Daily Market Commentary for November 9, 2011

President Barack Obama signed an executive order today that includes an end to federal government purchases of swag - clothing, mugs and non-work related gadgets often given away in promotions.
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The debt crisis in Italy is huge as the Italian sovereign debt is larger than Greece, Ireland, Spain and Portugal - all put together. Its debt burden of Italy is the highest of any countries besides the U.S. and Japan and, makes it a seriously huge problem for the International Monetary Fund and European Union, which have bailed out the other peripheral nations. Italy holds the fourth highest reserve of gold, in the world.

The U.S. financial sector, which has lent billions of dollars to European banks are now burdened with risky Greek, Italian and Spanish debt and continue to suffer tremendously. From across the pond, the European tide is washing out as the region continues to struggle with one sovereign-debt crisis after another, leaving many U.S. businesses exposed to a serious, continental recession. With Europe holding position as a major component to the U.S. economic engine, companies that sell discretionary products are expected to begin feeling the wrath of the sovereign-debt crisis, at any time now. Europe is known as the largest market for U.S. goods, to the tune of $1.36 trillion or approximately 29% of overseas sales, during 2010 for S&P 500 companies.

Legendary Penn State University coach Joe Paterno officially reported that he will retire at the end of the current football season. The announcement came on the heels of the child-abuse allegations leveled against a former assistant coach and very close friend to Paterno. "I am absolutely devastated by the developments in this case," said Paterno who has led the Penn State Nittany Lions football team for 61 years. Noting that the university's board has "far more important issues to address" than his future, he said he is committed to finishing the season with "dignity and determination." "This is a tragedy," he said. "It is one of the great sorrows of my life. With the benefit of hindsight, I wish I had done more." While support of team players, students and Penn State fans was widely expressed for Paterno, there is extensive out pouring for the victims and families involved in the child-abuse allegations against former assistant coach Jerry Sandusky. Sandusky has been charged with 40 criminal counts, accusing him of serial sex abuse of minors. The alleged incidents have reportedly been ongoing by Sandusky since 1994.

Wholesale inventories data released this morning showed a 0.1% decline in September resulted in a large downgrade to Q3 growth estimates. J.P. Morgan and Macroeconomic Advisers each cut their third-quarter GDP estimate by 0.7 percentage points to 1.6% and 1.7%, respectively compared to the first Commerce Department estimate of 2.5%. Barclays cut its tracking estimate to 1.8% from 2.4%. The decline could boost Q4 output because there was a smaller inventory accumulation during Q3 and Macroeconomic Advisers pushed their estimate for the final quarter up by three-tenths to 2.9%. J.P. Morgan did not adjust Q4 estimates, noting that imports could be more of a drag on Q4 growth if petroleum inventories are restocked from foreign sources.


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