president is inviting and listening (not preaching) to members of the opposing party.”
