Global Business Confidence:

According to the global business confidence survey results, the global economic recovery remains firmly in place. Moreover, the slowing in growth experienced this past summer appears to be largely over; growth has stabilized. Unfortunately, the global economy is now expanding at a rate that is barely consistent with its potential. It is expanding at above potential in South America and in Asia outside of Japan, European growth is close to its potential, and the U.S. and Japan are expanding below potential.

Treasury International Capital Flows: +$61.2 bil
Net long-term capital flows to the U.S. rose to $61.2 billion in July from $44.4 billion in the prior month, as private foreign investors and foreign official institutions increased their holdings of U.S. Treasury bonds and notes. The TIC data also revealed higher demand for other U.S. financial asset classes-government agency bonds, corporate bonds, and equities-by private foreign investors, indicating confidence that the U.S. recovery would remain intact.

Current Account: -$123.3 bil
The current account deficit widened by $14.1 billion in the second quarter to $123.3 billion. We expected a slightly larger widening to $125 billion. A wider deficit on goods and services drove most of the change as the balance on income receipts changed little. Additional widening in the current account deficit is anticipated as global trade strengthens.  Note: The current account is one of the two major measures of a country's foreign trade (Capital Flows - above - is the other). A nation is said to have a trade deficit if it is importing more than it exports.

Treasury Budget: -8%
The unified budget deficit for August was $91 billion. Through the first 11 months of fiscal 2010, the deficit is 8% smaller from the same point last year. The U.S. is running enormous deficits because of the poor labor market and the stimulus package. However, the deficit is getting smaller because of an end to spending on the financial system bailout and an expanding economy. The deficit for all of fiscal 2010 will be smaller than the record $1.4 trillion deficit last fiscal year.

Import and Export Prices: 0.6%
Import prices pose little threat to domestic inflation dynamics. U.S. import prices rose 0.6% in August, an acceleration from July's 0.1%. The larger than anticipated gain was driven mostly by imported petroleum prices, which rose 2.1%-more than double July's gain. In an encouraging sign that the threat of deflation is not rising, nonfuel import prices rose 0.3% following two consecutive declines. Although the risk of deflation is subsiding, additional monetary and fiscal policy may be needed as the pace of the recovery is mediocre, at best.

Industrial Production: 0.2%
Industrial production grew at a noticeably slower pace in August than earlier in the year. Weakness in motor vehicles and utilities limited the increase to 0.2%. Motor vehicle production had surged because of fewer than usual annual summer shutdowns, and payback for this caused auto output to decline. Manufacturing output excluding autos rose a healthy 0.5%, although here too the pace has slowed since the spring. Capacity utilization rose a tenth of a percentage point to 74.7%.

Wholesale Trade (MWTR): +1.3%
Wholesale inventories rose 1.3% in July after increasing by an upwardly revised 0.3% in June (previously 0.1%). Sales rose 0.6% after falling by an upwardly revised 0.5% in June (previously 0.7%). The inventory-to-sales ratio rose by 1 basis point to 1.16 in July.

Producer Price Index: +0.4%
Producer prices for finished goods rose 0.4% in August, posting the biggest gain since March. The higher than expected gain resulted from strengthening prices for energy goods. Excluding food and energy, core prices for finished goods were up a modest 0.1% in August. Core prices for intermediate and crude goods have also posted gains, reversing declines of recent months. That said, pass-through from earlier stages to finished goods is constrained by still-high unemployment that is keeping producers at a disadvantage in terms of pricing power.

Business Inventories (MTIS): 1.0%
Total business inventories increased by 1% in July, above expectations that had already penciled in a large gain. Having sustained considerable declines in inventory levels through the recession, businesses are gradually rebuilding. The inventory gain in the month was spread across all three categories, led by wholesalers, followed by manufacturers and retailers. Despite this latest gain, it is still expected that inventories will be less of a support to growth for the rest of the year.

Jobless Claims: -3,000
Initial claims dropped slightly, falling by 3,000 to 450,000 for the week ending September 11. This will help further ease recent double-dip recession fears. This week's mild drop was important, but that the prior week's data were not revised significantly was even more significant, since those data corresponded with the Labor Day holiday and claims in several states had been estimated. Continuing claims were down, dropping by 84,000 to 4.485 million for the week ending September 4.

Retail Sales : +0.4%
Total retail sales rose 0.4% in August and 0.6% excluding autos, besting expectations for a milder gain. Increases were spread across most retail categories, with the largest declines coming from electronics and appliance stores as well as auto dealers. July was modestly revised lower, now showing a 0.3% gain compared with the advance estimate of 0.4%.

Chain Store Sales Snapshot: 09/11/2010
Although choppy, weekly chain store sales suggest that consumer spending is holding up roughly in line with our expectation this quarter. The ICSC sales index rose 0.8% in the week ending September 11, more than offsetting the previous week's 0.4% decline. The latest gain put year-over-year growth at 2.6%, compared with 1.8% previously. The ICSC noted seasonally cool weather was a positive for spending, as it boosted demand for fall and back-to-school apparel.

MBA Mortgage Applications Survey: -8.9%
In the week ending September 10, the market index dropped 8.9% to 801.5 because of declines in both the refinance and purchase indices. The refinance index performed the worst, falling to 4,396.1-a decline of 10.8% from the previous week. Meanwhile, the purchase index shed just 0.4%, falling to 183.7.

Weekly Natural Gas Storage Report: +103.00 bcf
Working gas in underground storage rose by 103 billion cubic feet for the week ending September 10, far surpassing the consensus estimate of a 93 bcf rise. This report should apply downward pressure to natural gas prices.

Oil and Gas Inventories: 09/10/2010
Crude oil inventories fell by 2.5 million barrels during the week ending September 10, in line with the consensus estimate. Gasoline inventories decreased by 700,000 barrels, exceeding the consensus estimate of a 500,000-barrel decline. Distillate inventories fell by 300,000 barrels. Refinery capacity utilization fell to 87.6% from 88.2%. This report will not have a substantial effect on the price of crude oil.